What to Ask Your Solicitor before Selling Your Cafe

What to Ask Your Solicitor before Selling Your Cafe

 

 
 
As part of the planning phase, we’re going to talk in this video about what you need to discuss with your solicitor. Setting up an appointment with your solicitor early on is one of the most important things to do because you’re going to be reviewing the lease with them. If there is an issue with the lease or something which needs changing, it can be quite time consuming, so good idea to kick this meeting off first.

As soon as you start thinking about selling or planning the sell of the business, set up an appointment with your solicitor and start going through some of the things in the lease that could potentially affect the sale. If you’re anything like me, you probably haven’t looked at the lease since you bought the business.
I tended just to deal with the solicitor at the point of purchase and then didn’t give it a second thought. Maybe you might have looked at it when the rent went up if there was a review, but normally, you kind of forget about it, so a great time to dust it off and revisit some of the important clauses in there, which could affect the saleability and the price of the business.

When you get to sit down with your solicitor, some of the really most important things to look at

Looking at how much time there is left on the lease, do you think that that is going to represent good value to the person that’s looking to buy the business? With what you’re expecting or what you’d like to achieve for the sale price, is the value in line with what’s left on the lease?
You have to ask yourself whether the return on the investment for what you’re expecting is going to be viable. That’s a really important thing. Chances are you might well know that off the top of your head but get your solicitor to review that with you and make sure there’s nothing in there that you’re not aware of. In general the longer that there is left on the lease the better.

When and how much are the rent increases?

Secondly, you want to look at rent increases. Chances are, again, you may well know that off the top of your head. How often are the rent increases and how much does the rent increase by? This is something that I get asked a lot in the early stages, so I try and proactively deal with that with the advertising and the marketing. We’ll actually put that out there early on so people know what that is.

Generally speaking, it’s going to be an annual increase. Usually it will be either by CPI or it will be a set percentage. Make sure you understand what that is and let’s use that in the marketing, just to save people asking questions early on. It cuts down the amount of initial inquiries you get.

What does the lease say about assignment?

Now assignment is basically the transfer of the lease from you over to the person buying the business and all leases are going to have something in there about the assignment process. By reading through this and revisiting this clause, you’re going to get a good indication of how much information the landlord or the managing agent are likely to need.

The lease will also state who is responsible for the legal fees. Now nearly always, it will say that you, as the lessee are responsible for paying the legal fees of the landlord. In some cases, there might even be an additional fee for them processing the application, so make sure you’re all over that and you understand who is responsible for paying.

Chances are as I said, it’s going to be you but what you can do at this stage is get your solicitor to make sure when they draw the contract of sale out, that they only put 50% to you and 50% to the buyer. Nine times out of ten, when you do this, the solicitor acting for the purchaser very rarely picks up on it and it normally doesn’t get questioned.

This is a great way just to save a little bit of money or to save 50% of the landlord’s legal fees just by making sure you get that in at the start. You have to give your solicitor instructions to do that because sometimes, they miss it and the contract will just go out. Once that has gone out, it’s very hard to then go back and try to get it changed.

Just make a note of that. It’s a really important think just to try and save yourself 50% of those fees. It’s definitely worth mentioning early on.

How Much Will They Charge You?

Finally, you ought to be asking how much they’re going to charge you. You may have been with them for a long time, but this may be the first time you’ve used them for something like this. Make sure you understand what that cost is going to be to you because when you sit down and start working all of your numbers out, like what you’re actually going to be left with at the end of the sale price, that’s an important figure. The legal fees are a big chunk of the fees coming out of the sale, so make sure you know what your solicitor is going to charge you.

If you feel it’s too much, don’t be afraid to question it. For this kind of thing, if it’s a straightforward transaction, it shouldn’t really be any more than two and a half, maybe push three and a half thousand dollars. If it’s towards the top end of that, then you can probably shop around and get a better deal.

