03 January 2015

Running Cafes as a Business Owner

Cafes. Ah, there is that fascinating sense of novelty and vision of sitting by and running a quaint little shop that offers an amazing cafe experience. After all, the road to financial independence tends to suggest that being a business owner offers higher opportunities than being an employee. So how about running a cafe?

But it looks like running such a business is tough. Straits Times published a piece recently about the challenges of running a cafe (Running Cafes No Piece of Cake). Kind of the dream for many people, young and old. Unfortunately, start up cafes are more likely fail than succeed. Sustainable success requires a lot more hard work.

A friend shared on her experience. When starting up, there is that tremendous urge to get the best. The best equipment, the best decor, the best furnishing. "Best" costs. When it came round to shutting down the business, selling off these stuff became a heart bleed.

And then there is the problem of staffing. It is difficult to find good help, especially in manpower strapped Singapore. When it came to closing time, her staff would readily disappear most quickly. And she found herself being the one cleaning up everything. It is an extremely tiring business.

At the end of the day, is it still profitable? Sales matter. Costs matter. Location matters. Publicity matters. Differentiation matters? Great tasting food? Presentation! There are so many factors that have to come together for that elusive success to click.

LadyIronChef has some insights to share in 10 Things You Should Know Before Opening a Cafe. Those are probably most helpful advice for the adventurous wannabes ready to take the next step.

Perhaps interning at an existing cafe could be a good starting point to learn the business? Gain the experience, gain the connection, understand what it takes. Better yet, if a well run cafe could hand hold new players to come into play? But perhaps there is little motivation to do so? Would a former employee be viewed with much disdain as a traitor who learned the trade and then became the competition? Maybe some kind of franchising system is needed?

In memory of the sad incident at Lindt Cafe, Martin Place, Sydney ... (Dec 2014)


RetailTrader said...

It's not easy indeed. You see F&B outlets everywhere, even in new malls that have sprung up, the proportion of F&B shops is increasing. And every "artisanal cafe" looks increasingly like each other nowadays. Cafes seem to be reaching a saturation point. But we as consumers can benefit from the rising standards generally across the new cafes that have come up over the past few years.

Lizardo said...

Pretty commoditised. Nice that consumers can benefit. More niche locations may be needed.

B said...

Hi Lizardo

With labor crunch and rental going up there is only one way to go up and that is customer prices. But the only way to keep going is innovation.

Rolf Suey said...

The coca trees founder Mr. Loo said in a documentary before. If I do not remember wrong, he once said

"Nowadays youngsters opened cafe because they thought cafe business is cool. It can also be a place for them to ask their friends to sit by, and drink chit chat. As for him, he thought that is a behavior of a retiree!"

Lizardo said...

Rolf Suey,

Seems to be case for some Gen Y. Looking for the seemingly 'easy' path. Losing the drive? Or is this progressive?

Lizardo said...

Some restaurants trying to introduce tech to improve productivity. Small cafes may feel such investments prohibitive. But there are in fact government subsidy schemes available to tap on.

Innovation has become a necessity. Problem is what tangible ideas are there?