Taking over a coffee shop in 1 month

[Jannisarie]

Hi All,

There is some really great stuff on this forum but it has made me realize how ill prepared I am and the huge task I have ahead.

We are moving from Sydney, Australia where I am from to Cork, Ireland where my girlfriend is from.

My girlfriends dad has offered to buy us a coffee shop which is in a building that he owns.
I have no experience other than drinking more expresso than anybody should and really enjoying it aswell as being a good at home cook.

My girlfriend worked in a coffee shop for a year and really enjoyed and I think her parents are trying to give us a reason not to move back to Australia as we did last time we moved to Ireland.

The coffee shop is located in a small town where my girlfriend is from. There are 5000 people living there but there are 4 large supermarkets which draws people from the surrounding towns. From the research I have done the catchment size is around 15000-20000 people.

It is currently run by a chef and it is open 8 hours a day 6 days per week. According to the accountant we had look over the books the takings are 10000 euro per week serving typical cafe meals with baked goods and tea and coffee.

I will be transferring back with my current job so the day to day running of the shop will be in my girlfriends hands with me working on prep (After work) and working weekends.

I make over 100k per year at the moment working in I.T and am successful in my job but with the recent layoffs at my work in a big multi national I have become quite unhappy with big corporations and the way people are treated and discarded. It is not this company but business in general and just the fact that you are not regarded as a person in many ways just a number on a spreadsheet that someone can cross off without thinking too much about it. (Going a little off track but it all goes to background)

My girlfriend has never had a proper career and has one of those degrees that don't lead onto any job.

We are in our mid 20's and have never run a business or managed staff and I am starting to freak out a little. I am the planner and the do er in our relationship and most of this is on me although I will have another job while organizing this place. We have 1 week from when we get there to starting. The lady who runs the place right now will be staying on for 2 weeks to show my girlfriend the ropes.

In this time I will have to hire a chef to replace the owner. Having never hired anybody before this is daunting enough in itself.

We are planning to change the menu a little to do more baking of our own goods. I have a friend who managed a chain cafe/bakery in the U.S and has all of the recipe's and know how to start us off with these items which I will prepare at night and freeze for baking in the mornings.

Given that we have no rent and no start up costs with an asset I can't see how we can possibly lose but after reading alot of the great threads on this site I am getting worried.

The plan would be for me to quit my job once we are settled if the cash flow allows.

Has anybody got any tips of the basics you should know with running a cafe?

Can you make a success out of something just handed to you like this?

My girlfriend and I have come from different worlds. I am not used to anything given to me and I am feeling extra pressure (From myself) to become an expert over night on something I am only really imagining and reading about.

I feel a little like a fraud here after reading all of the in depth research people have done and all the hard work that has gone into it but any help would be appreciated.

 

[caffe biscotto]

It will be what YOU will make of it.
You're young and you'll learn as you go along, just keep in touch with us here, if you can.
There are some good connections in the industry to be had in this forum.
See you around.
Ed

 

[ElPugDiablo]

I don't know if 10000 euro a week in Ireland is consider good business, but in the US 10000 dollar a week is a pretty good coffee shop. Assuming 10000 euro a week in Ireland is pretty good business, then I won't change any menu item immediately. Your goal should be an easy and smooth transition without customers noticing too many changes, especially ownership change. You don’t want to end up losing business because your customers don’t like the change you made. You should get yourself familiar with the situation; once you have retain the business volume, then you can think about baking on site - you just have to make sure your friends US recipes are suited for Irish taste. You also have to be pretty sure your bake on site items are much much better than the current offering otherwise you may not be able to justify added work load for yourself and the early morning person who has to bake it.

By the way, I don't mean don't change anything. If the WC is dilapidated, you should change that.

 

[Jannisarie]

Thanks very much for the responses.
I think you are right about not changing the menu until we can keep the customer we have.
The decore has not been updated for the last 8 years since the current owner took over and is old outdated.

As far as I can gather from people I know (Having not seen the place in 3 years and not knowing I was going to be running it) it is the 2nd choice for a cafe in the town. The other cafe is considered the nice cafe and where you would go to be seen a little more.

From what I can tell it is partly to do with the design/furniture and color scheme which is very strange.

I think this is something we can change early on. There is no cookie/muffin/cup cake franchise type places in Ireland. This is a country that came into money and started spending on the not required on in the last 20 years. They are big in Australia which is why I thought of the baking on premises with tested recipe's tailored to the Irish tastes.

They do accept these things very well as they all travel to the U.S. As an example a bagel place started opened about 4 years ago and within 1 year there were 3 on the same street all doing good business.

 

[caffe biscotto]

Good catch Pug!

I ran a conversion of Euros to USD and the results...

10,000 Euro is equal to $13,496 per week.
Annual sales = $700K plus (USD).

So yeah, don't fix it if it ain't broken, is good advice here.

I got caught up in the "feeling like a fraud" part.

 

[Jannisarie]

The fraud part comes in because I read all the posts on here that are full of passion where I have fallen into this one without any planning.

Thanks for the advice anyways. I will get back to you once I get into the place.

 

[ElPugDiablo]

Question, 500000 euro in business is what after Irish taxation? Also can you give us some sample menu pricing? Also, why is the owner getting out? Lastly, why do people prefer the other shop? Is it more convenient location? Is it atmosphere? If so, Upscale? Trendy? Funky? Minimalist? Maybe it is clean bathroom? Better service? Lower price? Superior coffee, tea and baked goods? charming owner? Or sexy barista?