You don’t have to go with the solicitor that you’ve got history with for this kind of thing. It’s really just about making sure you’re comfortable who you’re working with and then they’re not going to be charging you too much.

Well that has covered some of the key points that you should be discussing with your solicitor and in the next video, we’ll be looking at what you need to do with the financials, setting up with your bookkeeper and then going from there down to having a conversation with your accountant.

Well, that’s it for now, I’ll see you in the next video.

What to Ask Your Solicitor before Selling Your Cafe

How to Apportion Goodwill, Fixtures and Fittings

How to Apportion Goodwill, Fixtures and Fittings

 

 

The split between goodwill fixtures and fittings is something that will be agreed as part of your sale negotiation, knowing your tax position and what will suit you best is going give you the best chance of getting the terms that you want.

If you have this figure worked out before you agree the sale then you can make sure that your solicitor adds this figure to the first draft of the contract.

In this video from our Six Steps to Sale Program I break down what the apportionment is and how to go about working out what yours should be.

 

 

How to Apportion Goodwill, Fixtures and Fittings

Video Transcript

Let’s talk about how to apportion Goodwill, Fixtures and Fittings when selling your cafe. Now, if this is a term you’re not familiar with, don’t worry. I’m going to go through and break down exactly what it is and what you need to do.

 

 

The apportionment of goodwill, fixtures and fittings is, basically, it’s a split between the value or the sale price of the business. It’s going to be broken into two parts, so, firstly, all the plant, fixtures and fittings, so that’s all of your kitchen equipment, all of the inventory, furniture and all that sort of thing, that forms one part of it and then, on the other side, it’s the goodwill that’s being applied to the business’ sale price.

 

 

It’s really good to be on the front foot with this and make sure that that you’ve taken some advice early on so that you know what your tax position is and what split your accountant suggests is going to benefit you most. It will always form part of the contract of sale, and it’s going to be the figure that’s used for tax purposes for you and for the purchaser. Its a really good idea as I mentioned just to make sure that you know what your tax position is and what your accountant suggests that you should do in regards to that split, so all you need to really worry about at this point is taking some advice, so talk to your accountant and make sure that you find out what they suggest about that split. It’s going to depend on your personal and business tax situation.

 

 

Now, normally speaking, when you’re the seller of the business, it’s going to be in your interest for that split to be higher on the goodwill side, and for the person purchasing, it’s usually better for them to have it higher on the fixtures and fittings so that they can then write down the depreciation at a higher level, so do take some advice on that. It’s not a one-thing-fits-all. It’s going to be very specific to your business and your personal tax situation, so make sure, as part of that, it’s on the checklist there for what you should discuss with your accountant, but make sure that that’s a figure that you’re aware of.

 

 

Make sure that when you do get to the contract stage of your sale that you’re going to advise your solicitor this early on, so it’s a great idea to put this into the first draft of the contract. Sometimes, this won’t even be questioned by the purchaser, so, as mentioned, good idea, be on the front foot, be proactive, make sure that you know what’s going to suit you best.

 

 

Having said that, you need to be prepared to negotiate. It is usually something that a savvy buyer with a good accountant and a good solicitor is going to probably pick up on what you’ve put in there and realise that that’s not to the best advantage of their client, the purchaser, so you may well need to negotiate on that, so be prepared to do that.

 

 

That’s a very brief look what the split between goodwill and fixtures and fittings is. It’s nothing that that you need to be too concerned about, but it’s something that you should be taking some professional advice on from your accountant just to make sure that you’re fully prepared and, when you do get to that stage, as I said, make sure that you communicate that split that you’re aiming for with your solicitor and get in the first draft of the contract early on. You may find there’s no negotiation about that at all and it’s accepted on your terms, which, obviously, for your tax purposes is going to be perfect.

 

 

Hopefully that all made sense. If you’ve got any questions, as always, get in touch in the usual channels, let me know. I’m more than happy to answer any queries you might have about this.

