New here! wanting to open coffee shop - excited and very nervous! help please

[authentic]

Hello all of you coffee shop owners I am new here and have been reading a lot of threads. Very informative, thank you.

My dream is to open coffee shop.I have never been in this industry before and it is very exciting but nerve wracking too!

So after more investigation intoy dream I have found wonderful location on a busy street in a little strip mall. It is about 1300 sq ft and has small patio to seat approx 4-5 tables. Rents for $3600/month with additional $1500 in utilities and taxes etc bringing it to $5000/month in location expense. Contract is over 5 years!

Here is a catch: it was previously franchise coffee shop for few years. It closed all of their locations in the city including this one. Then it was private coffee shop that run for 8 months before owner decided to sell it.

All the equipment and furniture is in there already. He is asking $100,000 for it. Not sure if it's really worth that much. So I am looking at other options of getting equipment and furnishing it.

Now with all that said I was told previous owner shut it down because he could not be there himself to run it. It was run by staff. Also he said he was making approx. $1000/day gross in the bigining then it dropped to 500-600/day.

I love location but it is raising red flag with 2 prev. Shops closing there.

My plan was to have authentic coffee (espressos) shop with some healthy food choices and deserts and of course one authentic grilled sandwich on the menu. I was also planing to have mini entertainment as a part of evening hours.

However I am scared off by knowledge of 2 prior shops closing off. I have no idea what to expect in sales throughout the day. I estimated I would need to get at least 1500/day/gross to cover expenses & wages. I would work there myself and have extra 2 staff.

My gut is saying go for it, but my brain is still doing the math and going tsstssstssss...

I dreamed of this. I would stand out from the rest for the fact I know none of coffee shops have this brand and is very loved by tourists from originated country of beans.

Even the mini entertainment would be something different that no one else offers.

Not sure if I am getting a deal here as far as location of the shop and rental fee.

It scares me greatly bit at the same time it is so exciting. I would definitely use patio during warm season and I know it was never used before by other coffee shop. The area is newer (10y) and has lots of shopping around, residential areas behind, one restaurant across ...

Any tthoughts from you wise people and any ssuggestions would be greatly appreciated.

P.S coffee shop is a sit down. There was previous drive through window but it will be used for addition to the strip mall.

Thank you and looking forward hearing from you all

 

[CoffeeJunky]

First of all, welcome aboard.
I hope you read some of the past posts. We did touch this subject over and over again by many different people.

I don't know where you are located but 100,000 is crazy money. You should not pay for a coffee shop that is failing.
Also coffee shop that ran poorly would not make much sense to re-open back up.

 

[PinkRose]

You said the previous owner said he was making "approx. $1000/day gross in the beginning then it dropped to 500-600/day"

and you also wrote that you estimated you would need to make at least 1500/day/gross to cover expenses & wages.

How do you plan on making that additional $500 a day?

Is the current owner asking $100,000 just for the furniture and equipment, or is it for the whole business, including the furniture and equipment???

Can you negotiate and get him to come down on his asking price? Since his coffee shop was already failing, you're certainly not purchasing his loyal customer base along with the business. Don't fall for it.

 

[authentic]

Thank you for warm welcome. I am in Saskatchewan, Canada. City of 250000 population. Yes I agree, $100,000 is too much to be asking for 10 tables/chairs, fridge, display fridge, microwave, rented dishwasher and rented water heater/softener, bookcase, 2 espresso machines with 4heads/2 wands, toaster, coffee grinder. I am not buying his business, just the equipment and furniture. However it does sound quite high in price especially for used equipment that I am not sure whether it works properly. I wanted to start from scratch on coffee shop with my own identity and build my own clientele. I am concerned whether it would be making sufficient profit to cover the costs being that 2 previous coffee shops shit down. And when I say 2 previous coffee shops I am saying franchise and another one private with experienced owner who jhas been in the industry before. Good question "how am I going to make $1000/day?" I have been asking myself that same question and that is why I am so nervous to open it there. Yes I have a plan, I have great work ethics, I am determined, I am hands on person but is it really going to work? It's a million dollar question for every business. No guarantee to no one. I understand. That is why I am asking from you wise people to see your thoughts on this. If you were in my shoes what would you think or do? Thanks for replies! Oh yes, I was told he had the shop working into evenings then brought the hours of having it open only through the day

 

[peterjschmidt]

How much of the $100K will be financed? You'll have to add that amount on top of the $5K/mo. costs. Say the loan payment is $1K, which means you need $6K/mo. to break even.