 

[wmark]

1. Of the 100,000 k you make, how much do you keep ?

2. I don't know what taxation is like there, but what will be your level of income ?
Example, as a business, is your automobile, gas etc. now tax deductable ?
You were paying for food before, now your cafe will be providing you meals ?

3. Is your gross revenue 1,000 euro per week or is it net revenue ?

4. Food margins tend to be lower than coffee and tea.
What is the breakdown of sales ?
This may help you decide if you need a full time chef or not.
Baked goods here tend to have about 100% margin, coffee much more than that by the cup.

5. What are your other costs ?
Hydro ? Heat ? Property/Business taxes ? Payroll taxes ? Who will do the bookkeeping ?

6. Will one of you be in the establishment all the time ?
Employees are the single largest source of theft in most businesses.

 

[caffe biscotto]

Gee, this is becoming overwhelming...
I hope we don't scare the guy away.

 

[caffe biscotto]

3. Is your gross revenue 1,000 euro per week or is it net revenue ?

Actually, the figure stated by the OP was:
"...takings are 10000 euro per week...".
That's four zeros.
Must be a hoppin' joint.

 

[Jannisarie]

Where to start lol.

1. Of the 100,000 k you make, how much do you keep ?
We will have staff/food/gas and elec and tax but I am not sure what the tax rate is. I won't arrive there until the 26th but the books have been looks at by my girlfriends dads accountant and average of 10k per week for the last financial year. They do say that there was a new medical center being built over the road last year though. There are only 2 maybe 3 cafe's in the town

2. I don't know what taxation is like there, but what will be your level of income ?
Example, as a business, is your automobile, gas etc. now tax deductable ?
You were paying for food before, now your cafe will be providing you meals ? My girlfriends dad has just retired after running businesses in Ireland for the last 40 years. We had a conversation about the tax and he says its at the rate of income tax unless you create a corp when its 30%.

They provide meals at the moment. The current owner is a chef. We will have the added expense of a chef so we can transition smoothly.

3. Is your gross revenue 1,000 euro per week or is it net revenue ?
Takings are 10k per week for last financial year.

4. Food margins tend to be lower than coffee and tea.
What is the breakdown of sales ?
This may help you decide if you need a full time chef or not.
Baked goods here tend to have about 100% margin, coffee much more than that by the cup.
I will have more of an idea once I get there and can spend more time in the store.

5. What are your other costs ?
Hydro ? Heat ? Property/Business taxes ? Payroll taxes ? Who will do the bookkeeping ?
I am pretty handy with excel so I am thinking I will try with the books to start with and if it doesn't work use the same accountant as my girlfriends family. We won't have to pay rent though which the current tenant is paying so I guess we make some back there.

6. Will one of you be in the establishment all the time ?
Employees are the single largest source of theft in most businesses.
My girlfriend will be there full time. I will be working full time and in on most weekends.

3. Is your gross revenue 1,000 euro per week or is it net revenue ?

Actually, the figure stated by the OP was:
"...takings are 10000 euro per week...".
That's four zeros.
Must be a hoppin' joint.

I think its more that Ireland is a rip off for consumers. Especially in places where there is little competition. Also they have a few things there. It's a small town but it had 4 supermarkets so it draws people in from all over. Also they have a farmers market weekly directly across the street and a festival that brings in 30k people to the town over a weekend.

It's not a big town but just happens to have these supermarkets there for some reason which brings in the people daily. It is 2 doors down from one of the supermarkets.

I will provide you more info once I get there. I will have a week between starting work and taking over this place so I will get to have a good look at the books and break it down to see where the money is coming from.

The owner now bakes some sort of bread that you have to get up early to get also otherwise its sold out. I don't know alot else about it though.

 

[wmark]

Yeah but you still cannot make a dollar to dollar comparison.

i.e. in Australia, a beer costs $5.00 but in Ireland, a beer costs 5 euro. If one were to go from Ireland to Australia, a beer would be cheap but if one were to go from Australia to Ireland, a beer costs a friggin fortune.

 

[caffe biscotto]

Yeah but you still cannot make a dollar to dollar comparison.

True, it would be relative to the economy. Who knows, to rent an apartment there could cost 10,000 euros per week. I'm exaggerating of course, to make a point.

 

[wmark]

I talk to the owner of a bakery that makes excellent bread. Yeah, you have to get up pretty early. They make a fixed amount of dough for bread. What is left over goes to making pizza.....an excellent pizza.

From their perspective, a loaf of bread brings $2.75. If you flatten it out, put a little sauce , cheese and pepperoni on it, you can charge $13.00


If you get into the baking, you probably have to add 4 - 5 hours onto your 8 hour schedule.

 

[thewilliams1]

My take:

Generally speaking.. advanced countries monetary systems may be set up with different exchange rates.. ie: 1 Sterling (uk) equals aprox 2 usd .. but I buy a lot of my vinyl (I'm a DJ) from shops in the UK.. I may spend 4.75 Sterling wich comes out close to 10 USD.. but if I bought the same record in america, it'd cost 10 usd.

1 Aus dollar equals about .70 cents USD.. a beer would go for 5 in AU and 3.50 in the US... even though the exchange rates are different, they all seem to carry pretty close to the same weight... pound for pound.