 

 

 

Cafes For Sale in Sydney

Cafes For Sale in Sydney

GSE Business Consultants specialise in helping people to sell cafes across Sydney, Canberra,  Regional NSW and throughout Australia.

 

If you are looking to buy a cafe and would like further information about any of the businesses listed please register as a buyer and complete the Confidentiality Agreement. 

 

Once logged in you will be able to view financial information that is only visible to registered users. Once you have read through this information feel free to get in touch to request a full business profile which will show the full details and address of the business.

 

Please note that we do not send these details out without having a conversation with you first, its really important that we understand exactly what it is that you are looking for.

 

Many Cafes for Sale in Sydney that we work with are not listed on the website and, by gaining a clear understanding of your needs this will enable us to offer you opportunities that you may not otherwise have found.

 

If you are considering the sale of your cafe I would love the opportunity to meet with you and discuss your options. As you are probably aware there are hundreds of cafes for sale in Sydney at anyone time.

 

To secure the right deal you need to make sure you work with a specialist and with somebody who has been where you are and knows the business inside out.

 

If you have a cafe for sale in Sydney and would like to have a chat to talk about the best way forward and,  ensure that you sell for the right price and the right time give us a call on 1300 52 21 79.

 

We also have a Private Facebook Group for anyone thinking of selling their Cafe the group is called “Exit Planning For Cafe Owners”  this group is a community of cafe owners and industry professionals who are coming together to share the best tips, tricks and insights to selling cafes and restaurants without the struggle, and without paying thousands in commission!

Find the Exit Planning Group here: https://www.facebook.com/groups/2124440880959192/?source_id=1648444935438475

 

Check Out the Top Cafes in Sydney 2018

Check out Sydney’s Top 20 Cafes of 2017

Industrial Style Northern Beaches Cafe

Industrial Style Northern Beaches Cafe

This well-known Café on The Northern Beaches has been established for more than 4 years and, has been with the current owners since opening.

 

There are approx. 10 seats outside and 25 inside, the café is 54 square metres internally, with additional storage area.

 

Current coffee sales are 23 KG per week and the café also serves breakfasts, burgers, salads and range of cakes. There is also a range of soft drinks, milkshakes, and recently added a small number of smoothies.

 

This business would suit an owner operator that is passionate about good food and good coffee, as its point of difference is unique menu offering that has been recognised by local customers and local media. (a few articles in the Manly Daily) this has enabled them to build up a steady following and substantial amount of regular customers.

 

The café is positioned in the central part of Mona Vale with ample parking, 3 local schools, and passing trade from a major supermarket and other successful local businesses.

 

 

 

Industrial Style Northern Beaches Cafe

Years Est
4 Years

Years With Current Owner
4 Years

Staff No
4-5 Staff on the books in total including a Barista, one chef, 1-2 all-rounders. (All casual)

Lease Info
New 3 x 3 Lease . – CPI increases – A 3 month bond is required

Trading Times
Monday-Saturday 7.00-15.00 Closed on Sundays and Public Holidays

Size of Premises
54 Square Metres

Seats Inside
25

Seats Outside
10

Busy Beachfront Cafe & Restaurant

Busy Beachfront Cafe & Restaurant

This well established Café & Restaurant has an area of approx. 250 square metres and occupies a prime beachfront location on The Northern Beaches. There are 90 seats inside and 32 on the designated outdoor seating area.

The café offers a wide range of breakfast dishes as well as a full lunch & dinner menu, kids menu and dessert menu. In addition to catering for locals and tourists the venue is a popular location for functions and they offer set menu packages to suit different budgets.

The café has been established and under the same ownership for more than 20 years. An exciting opportunity now exists for a new owner to build upon this solid foundation and take the business to the next level.

**For confidentiality the images in this ad are generic **

Busy Beachfront Cafe & Restaurant

Years Est
20

Years With Current Owner
20

Staff No
The business is currently run by the owner, two chefs and a team of casuals.

Lease Info
New 5×5 year lease granted Jan 18 – 5% increases – A 3 month bond is required.

