The ultimate guide to running a cafe business

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James Longley

Managing Director

min read

The process of setting up your very own coffee shop or cafe can seem daunting, but this doesn’t have to be the case. Running your own cafe or coffee shop is achievable through market research and thorough planning. Continue reading our ultimate guide on setting up and running your cafe brand to find out everything you need to know.

How to write a café business plan

Firstly, you will want to create a plan for your cafe which will need to include:

How will your successful cafe fit in the cafe market

You will need to determine your offering whether this might be premium products or an independent coffee shop

Research your competitors

Is there a gap in the market that your cafe can fill? Check out your competitor’s offering and understand what your customer base wants.

Sales and Marketing Plan

Decide which products you will be offering as well as the price of these products. Think about promotions and customer incentives to attract customers to help get your business off the ground.

Opening a cafe

Now you have your strategic plan, you will need to start the process of opening a physical cafe and get your business running. We understand that opening open a coffee shop or cafe can be a long and daunting take but having a thorough business plan can make this much easier.

What products and services will your cafe offer?

As the start-up costs are part of your business plan, you need to outline what products and services you are going to offer to your customers. We recommend starting with a drinks and food menu, as part of this you may want a coffee menu to include hot and cold drinks, sandwiches, paninis, smoothies, iced teas, smoothies, cakes sweet treats and other snacks.

In addition to this, you will want to include potential food offerings within your business plan and the different profit margins of each. This may be breakfast, takeaway food or simply snacks. It is important to remember, that if you are planning to sell alcohol on your premises, you will need a license.

When starting up a food business, we recommend keeping your menu minimal and building on this over time as you may experience some teething issues. As your business is building, you can then consider adding to your menu and offerings.

Financing your café business

There are various outgoings to consider when opening a new cafe business such as staff, equipment, and the physical premises. Some cafe owners may use their savings or borrowed money to set up their coffee shop business plan but there are other avenues to pursue. It is worth checking if you are eligible for a business loan or grant to help get your business started. You may also be eligible for:

Startup loans

The Startup Loan is a government-backed scheme, where you can borrow up to £25,000 with a fixed interest rate of 6% p.a.

Business loans

Start-up loans are for new businesses but have slightly different eligibility. You should also consider how you will keep track of your savings and finances. It’s best practice to use a business bank account to separate your personal and business expenses and income, and you’ll have to if you’re starting a limited company.

Credit and Bank Loans

Bank loans are a reliable financial option characterized by lower interest rates compared to alternative loans. However, securing a bank loan can be challenging. Most banks prefer to grant loans to local businesses, with a proven track record of profitability and financial success, as this instils confidence in their ability to repay.

To improve your chances of obtaining a bank loan, it’s imperative to present a comprehensive and well-thought-out strategic plan. This plan demonstrates your commitment to the venture and showcases your meticulous planning.

Many banks extend small business owners with loans, often with the potential to borrow up to £25,000. Additionally, some banks offer valuable support in strategizing for your business’s success and even provide mentoring programs. The presence of fixed interest rates in bank loans is advantageous, as it ensures predictability in your repayment obligations.

When applying for a loan from a bank, expect them to inquire about:

You and Your Business: A thorough understanding of your personal and business background.
Investment Plan: Details about your planned investment and how it aligns with their contribution.
Purpose and Financing: The intended use of the borrowed funds and your financial options.
Loan Amount: The specific sum you seek to borrow.
Loan Repayment Period: The timeline over which you intend to repay the loan.
Creditworthiness: An assessment of your credit score.

Additionally, banks will likely request supporting documentation, including:

Security and Assets: Information on any collateral or assets you can offer as security in case of repayment difficulties, such as guarantees, property, or other valuable assets.
Cash Flow Forecast: A projection of your business’s financial performance, demonstrating a thorough understanding of your business model, revenue generation, and the timing of cash inflows and outflows.

