Buying a Cafe a quick Introductory Video
YOUR TEXT
Health Issues to look for when you Buy a cafe
This subject is very close to being number one when you buy a cafe.
If your getting close to deciding this is the business I want, have another look around the kitchen and and study the layout and how its construction makes for easy cleaning.
When you buy a cafe its important that the kitchen can be steam cleaned now and again so are the wall tiles and stainless, are there floor drains to make for easy cleaning?
For other hints and how-to’s concerning the restaurant trade go to Dick Dunlop.com
The 3 Main Rules When Buying a Café, Location, Location, Location
The 3 Main Rules When Buying a Café, Location, Location, Location
location
Good, your starting to get the idea now how important those three words are, tell me, have you ever seen a major franchise on a backstreet?
Of course not, and neither should you,The location your looking for must be in a high traffic area and have plenty of parking close by and be visible.
It takes a lot of work initially to find a great location for a food business and the type of business also has to be thought through for that particular location.
In the past I even bought a menswear shop because of the location, that was in liquidation (bankrupt, I had a great supply of neckties for years), the reason it had gone bankrupt was the owner had been making money for a long time and his wife left him and he turned to drugs, at the time I had a very friendly bank manager who called me up and explained it all.
Of course the bank manager wanted out of that situation as soon as possible and I got the lease for a song.
This menswear shop had the best location in town, it was on a corner of a major intersection with a parking lot next door.
I only owned that place for 9 months and a couple came in and enquired if it was for sale, well in my mind, everything is for sale at the right price and I sold it for a great price, because it was turning over a lot of money.
When you have that great location you can capitalise on that asset with signage, people can be a little blind with signs, so you have to give them a reason to come to your place.
If meat pies are normally $1.60 put a big sandwich board out Meat Pies 99c.
And change that sign every week, even if that item is cost, (The supermarket people call it a loss leader)you will still make it up with other items and maybe you just got another customer, so location is everything.
“You only get what you pay for in this life”
How true, so don’t even think about anything that’s for sale off the main thoroughfare ok, its not worth considering even briefly.
Don’t forget, you are probably borrowing a lot of money to get this business going, so even if the rent is high its up to you as a business person to get those customers in the door and get that rent paid. Location will do that for you.
Running a restaurant.
Restaurant in Kiwilodge
Running a restaurant is hard work.
But it can be made easier, I am currently running a running a restaurant in my hotel in the philippines and I actively spend about one hour a day IN my business.
But I would spend about 4 hours a day working ON my business, there is a big difference. I have in the past, worked like a dog and even though I made a lot of money and enjoyed every minute I would do it differently the next time.
And I will admit there were times when I would sit down and have a cup of coffee and ask myself where the customers were. I should have been spending more time ON my business, not sitting inside working and running a restaurant..
Hindsight is a wonderful thing and I will tell you a true story, which opened my eyes on how it should be done.
Years ago I had a friend who inherited his fathers engineering business, now John was an educated guy who had been travelling a lot overseas when his dad died, and when he returned home his world as he knew it fell apart
He is not an engineer but during his travels he had managed a few businesses so rather than sell his dad’s pride and joy, he decided to settle down and operate it.
Now this is not about running a restaurant but the lesson that I learned.
John bought the yard next door and expanded his business and built a steel luxury cruiser and when it went into the water he called me often to go out fishing, my answer was always the same “sorry too busy”.
A few months later I was invited again and I decided to go. He told me “I leave on friday at 1pm or 2pm and we will be back monday morning sometime” I was astounded, how can a guy who employs 50 people have all this time off?
When out on his beautiful boat I asked “how do you get to have all this time off ?”
His reply was, “It’s easy I just schedule everything around my days off and when I’m out here I can think about strategy and planning and organise things better.”
When I stepped off that boat and went back to running a restaurant I had a spring in my step and a new lease on life.