Trading Times
Monday to Sunday 7.00am till 9.30pm

Size of Premises
250 square metres. – Three toilets including one with disabled access. Full commercial kitchen and store room. Outdoor seating area.

Seats Inside
90

Seats Outside
32

Stock Value
8000

Coffee Roasters on The Northern Beaches

Coffee Roasters on The Northern Beaches

 

 

This page is designed to showcase local Coffee Roasters on The Northern Beaches and North Shore to help buyers and cafe owners become more aware of the options available to them.

 

I have added this page as I am often asked for suggestions and recommendations from people buying cafes as well as existing operators who may be shopping around for a new bean or better deal.

 

The roasters listed on this page are all companies that either I have worked with directly or my clients  work with currently.

 

As with anything it pays to shop around when looking for a coffee supplier and, your decision to work with a particular roaster should be based on many different criteria.

 

It is quite likely that whoever you chose are going to become one of your biggest suppliers so you need to make sure that you feel that you can work long term with the roaster and that they will support you on an ongoing basis.

 

Whilst I am a great advocate for driving margins and reducing food costs wherever possible the price per kilo should be lower down your list of questions when speaking to roasters. In my opinion it is far more important to see how you will be able to work together to grow your business, after all the better you do the better they will do.

 

Many roasters will help you out with equipment, training and branding in return for agreeing to buy from them for a certain period of time, currently this seems to range from 1-3 years.

 

One of the best things I can suggest for you to do is to go and visit all of the roasters that you are considering. Meet with the owners, sales reps and roasters and get to know the company, decide whether they are the type of company that you can see yourself working with long term.

 

Once you have visited a few roasters and of course tasted more espresso than you thought possible then you can start thinking about price.

 

In most cases the price per kilo will not vary greatly between like for like roasters, you should really be motivated by taste of the coffee and your feel for the company when making your final decision.

 

As coffee is likely to be one of the mainstays of your business and your customers will vote with their feet if it is not good enough then opting for an inferior bean to save a couple of dollars per kilo will hurt the top line more than it will help the bottom line.

 

I hope this page helps you become more aware of some of the great Coffee Roasters on The Northern Beaches that you have to choose from, if you have any questions, comments or feedback please feel free to get in touch anytime.

 

Quattro Coffee Roasters

 

Coffee Roasters on The Northern Beaches

 

 

 

 

 

 

 

2/3 Apollo St Warriewood NSW 2102

P: (02) 8919 2125

[email protected]
quattrocoffees.com

Quattro Coffee Roasters is all about the highest quality coffee sourced from around the World and Roasted in Australia. Time is spent on cupping to ensure just the right roast profile is applied so the coffee is just right for the best cup of coffee possible.

We are called Quattro because not only do we believe in the heritage of coffee we believe that there are 4 really important aspect to creating the perfect cup

– it starts with People critical at all stages

– then the Bean is selected direct from farms in the coffee belt

– the green bean is then Roasted with care and attention

– finally it’s down to the Brew, whether it’s a stove top, a Siphon or an Espresso machine get the grind right and brew away…

 

 

 

 

 9 Bar Coffee

Northern Beaches Coffee Roasters

 

 

 

 

 

 

 

 

Factory Unit 6/4 Hayes Street Balgowlah NSW 2093

P: (02) 9949 3275

M: 0414 527 663

[email protected]

www.9BarCoffee.com

 

9Bar Coffee are a service company located in Sydney’s Northern Suburbs offering service for most makes of espresso coffee machines and  coffee grinders. 9Bar also trade new and used coffee equipment Australia Wide.

Jason Marks, owner operator of 9Bar Coffee has over 20 years experience within the coffee industry.

Jason’s passion for espresso coffee has led to the creation of a premium coffee brand 9Bar Coffee and more recently the revolutionary espresso machine espressoDECK .

Jason believes that proper training, fresh coffee and well-maintained espresso equipment improves your coffee standard, he sees it as a proven way to a better cup and increased coffee sales.

