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

Analysing The Business Summary

This is a preview to the chapter Analysing The Business Summary from the book The Complete Guide to Buying a Cafe by Craig Reid .
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When you inquire about cafés that you are interested in, you will be asked by the broker or seller to complete a non- disclosure agreement. This is a legal document that basically is designed to make sure that you don’t go and tell others about the details of the business (if you did they could take legal action against you). A non-disclosure agreement (or NDA as it’s commonly known) is standard practice and isn’t anything you need to overly concern yourself with. Just sign the forms and send them back. No NDA equals no information, so it’s not as if you have any choice.

After you have sent the NDA back, the broker will send you what they call a business summary. This is a 1 or 2 page document that gives you a high level overview of the café. It will usually contain details such as:

• Description of the café
• Location
• Hours of operation
• Reason for sale
• Equipment
• Staff
• Financials.
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What else is in the chapter 'Analysing The Business Summary'?

An Example of a Business Summary

Café Mocha, 62 Pleasant Street, Pleasantville (nearest cross-street Nice Street) ...

Reliability of the Business Summary

It is critically important for you to understand that the business summary is not the truth. It may be a version of the truth, but the details within the business ...


When you ask the broker to see the accounts, he will point you towards the Business Summary. It is better that you ask to see the “certified accounts”, since these ...

How to Read the Financials

The following sections will help you to look at the figures, understand what they mean and to find out how the business is really performing. ...

The Percentage Guide

The percentage guide is a methodology that café owners use to manage the costs of their business. It states that each cost should fall into a category which makes up ...


Turnover is simply the $ amount of sales the business makes in a year. Don’t be blinded by impressive turnover figures (remember “turnover is vanity”!). Also ensure that you ...

The Cash Dilemma

One of the biggest problems you may encounter with buying a café is undeclared turnover, or in other words “cash”. ...

Gross Profit

Gross profit is turnover minus the cost of goods. It is useful to know the Gross Profit Margin as a guide to business performance. Gross Margin = Sales (100%) ...

Cost of Goods

Cost of goods is the materials cost required to produce your output. Essentially, cost of goods is your food cost, but it will also include all items required to produce ...

Food Cost

Food cost, as stated before, should be approximately 25-35% of sales, but this will vary according to the type of café. For example, if you are selling lots of seafood ...

Labour / Staff

Labour is the cost of your staff. Other staff expenses can sometimes be hidden under other categories, such as “Contractors” or “Consultants”. Labour also may or may not include the ...

Roster vs Staff Costs

A key way to find out about staffing is to obtain a weekly roster. This roster should contain all staff working over a seven day period and should be ...

Analysing the Roster

To analyse the roster the first thing you should do is to look at the wage costs in the financials and divide this by the number of weeks the café ...

Fixed & Variable Costs

Fixed costs are costs to the business that tend to remain the same or “fixed” over a period of time. For example, the most common fixed cost is rent. Rent ...


Rent is a critical (fixed) cost and should represent 10-15% of turnover. Rent is subject to GST so be careful to check whether the rent stated in the business summary ...


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