From that moment on I worked ON my business and not IN my business. Nothing to do with running a restaurant but everything to do with Marketing my restaurant.
I went from strength to strength, and involved myself totally in marketing every way I could and became well known for helping the community on various projects, offered my restaurant for meeting of sports groups etc etc.
Running a restaurant is not about slaving away in the kitchen it’s about managing sensibly and marketing as much as you can.
Buying a cafe– 7 main points to consider
buying a cafe
When buying a cafe there are many traps the first comer to the cafe business should understand. I have outlined the top 7 points to check on and consider, when buying a cafe.
Its is a great business to be in and at the moment some great bargains are to be had out there, as not many people are buying, but there are many good cafes and restaurants to be had and don’t let the current economic situation deter you from your goals.
I have outlined 10 points you must look at very carefully when buying a cafe. You must do your homework and be 100% sure on all these points.
- Location :
You never see a franchise operation in a backstreet do you? And so don’t even consider buying in a backstreet, the rent will of course be cheaper but remember the old adage ‘”you only get what you pay for”2. The lease :
Make sure you read the lease carefully, don’t just leave it up to your lawyer to do this, you must make an effort here and anything you don’t understand, make a note and when consulting your lawyer bring these points up.
- A lease should be a minimum of 12 years long, 15 would be preferred, and then you have something to sell to the next person buying a cafe.
So a 5 x 5 x 5 lease is perfect, this means you have 5 years to run before you can either renew for 5 years or get out, but you can effectively stay for fifteen years.
Some leases have the lessee (you) paying for all the external repairs and maintenance to a building, look these are hard times now so negotiate all points in a lease.
- Finance :
When buying a cafe make sure you have at least 40% to 50% of the money needed as the repayments might cripple you. The best avenue for finance is vendor finance, then bank finance (collateral required here), friends and family, I would advise not doing the friends and family thing if you can avoid it, but if you insist then make sure you have legal documents in place to cover both parties as you don’t want any nasty comeback on this.
- Checking the Books :
I was told in my early years when buying a cafe, to make sure you get a business mentor or a respected businessman in your area to have a look at the books before you go to your accountant. Accountants are bean counters and do taxes and stuff, a business mentor or a respected businessman knows what’s happening in the business environment in that town or city and is far more qualified to judge whether your making a good decision here.
- Opposition:
Opposition is good and keeps you on your toes, but make sure there are not too many recently opened cafes catering to the same niche in the same area, as this may be why the vendor is selling, do your homework and go visit all the opposition and the one you are considering buying. Then you can see the real story, are they all busy, are they all quiet, how does the cafe you are buying stack up against the others.
- Work Ethic :
The food game is a tough one, it’s hard work so do not bother here if your not a hard worker, when you own a cafe, it’s go, go, go from the start of the day to the end.
- Passion :
When buying a cafe if there is no passion for food don’t bother ok, I have seen couples in the past buying because “there’s always money in food” and they went bankrupt, simply because there hearts were not in it. You must really live and breathe food and recipes and just love it to death.
Happy purchasing….
For more information and free articles mostly concerned with two main themes, buying a cafe and Marketing your business.
On the marketing side this information is useful for any small business and buying a cafe tips are also relevant to the purchase of any small business.
Restaurant management. How systems evolved.
Restaurant Management
Restaurant management has changed a lot over the last 30 years with a concentration on systems.
Remember ISO management standards, they were all the rage in the 90’s every company was scrabbling to get on the bandwagon. Recently you don’t hear or see as much as you have in the past.
Basically it takes a company through a course which implements 8 quality management principles, which aim to guide senior management toward improved performance.
Quality products and quality management is the main goal.
- Customer Focus
- Leadership
- Involvement of people
- Process approach
- System approach to management
- Continual improvement
- Factual approach to decision making
- The next step
The term given to modern restaurants now is a ‘system based’ style and can be adapted to be used for any small businesses and should not be any different, today I’m concentrating on restaurant management.
