Has anyone started a restaraunt or cafe?

[Slade]

I have a friend who wants to start a cafe/restarant type business, ideally in the CBD to cash in on city workers at lunch.

His idea is actually quite good and pretty unique, and I really think it can work if executed correctly.. so I thought I would do a bit of digging for him, hopefully someone on here can help.

Has anyone started a restaraunt or cafe, and can give us a few tips on where to start?

[itycoon]

I have worked with people who have and I have friends who have started them....some successful most not. I can probably tell you almost everything what and what not to do with a restaurant. And remember 50% of restaurants go out of business within the first two years or less.

[gerryonline]

itycoon, what do you think some of the reasons for that sort of number of businesses going bust? Location, Food? Marketing? Staff.. ?

[The Y-man]

My friend ran a cafe in the city - and bailed out after 5 hard years.

Issues:

super long hours - 4:00am to midnight (they did lunch and dinner after discovering lunch traffis insufficient)
unable to make money if they were away or sick (self employed)
not enough profit margin (costs higher than expected, turnover lower)
high staff turnover (combinantion of low pay, hard work, etc) - constant retraining, etc
Cheers,

The Y-man

[justinsigns]

Prior to getting into signage, I completed an apprenticeship in pastrycook/baker.

It was an experience and certainly not the faint of heart - extremely long hours, low margins etc.

From my experience, cafes net around 10% profit, 300k turnover = 30k profit before you take a wage.

If you did something unique as in a gluten free and diabetic menu then it may be worthwhile, but I would certainly do the homework first and think hard.

[Brendan]

My dad used to own a restaurant for a few years, it was reasonably profitable but the hours were horrendous, he would get in at about 10am and leave after midnight.. and there was no time for holidays, time off etc.. so be prepared to work hard!

My Fiance' was a manager of a CBD cafe for a few years also, 6-7am starts, hard graft and quite a cut throat industry.

So the thought of owning a restaurant or cafe sounds great to people.. but in reality its lots and lots of hard work, and as justinsigns says, low margins and long hours.

[HMcIntyre]

I'm friends with some former cafe/restaurant owners, and I would have to say I agree with the above posters mentioning it's one of the hardest industries to get into. Personally, I wouldn't recommend it, especially for the inexperienced in the industry.

[gerryonline]

My friend ran a cafe in the city - and bailed out after 5 hard years.

Issues:

super long hours - 4:00am to midnight (they did lunch and dinner after discovering lunch traffis insufficient)
unable to make money if they were away or sick (self employed)
not enough profit margin (costs higher than expected, turnover lower)
high staff turnover (combinantion of low pay, hard work, etc) - constant retraining, etc
Cheers,

The Y-man
Where was the cafe located? was it a CBD location or outskirts?

[The Y-man]

Where was the cafe located? was it a CBD location or outskirts?

CBD .

Cheers,

The Y-man

[Slade]

CBD .

Cheers,

The Y-man

I would be interested to know what sort of numbers a CBD cafe does in terms of turnover/profit.. have you got any rough figures Y-Man?

[The Y-man]

I would be interested to know what sort of numbers a CBD cafe does in terms of turnover/profit.. have you got any rough figures Y-Man?

Unfortunately I don't - other than that the operation basically ate through a few hundred grand worth of investmnet put in by 3 partners in a few years.... to zero...

Cheers,

The Y-man

[Brendan]

Ouch! that's gotta hurt, just wondering, did they buy an existing business, or do their own fit out?

[The Y-man]

Ouch! that's gotta hurt, just wondering, did they buy an existing business, or do their own fit out?

Did their own.... and cut costs on things like insurance :o so when someone forgot to put there hand brake on and the car rolled into the shop....:eek: (that was just one of many things going wrong there)

Cheers,

The Y-man

[Slade]

So it seems it may not have been the cafe business being a bad idea.. just seems it wasnt set up and ran properly? Was it their first business?

[The Y-man]

So it seems it may not have been the cafe business being a bad idea.. just seems it wasnt set up and ran properly? Was it their first business?

Yes for both partners. Classic case of employees (both worked as chefs) wanting to go out and own their own business instead of working for someone.

Cheers,

The Y-man

[jacylnong]

Has anyone started a restaraunt or cafe, and can give us a few tips on where to start?

I have been living in Sydney and since I am only one person, I usually eat out. What I look for in food is the 'quality' and the 'taste'. don't matter how much it is.. just as long as it is yummy, I don't mind! :)

My bf aka ex-head chef of a five star hotel (kept anonymous) told me that you need to have food management (to know what you are cooking a week ahead). Moreover, what is evil is how hotels make $ is buying best-after food! (meaning those food that have passed the best before date within a week range).. one word: gross! but then it all boils down in the end: businesses need to make $ :)

[axeray]

It's very difficult to make money in restaurants and cafes. It can be done but it's a lot of hard work and dedication. Although, that still doesn't mean you'll make a profit.

Everyone wants to run a cafe, but in reality it'll go bust if you don't know what you're doing.

[obscura]

LOTS of hidden costs. Unless you've run a restaurant/cafe before, or have a business mentor who has, I wouldn't recommend it. As mentioned before, long hours, incredible amount of capital investment, and cost of staff! The best advise given to us when we were starting out was 'start off small'. You'll be lucky if you're turning a profit in the first 12 months.

[Slade]

do you run a cafe obscura?

[obscura]

Not sure if it counts as a cafe. We're more of a coffee shop. We started really really small, and have no life, never see our friends, and I have to work full time in the city to help support my business partner who runs the business full time. After speaking to many people in our industry, I have found that this is not uncommon.