Feel free call or email Jason any time to see if  he can help you with your espresso coffee needs.

 

 

 

 

 

Little Italy Coffee Roasters

 

Northern Beaches Coffee Roasters

 

 

 

 

 

 

18/8 Tilley Lane, Frenchs Forest NSW 2086

P: (02) 9453 2009

[email protected]

www.licr.com.au

 

Little Italy Coffee Roasters was established since 2007 and since then they have built up a loyal following of wholesale customers.

Brothers Adam and Guy Bortz who run the business pride themselves on offering a bespoke roasting service tailored to their clients specific needs. Little Italy have move than 15 different blends available and, they also work with their customers to develop individual roasting profiles if required.

Many of the house blends that you see in Sydney cafes packaged with the cafe’s logo come from Little Italy’s purpose built facility on The Northern Beaches. In addition to personalising the coffee packaging Adam and Guy also offer bespoke printed cups which can either be co branded or printed with just the cafe’s logo.

A wide range of coffee machines and grinders are available as part of the supply agreement and different options can be put together to suit any budget.

Complimentary barista training of all levels is also available to customers either in store or at Little Italy’s premises in Frenchs Forest.

 

 

Background Coffee

 

Background Coffee are on of our featured Northern Beaches Coffee Roasters.

 

 

 

 

 

 

 

Shop 1/ 61 Middleton Rd
Cromer, NSW 2099
Telephone: 1300 44 26 33 (24 hours)
Email: [email protected]

https://backgroundcoffee.com.au/ 

 

The Background Coffee  journey began back in 2009 when Lecio (owner) set up his first café serving speciality coffee in Manly.

 

After successfully operating the business for 12 months Lecio decided to install a 2Kg top bench roaster inside the shop. The locals loved the flavours of the high quality speciality coffee and the café became a huge success.

 

From there the demand for Lecio to supply other cafes began to grow and in 2012 Background Coffee was established. Since then the wholesale business has grown significantly and is recognised as one of the leading roasters on the Northern Beaches.

 

Background take a wholistic approach with their clients and in addition to providing barista training and equipment maintenance Lecio and his wife Patricia also use their experience of buying and selling cafes to help owners improve profitability and systems in their cafes.

Do I Need To Pay GST When I Sell My Cafe?

Do I Need To Pay GST When I Sell My Cafe?

 

 

 

Do I need to pay GST when I sell my Cafe?

 

The question about whether or not GST is payable on the sale of a cafe is something that seems to confuse many people and, it is certainly something that you should look into before you sell.

 

The short answer to this question is no (providing that you meet certain criteria outlined by the ATO).

 

The term used commonly in this ruling is “supply of a going concern” simply put this means that the business is still trading.

 

The ATO make it quite clear that if the business is being sold as a going concern then there will be no GST payable on the transaction.

 

What determines if a business is being sold as a going concern?

 

In order for the business sale to be deemed as a going concern then you must make sure that:

 

  • The business continues to operate up until and including the date of supply (settlement)
  • All of the equipment required to continue the operation is supplied as part of the sale.

 

Most cafe sales will fall into this category. An example of an exception might be a sale of fixtures and fittings in a shop which is no longer trading.

 

If you are selling your cafe as an operational business then the sale will most likely be considered “a going concern”.

 

What else needs to be considered to ensure you don’t have to pay GST on your sale?

 

In addition to making sure you are selling as a going concern you will need to make sure that both you and the person buying the business have agreed that the the business is being sold as a going concern.

 

This is generally taken care of in the contract of sale, this is quite a standard clause in most contacts and looks something like this:

 

By you both signing this contract you will have effectively agreed that the sale is as “a going concern”

 

The buyer must also be registered for GST

 

Whoever is buying your business must also be registered for GST in order for the transaction to be GST exempt.

 

If you can meet all of the criteria above then your sale will likely not include GST.

 

Where can I get more info?