The following has been copied from Wikipedia and rather than rewrite I have copied and pasted to keep the links and I could not have written it this good anyway.
“It all started back In 1937, Patrick McDonald opened “The Airdrome” restaurant on Huntington Drive (Route 66) near the Monrovia Airport in Monrovia, California. Hamburgers were ten cents, and all-you-can-drink orange juice was five cents. In 1940, his two sons, Maurice and Richard (“Mac” and “Dick”), moved the entire building 40 miles (64 km) east, to West 14th and 1398 North E Streets in San Bernardino, California. The restaurant was renamed “McDonald’s.”
I’ll interrupt here to to point out that restaurant management systems actually started in 1923
It is often erroneously thought that McDordization in the production and service of fast food, but it didn’t. The company did, however, contribute greatly to that standardization. In 1948, Mac and Dick McDonald introduced the “Speedee Service System“, which helped to further the principles of the modern fast-food restaurant. However, they were preceded in this by two decades by William Ingram and Walter Anderson, founders of the White Castle hamburger chain. In addition to being the first to standardize the production of hamburgers at their restaurants, Ingram’s and Anderson’s White Castle System created the first fast food supply chain to provide meat, buns, paper goods, and other supplies to their restaurants, pioneered the concept of the multistate hamburger restaurant chain, standardized the look and construction of the restaurants themselves, and even developed a construction division that manufactured and built the chain’s prefabricated restaurant buildings. The McDonalds’ Speedee Service System and, much later, Ray Kroc’s McDonald’s outlets and Hamburger University all built on principles, systems and practices that White Castle had already established between 1923 and 1932.
After the McDonald brothers realized that most of their profits came from selling hamburgers, they closed down their successful carhop drive-in to establish a streamlined system with a simple menu of just hamburgers, cheeseburgers, french fries, shakes, soft drinks, and apple pie. The carhops were eliminated to make McDonald’s a self-serve operation. Mac and Dick McDonald had taken great care in setting up their kitchen like an assembly line, to ensure maximum efficiency with their restaurant management.
In 1953, the McDonald brothers began to franchise their successful restaurant, starting in Phoenix, Arizona and Downey, California.
In 1954, Ray Kroc, a seller of Multimixer milkshake machines, learned that the McDonald brothers were using eight of his high-tech Multimixers in their San Bernardino restaurant. His curiosity was piqued, and he went to San Bernardino to take a look at the McDonalds’ restaurant.
Believing that the McDonalds’ formula was a ticket to success, Kroc suggested that they franchise their restaurants throughout the country. When they hesitated to take on this additional burden, Kroc volunteered to do it for them. He returned to his home outside of Chicago with rights to set up McDonald’s restaurants throughout the country, except in a handful of territories in California and Arizona already licensed by the McDonald brothers. Kroc’s first McDonald’s restaurant opened in Des Plaines, Illinois, near Chicago, on April 15, 1955, the same day that Kroc incorporated his company as McDonald’s Systems, Inc. (which he would later rename McDonald’s Corporation).”
Ok so now we see where the first system based restaurant management style came from, and you cannot deny it’s success.
I am presently putting together a restaurant management toolbox or kit which you will be able to implement in your own restaurant or café and believe when you have new staff training becomes a breeze.
Getting a Restaurant for free . | buying a restaurant
Buying a restaurant for free is a matter of looking and keeping your ear to the ground.
There are Chartered clubs, Sporting Clubs, Drinking Establishments who want managers or cooks to run their kitchen as to them it’s a hassle, and there can be a lot of leakage (theft) here when its run by the club as everyone wants free food.
Buying a restaurant
Go visit ALL the clubs in your area and discuss with them about running their kitchen.
Some clubs take a percentage of the till take and others charge a monthly rent, both ways, its ok, and a great way to start in the business. You can walk in and walk out with a months notice from either party.