How to boost business at your cafe

Even well-established businesses have room for improvement, as there are always opportunities to enhance sales, generate more revenue, and foster business growth. For numerous coffee shops and cafes, refining fundamental strategies, like upselling and waste reduction, can lead to substantial improvements in business success.

Whether you’re an independent coffee shop aiming to attract more customers during slower periods or considering expanding your entire cafe operation, it’s highly likely that reviewing the following suggestions and integrating them into your daily operations will contribute to the enhancement of your cafe’s success.

How to market your cafe

A critical step in launching a business involves formulating a strategy for promoting and gaining visibility.

Online advertising serves as a powerful channel for reaching a broad target audience that might otherwise remain unaware of your enterprise. Consider establishing a presence on social media platforms such as Facebook, Twitter, and Instagram to showcase your café.

Facebook allows patrons to leave reviews, making it the most widely utilized social media platform. Use Twitter to attract attention using relevant hashtags, while Instagram provides an ideal platform for sharing enticing images of your delectable food and beverages. Social media also offers valuable insights into current trends and the operations of similar businesses.

Additionally, it’s crucial to create a website to promote your latest offerings, display your menu, and provide location details to takeaway customers.

Offline advertising is equally vital in attracting new customers. Engage with the local community by distributing flyers or offering complimentary drinks. Think about initiating unique introductory offers or event themes to attract customers.

Here are some promotional ideas:

Offer a complimentary coffee to the first ten customers through your doors.
Offer a free coffee to people who like and share your Facebook page.
Extend a 20% discount on the bill to customers wearing fancy dress attire. (This can be displayed on your social media profiles to communicaYou can display this on your social media platforms to demonstrate that your café is lively and well-liked.te that your café is lively and well-liked.)

While crafting these offers, it’s imperative to ensure they don’t lead to financial losses. Include them in your plan to guarantee that your costs are adequately covered.

The advantages of starting a Café

Embarking on a café business venture offers a number of advantages, making it a compelling choice for many aspiring entrepreneurs. Here are some of these compelling reasons:

Be Your Boss: Running a café provides the opportunity to take charge and be the master of your enterprise.
Café Popularity: The current widespread popularity of cafés ensures a steady stream of potential customers seeking great coffee and ambience.
Community Engagement: Cafés foster a sense of community, enabling you to connect and interact with a diverse range of individuals.
Passion Pursuit: Pursue your passion by creating a business centred around something you love – whether it’s coffee, food, or creating a welcoming atmosphere.
Personal and Professional Growth: Operating a café offers numerous chances for personal and professional development, from honing culinary skills to managing a thriving business.
Artistic Freedom: Enjoy the creative freedom to craft and curate your unique business concept and menu, allowing your vision to come to life.

Given the recent surge in café popularity, the present moment presents an opportune time to embark on your café business journey.

Government support with business energy bills

The disadvantages of starting a Café

Starting a new business is akin to embarking on an uncertain journey, and determining its viability can be a daunting endeavour. It’s crucial to have a clear understanding of the inherent risks associated with launching your venture and not leap into it recklessly.

Establishing a business demands relentless effort. Initially, profitability may prove elusive, requiring you to invest countless early mornings and late nights without immediate rewards. Moreover, there are several additional factors to contemplate before taking the plunge:

Complete Responsibility: When you start your own business, you assume full responsibility for all aspects, including hiring, firing, and financial management.
Staff Turnover: Depending on the industry, you may encounter a potentially high turnover of employees.
Financial Risks: If the business falters, you stand to incur financial losses.
Competition: Expect to face formidable competition from larger chains like Starbucks and Costa.
Customer Focus: Remember that customer service is just as crucial as the products or services you offer, so being adept at interpersonal interactions is essential.

How to reduce your business energy bills

How Utility Bidder can help your cafe

We promise to deliver award-winning service and top-notch expertise throughout every step of the journey. Our team of energy experts are ready to assist you, tailoring our services to your cafe needs. We have a proven track record of collaborating with businesses of all sizes and across diverse sectors in the UK, effectively reducing their utility expenses. Get in touch with our energy experts today to discuss your business energy requirements.