 

You can read more about the ATO guidelines here

https://www.ato.gov.au/General/ATO-advice-and-guidance/In-detail/Private-rulings/Supporting-documents/GST/Sale-of-a-business-as-a-going-concern/

 

Details about the tax ruling can be found here

 

http://law.ato.gov.au/atolaw/view.htm?docid=GST/GSTR20025/NAT/ATO/00001

 

Speak to your accountant and double check your personal situation and if you are still not sure then the ATO are very helpful in explaining this.

Contact the ATO directly on 13 28 61

 

I hope this helps make the understanding of GST on cafe sales a bit clearer, if you need any help or advice feel free to get in touch at any time.

Are the outgoings that you are paying actually due?

Are the outgoings that you are paying actually due?

 

 

 

Its quite common for outgoings to be charged by landlords in addition to rent, the amount charged varies from lease to lease.

 

Some landlords will pass on charges like business rates, land tax, strata fees etc and some charge for many more items related to the building in which your business operates.

 

Many people believe that if outgoings are listed in the lease then they have to be paid but this is not the case. Changes to the Retail Leases Act in July 2017 mean that if outgoings are not listed in the Disclosure Document then the landlord cannot legally charge you for them.

 

 

What is a disclosure document?

When you were looking to take over the premises you should have been given a copy of this document (via your solicitor). The disclosure document is basically a summary of the key points of the lease, the document is given to you so that you can be sure that you know what you are signing for.

 

 

 

How Lucas just reduced his annual outgoings by $5,000 per year.

 

I was recently looking through a lease for a client, Lucas, to help him work out the potential value of his business when I noticed that the level of outgoings seemed quite high.

Lucas was not entirely sure what the outgoings that he paid monthly actually covered so the first thing we did was get the managing agent to send through an itemised invoice for all charges.

 

Looking through the lease along with the invoice for the outgoings we noticed that although the amounts charged seemed to match what was stated in the lease some of the charges did not appear on the disclosure document.

 

In addition to this the landlord had also miscalculated the way in which the land tax was being calculated.

 

I asked Lucas to contact his solicitor to check this and he confirmed what we had found and followed up with the landlord’s agent with the letter below.
Without going into too much detail the outcome resulted in a reduction of just over $5000 per year in outgoings and a rebate of the over payment since the lease was signed, not a bad result!

 

If you are currently paying your outgoings without being 100% sure what they cover it may well be worth checking.
Here is what you should do:

 

✅ Ask your agent or landlord for an itemised breakdown of what the outgoings on the rent invoice actually cover.

✅ If you do not have a copy ask the solicitor that acted for you when you signed the lease for a copy of the disclosure document.

✅ Make sure that all of the charges on the invoice are listed on the disclosure document and that the amounts being charged match up (allowing for declared annual increases).

✅If you find any differences then it may well be worth double checking these with your solicitor.

 

This whole exercise took Lucas only a few hours and resulted in a refund, a reduction of ongoing costs and a more saleable and valuable business. The $5000 saved per year drops straight into the overall profit of the business which ultimately will help to increase the value.

 

I hope that this inspires you to double check your own outgoings, good luck and let me know if you have any questions about this.

 

If you would like to have a confidential chat about your business anytime feel free to book in a time that suits you here https://www.gsebusinessconsultants.com.au/apply

 

Cafes For Sale on the Northern Beaches Sydney

Cafes For Sale on the Northern Beaches Sydney

Cafes For Sale on The Northern Beaches Sydney

 

View more cafes for sale in Sydney Here

 

 

 

GSE specialise in helping cafe owners to sell their business at the right time and at the right price.

This page shows some of the Cafes For Sale on The Northern Beaches Sydney that we currently have listed. We also work with many cafe owners that prefer not to list their business on the internet so, if you are looking to buy a cafe in Sydney make sure that you register as a buyer with us.

Once registered you will be able to login to our website and view financial information about the businesses that we have listed, you will also receive advance notification about new businesses before they are officially listed.