Technically your not buying a restaurant you are obtaining the right to run a restaurant, so do your best here as it all goes toward branding yourself as great operator
You can build these businesses and get great experience and start making money to buy your own show, generally all chattels are provided and all you do is come in with the food and sell it.
The Pros and Cons are,
Pros,
- Walk in with no money down, maybe if it’s a big club there maybe “key money”.
- Although buying a restaurant is your final ambition, this step can start your branding process.
- No expenditure for equipment,It’s all set up.
- Captive customers onsite, no marketing.
- Suppliers in place.
Cons
- There can be a lot of politics, as you are dealing with a membership system and they are effectively all owners and think they all know about the food business. Buying a restaurant gets you out of this, just go along with the flow, take the good with the bad.
- You are at the mercy of club rules regulations and opening hours. Again buying a restaurant of your own gives you flexibility.
- You cannot serve the general public and are dependant on whether the club is popular or not.
Leasing.
This is another great way to get into a café or buying a restaurant for free.
My wife had the opportunity to lease a food bar for a year, and she took it up, the guy wanted a rest and did not want to sell the business as it was a good one, also he wanted to take a year off and go travel with his family. We gave him a resume of our experience and he obtained landlord approval.
The deal was easy, she signed a simple agreement to pay the power, and water, gas, and takeover the rent to the landlord with a stock take the day before takeover. The agreement was for a year and away she went, a year later to the date she handed it back over, in the meantime she made some very good money with very little capital involved. With the proceeds of this, she ended up buying a restaurant of her own without borrowing.
In saying this, we were experienced and so you may think, easy for you what about me? I agree with what you say, but if you are passionate enough for what you want to do, just do it – with Integrity ok, buying a restaurant has many options and a lot of owners have worked out that it’s not for them, maybe they were buying a restaurant for the wrong reasons, it may have been a good idea at the time.
Put an advertisement in the paper saying “Want to Lease your Restaurant?” or go around the city with flyers suggesting they take a year off and lease their restaurant to you.
Do the same with a “lease to buying a restaurant” offer with all those restaurants that may be for sale.
So to Summarise,
- Look at all the Cubs in your area, this gets you closer to buying your restaurant as it adds to your resume and branding.
- Study the pros and cons of operating within the confines of a Club.
- Go visit all the restaurants in the area where you want to be buying a restaurant and offer them a lease to buy deal.
- Remember, lease to ‘buying a restaurant’ can usually be tailored to meet everyone’s position.
Buying a Restaurant is not easy when you have limited funds, but not impossible, Go fulfill your dream.
To buy my book on the subject, please click How to buy a Cafe
Working on your business
Working ON your Business.
Well hi to all , it’s another lovely day here in the Philippines and I was doing some reading in an article about small business marketing and I was devastated to see that this person was writing about working ON there business rather than IN their business. My immediate thought was how can he have taken my system (It’s in my book) which really spells out how to be working on your business and repackaged it. I calmed down a bit later and accepted the fact that, I should be flattered that someone else in the marketing world is thinking like I do. I must be on the right track. Woohoo.
Working on your business
So here are some thoughts on Working ON your Business.
It all started with me when I had a gas station and my wife owned a Food Bar years ago when my children were around 10 to 14 I guess and I had a friend who owned a engineering business which had around 30 – 40 employees.
Let’s call him Ted, he had built a beautiful steel Motorsailer and had asked me to go fishing with him about three times. My answer was always the same “Sorry Ted I don’t have time “ then the penny dropped, then I woke up, how can he find the time to go fishing every weekend and I can’t?
So the next night I called him and asked if the fishing offer was still on?, “of course he replied, plenty of room”, He told me he normally leaves at 1pm on a Friday and returns sometime Monday morning. I was flabbergasted, wow, how can this guy with a fairly large one man business take so much time off every week.
I met him at the marina and we had a great weekend away fishing and I came back to work totally refreshed with a spring in my step. I had asked the question that had been in my head the whole time about how could he have so much time off to which he replied “It gives me time to be working on my business in a different light.”