Then, say you can build it to $1K/per day revenue again. How much of that $1K will be profit? You'll need 20% of your daily revenue to break even; $200/day profit to equal your $6K/mo. costs. And that means nothing in your pocket for all your hard work.

The scariest part of all these types of threads is when someone says they "have never been in this industry before". Viewing a coffee shop as a business w/o having the experience in coffee is scary.

 

[PinkRose]

The scariest part of all these types of threads is when someone says they "have never been in this industry before". Viewing a coffee shop as a business w/o having the experience in coffee is scary.

I have to agree here. The fact that you were considering paying the guy $100,000 for his furniture and equipment, says that you need to step back and re-think what you're planning to do.

It may be your dream to open a coffee shop, but we would hate to see you turn it into a nightmare.

Do you have any coffee or restaurant related experience at all? Do you have any business experience? Do you have a partner or advisor?
Do you have a huge savings account that you're willing to risk? Do you have to do it now?

 

[authentic]

No I will not buy his equipment and furniture at the price he is asking. No way.

 

[authentic]

No I do not have coffee or restaurant experience. But have other business experience as my husband runs construction company however it has nothing to do with coffee yes I have become a member of business entrepreneurs and have access to advisor, support and financing. Many of these businesses have nothing to do with coffee and therefore I am not sure if I am gaining all the info and advise needed for coffee shop.

 

[authentic]

Yes I appreciate that $1000/day would cover the costs. That is why I was aiming to $1500/day/gross. But is it realistic? With knowledge that he was making at begining $1000/day then dropped down to $500-600/day. Maybe the rent for the space is overpriced considering other 2 coffee shops. Yes it's good location but is it good enough to run coffee shop at rental fee set $3600+$1500 utilities. Maybe it is overpriced? I am thinking according to past records of coffee shops it should be priced at $2000-$2500/month for 1300sq ft + utilities?

 

[John P]

This is a bad deal. For numerous reasons. The first of is, "a failure has no leverage to dictate price." There is NO business to buy, and the rent is too high for that size of space. Good for small eatery/restaurant. Bad for coffee.
It's a bad location. They chose poorly.

Walk away. Find something better to spend your hard earned money on.

 

[CoffeeJunky]

This is a bad deal. For numerous reasons. The first of is, "a failure has no leverage to dictate price." There is NO business to buy, and the rent is too high for that size of space. Good for small eatery/restaurant. Bad for coffee.
It's a bad location. They chose poorly.

Walk away. Find something better to spend your hard earned money on.

I have seen many failed coffee shops. I can even give you auction site that is auctioning off the equipment from coffee shops right now.
I don't think many of these people opened their shop thinking it is going to fail but bank ended up auctioning off their assets.

I will list things you need to be successful.

1. Location
2. Employes or the owners
3. Good Coffee or good product
4. good equipment

As you can see the location is in the top of my list.
If you have great location, you will be half way there. But it seem to me, the location you are looking at is not a great location. It is not the best the money can buy, walk away....

CJ

 

[authentic]

Thank you everyone. I glad to have found this forum. Yes it felt like I was getting closer to my dream but feared that as good of this location is for the city, it may be way overpriced to run successful coffee shop. I do not expect to make millions lol but I do not want to volunteer either with additional supplement out of my pocket. Maybe I should keep plans and dreams going but walk away on this location

 

[PinkRose]

Walking away from this one may be hard for you, but if you keep looking, learning (and saving), something better will surface. When the time is right it will happen, and then you'll be ready to take the plunge.

 

[Fanalone]

Another option for starters is coffee mobile units with out the franchise bite. But before you buy a coffee unit find out your local health department requirements are for Mobile Units. flexible hours, no Rent, No electricity bills. just insurance, gasoline. The majority of sales are in the filming industry and private events. make a theme that is cool on the go. the well done coffee units will always have a good resale value.

 

[authentic]

I am not keen on mobile coffee. Just because of plan and vision of coffee shop. Reaserched other locations, same sq ft for $1700/month rental + utilities. Traffic area of 50,000 exceeding. Original location of my interest was around 30,000 in daily traffic. So it is quite clear that location may be newer and nicer around, but lacks traffic and is overpriced. Ideal location for this city would be in the core downtown are around all business offices and banking and shopping. That would guarantee traffic. But I can not seem to get a space available