 

 

 

Read news about Northern Beaches Cafes Here

How to Increase the Value of a Café

How to Increase the Value of a Café

How to Increase the Value of a Café

 

In some ways selling a café is very different to selling other businesses but there are several ways in which you can add value to a café that are pretty much the same with most businesses.

 

So how can you increase the value of your café?

 

 

Reduce the Risk

One of the factors that will reduce the value of your café and also increase the time on the market is when buyers sense that there is some risk associated with the purchase.

 

Examples of this might be a short lease, a lease with a demolition clause, declining net profit and even a poorly maintained shop.

 

It’s a really good idea to start planning the sale of your business as early as possible, ideally your business should always be ready for sale but I appreciate that this is not always practical.

 

Negotiating a new lease or arranging an assignment can be a lengthy process so, before you commit to the sale process it is a good idea to meet with your solicitor to discuss any potential issues with either option.

 

With an incoming tenant most landlords and managing agents are going to want some proof that the person looking to purchase your business is going to make a good tenant. Make sure you understand exactly what your landlord will require to assess the purchaser and then make sure that the buyer is aware of this early on.

 

Another thing that worries some people is when they think that the business is too reliant on certain employees (barista, chef etc.) or even yourself. Anything you can do to reassure purchasers that you have a café which does not rely on one or more individuals is going to reduce risk and increase the  price.

 

This could be achieved by having a documented system in place for things like recruitment, training and operations. What you really want to aim for is to show that anyone could buy the business and follow your systems to keep it running the way it is currently.

 

 

 

Improve the Bottom Line

 

It seems basic to mention this but I often see businesses that have the opportunity to increase profit without making too many changes.

It’s tough when you get into the mindset of selling to stay focused on profit but a few small changes can often have an impact on the bottom line that can help to increase the value and saleability of the café.

 

Start with your biggest impact areas:

 

  • Wage costs – How is you wage cost percentage? Are there ways that you can tighten the rosters and save a few dollars here and there?

Can you cut back on a few casual hours?

 

  • Food costs – How is you Gross Profit percentage?

 

Along with wage costs supplier expenses are another major weekly outgoing for cafes and often an area to make quick improvements.

 

How does your gross margin compare to the industry average?

 

Are you confident that you have the best deal possible from your suppliers or can you negotiate some more discount?

 

Are you monitoring the food waste and stock control?

 

Are you confident that the margins are right for all of your dishes? When was the last time you checked?

 

 

Why Bother?

 

If your café is taking $10,000 per week and the food costs are 38% a reduction of just 2% could result in an extra $10,400 in annual profit which will in turn increase the value business, lower the risk and make you a few extra $$ whilst the business is on the market.

 

 

Drive the Top Line

 

One of the key metrics that buyers look at are the weekly sales of the café, it therefore makes sense to make sure you are doing all you can to maximise these, right? You would be surprised how many businesses I see that have stopped driving sales because they are on the market or the owner is thinking of selling.

 

Many buyers will see the lack of marketing such as social media posts, new menus and promotions as a sign that the owner has given up or is too busy with other commitments.

 

When I was buying cafes I was always pleased to see a neglected Facebook page or Instagram account as this signalled that I was more likely to get a deal.

 

Try and keep running the business like you just started it, keep the social media up to date and keep working on ways to bring in more business.

 

Focus on the only three ways to grow the business:

 

  1. Get more customers (advertising, social media etc)
  2. Sell more to your customers (would you like fries with that?)
  3. Sell more often to your customers (loyalty programs etc)

 

 

If you combine the impact of improving the margins mentioned above (wages and food cost) with an improved top line the impact can be very beneficial.

The value of the café is ultimately going to be determined by the net profit so the more you can do to improve the bottom line the higher the potential value will be.

 

I hope that this has helped you learn a little more about How to Increase the Value of a Café, you might also find this 20 point checklist useful.

 

If you have any questions about how to maximise the value of your café feel free to email me [email protected]