There are many traps the first comer to the caf? business should understand. I have outlined the top 7 points to check on and consider, when buying a caf?.
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 cafe’s 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 caf?. You must do your homework and be 100% sure on all these points.
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 and 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 caf?.
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.
When buying a caf? 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.
4. Checking the Books:
I was told in my early years when buying a caf?, 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 is good and keeps you on your toes, but make sure there are not too many recently opened cafe’s 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 caf? you are buying stack up against the others.
6. 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 caf?, it’s go, go, go from the start of the day to the end.
Do not buy a caf? is there is no passion for food, 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.