The Complete Guide to Buying a Cafe
Practical Advice to Get it Right

Analysing The Business Summary - An Example

This is a preview to the chapter Analysing The Business Summary - An Example from the book The Complete Guide to Buying a Cafe by Craig Reid .
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Café name: Café Mocha


Consider the name. Unless the name is truly awful, try not to change it. If you do decide to change it remember that you will have to spend money changing signage, stationery, websites, etc. You will also lose any equity in the name, e.g. if the café has had positive reviews and good PR in the past. If you do decide to change it, try to come up with something that encapsulates the entire business, not something bland and uninspiring like “Fred’s Café”.

Location: Shop 3, 62 Main Street, Gardenville, NSW. (Nearest X St, Rose Street)


Go to the location, look at the amount of passing trade and the position. Is it busy? Is it pleasant? Attractive? Is it a main road? Can customers park easily?

Classification: Café


Double check that the business has consent to operate as a café. Contact the local council to make sure everything is in place, or ask your solicitor to do this for you.
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What else is in the chapter 'Analysing The Business Summary - An Example'?

Parking: 1-2 parking spaces

Parking is important. Here you should clarify what 1-2 spaces means! Is it one space or two? In this instance it turned out to be one large car parking space ...

Established: January 1999

The establishment date is good to know – the longer the business has been established, the less chance there is of it failing. It also gives you an exact understanding ...

Trial: Negotiable

The trial period is a set period, e.g. 1 week that gives you an opportunity to view the business on a daily basis and to confirm the turnover as specified ...

Equipment: All in good working order.

Equipment generally will cover kitchen equipment such as ovens, deep fat fryers, blenders, pots and pans, etc. Ensure that you ask for a list of all the equipment and confirm ...

Equipment Checklist

When you visit the café, use the following checklist to note what equipment is present and what condition it is in. Check your notes against the equipment details in the ...

Premises: Fronts onto Main Street.

Again, check the aspect of the street, parking, etc. ...

Delivery Access: Front

Access is important as this will designate where your deliveries come in. In this case access is from the front, which is not ideal; therefore suppliers will have to come ...

Size: Approx 80 sqm

There isn’t much you can do with the size, but you should bear the size in mind if you are thinking about altering the layout of the café in any ...

Seating Capacity: 22 Indoor, 18 Outdoor

The seating capacity will ultimately limit your capacity to make money so is a very important number. In this case the café has 40 seats – small, but not tiny. ...

Grease Trap: Yes

A grease trap is basically a large pit in the ground where all the cooking fat and waste from your grills is stored. Having a grease trap makes it significantly ...

Reason for Sale: Other business interests.

You are often unlikely to get an honest answer as to why someone is selling a café but it does happen. After all, people do retire and people do build ...

Nature of Business: Typical cafe selling salads, sandwiches, pastas, risottos and all day breakfast.

This information won’t provide any particularly great insights into the business. You will be able to confirm the accuracy of this information simply by visiting the café and looking at ...

Nature of surrounding area: : Typical retail. Opposite street - Chinese takeaway, locksmith, TAB, florist, bakery, Gardenville Hotel adjacent.

The surrounding businesses are also vitally important. Local businesses have customers that might also frequent your café. Local businesses represent a great potential market for loyal local customers, i.e. staff ...

Owners Role: Owner is hands on, ordering stock, serving customers, making coffee.

Although you may have your own ideas about the type of work you would like to do in the café, a description of the owner’s role may help to identify ...

Business Potential: Extend hours e.g. open Mondays and open as a restaurant in the evenings. Mediterranean style at present, but any style cuisine could be offered.

While some of this may be true, remember this is a sales tactic designed to make you excited about the business. In this example the actual café was located in ...

Term Of Lease: 5 x 5

The term of this lease is 5 years with an option to extend for another 5 years. This means that you have a potential timeframe of 10 years to own ...

Commencement Date: On negotiation

Much like the settlement date when buying a house, the date at which you take over (commencement) can be negotiated. ...

Asking Price: $120,000.00


Usually the broker will advise the seller on what the asking price should be. The simple rule is, the higher the profit, the higher the price. It’s a very inexact ...

Stock: $2,000

Stock includes everything that comprises the cost of goods - food, drinks, napkins, etc. It does not include fixtures and fittings or equipment. The stock estimate is just that – ...

Outgoings: $88.00

Rent $924.00 ...

Utilities

Utilities include Gas, Electricity, water, etc. Unlike renting a residential property, utilities such as water will not be included in your rent. If you are renting a business within a ...

Strata

Strata is basically a means of managing building and expenses associated with the building that a number of premises are a part of. Basically the members of the strata ...

An Analysis of the Financials

In this example we have used the “true” historical figures rather than figures that have been altered to show “projections” or assumptions. ...

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