Top Choices Of Coffee Shop Business

1
Top Choices Of Coffee Shop Business

• There are a few things to know when considering
  getting into the coffee shop business. You can
  enter this business by one of three ways- start
  your own coffee shop from scratch, buy an
  existing independent business, or purchase a
  franchise. Each type of business has its pros and
  cons. For instance startups have more risk
  associated with them than buying an existing
  business or franchise. In my opinion, buying an
  existing business, either independent or
  franchise, is the easiest route and the more
  popular way to get into the business. If you plan
  on buying an existing coffee shop you will need
  to do your research. Check out the location, the
  atmosphere, the menu and the financials.
• Atmosphere
• Check to see if the establishment has a pleasant
  atmosphere. What is the decor like? Redecorating
  can be expensive. Are the employees friendly?
  Customers will be more apt to spend time in an
  inviting and comfortable environment. Will you
  keep the current employees? These are important
  factors to consider when negotiating the purchase
  price.

2

• Location
• It's not a bad idea to visit the coffee shop
  business you are interested in. You can act like
  a private investigator, after all nobody knows
  who you are. This will allow you to watch the
  business and its employees in action. It will
  also give you a real feel for the amount of
  traffic going in and out of the shop. The most
  successful coffee establishments are easily
  accessible to foot traffic. Great locations
  produce greater revenues but come with a price.
  High traffic equals high rent. High rents can eat
  up profits. Monthly rent should not be more than
  10-15 of gross sales. Look at the current lease
  agreement. See if it's possible to renegotiate
  the lease if the rent is too high. If the coffee
  shop is not accessible to foot traffic then more
  advertising dollars will need to be set aside in
  order to attract more customers.

3

Menu During your visit to the coffee shop for
sale check out the menu. Sample different types
of coffee and ask questions. Some coffee
businesses sell food items and some do not.
Adding food to the menu can boost profits. Cost
of goods sold should be around 28-32 of annual
sales. Financials Once you have
investigated the location, atmosphere and menu
you will need to look at the financials. Pre-tax
profits should be around 16-20 percent of annual
sales. If the shop is adhering to industry
standards and everything else seems to be in
order concerning the location, atmosphere, menu
and financials then all that's left to do is
close the deal.