So ever since that weekend I have spent around 50% of my time working ON my business and not IN my business.
The results were amazing, in my next blog, I will discuss how you can set up a simple goal setting chart which will be all about achievement and then your perception on how to run your business will be totally different. Also I will be covering small business marketing and working on your business and getting people in the door, and don’t forget when you get them coming to your business once we have to keep them coming back ok.
The Chain Restaurants Demise, Owner Operated Restaurants Doing OK
Chain restaurants Closed
It was reported on msnbc that the chain restaurants are doing badly, and that owner operated restaurants are miles ahead because there hearts are in the right place. Over ten chains are reported to have filed for bankruptcy and probably more to follow.Chains restaurants boomed in the good times and are now suffering as result, and the reasons they are suffering is obvious, the service is bad, budget cuts mean cleanliness is not what it should be and staff really don’t care as they may not have a job next week.
Owner operated restaurants fare much better, as they take more care in their investment, and basically care more for their customers.
Loyalty from customers toward owner operated restaurants is much better than chains especially in the smaller cities.
My "NEW" e book now finished.
Hi All,
Well finally we are underway on this site and welcome to all new readers, To find out more about me just go to the About me page.
I will be posting two to three times a week in this blog as Cafes and Restaurants and the Food trade in general is a subject I love and have been involved with all my life.
So as they say in Billboard land Watch This Space
Cafe for sale | Buy a Cafe
- Yes its for sale
You’ve seen the sign ! “Cafe For Sale” and now your excited, yes we have enough money, if we get a second mortgage on the house and if I keep working part time and if we open it 7 days a week and if…….. My goodness we are making a lot of “IF’s” here. To buy a cafe is exciting and it is possible to most people because regardless of your financial situation, there is a food business for sale at your price..there are so many of them that there will be a business for sale at your price if you look around. The object of this site is to provide you with as much information as I can, in a simple format which is accessible as you need it. So I will start here and explore, Whats for Sale, Where to find it, and what to watch for. Making the decision to buy a cafe or restaurant, is very exciting and a very exciting time in your life and many people have had a wonderful life in the cafe business and I wish you well, and its a great business to get into. Everyone thinks there’s money in food, and done correctly there is? and to buy a cafe is a great step to take. If your interested in food and you have a passion for the kitchen and your always thinking of new recipes….Go for it, take the plunge and I will assist you with all your questions ok, But I’ve seen a truck driver who was made redundant and his school teacher wife buy a Café in an Industrial area and were bankrupt within 6 months… I will use this example of what not to do in a later chapter, He had received over $40,000 in redundancy, his wife finished her job as a teacher or 20 years to go into the food business, and their venture failed miserably. But I will cover this scenario later ok. Many, many people buy a cafe because the previous owner did well… that’s fine for the first time and setting up a restaurant without previous experience in the industry, can be disastrous. But, you should buy a cafe ‘for what you can do with it’ ok? That is most important.. I always buy a cafe’s with good location and chattels but has had lazy or tired management, and it’s run down. But I knew what I could do with that business, to get it humming! All it needs is a clean up, get the commercial cleaners in, then the rodent control people, and get working on a new menu, sort out the kitchen the way you like it and you should only be closed for a week max… okay maybe two weeks. Buy a Cafe ok…
My Book!
This book is Guaranteed to Save You Money !
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- Food Safety At Turley’s Part 2: Staff Training
- Restaurant Management Tips: How To Deal With Employee Theft
- Restaurant Replenishment: Don’t Get Caught With Your Pants Down
- Green Initiatives: A Rise In Cost Or A Part Of Your Marketing Budget?
- Green Restaurant Tips: Use Efficiency Rebates!
- Fryer Oil Maintenance: Tips To Make Oil Taste Better & Last Longer
- Starting A Restaurant? Avoid Epic Fail
