There is no shortage of cafes and coffee shops in New Zealand. Most seem to serve decent coffee and most seem to do ok. But is “o.k.” enough to stand out from the local competitor around the corner, and is it enough to stand out from international franchised coffee shops like Starbucks?
At LINK Northland we’ll equip you with all the facts that you need to know to find the right business opportunity for you. If you are looking for a cafe for sale or a coffee shop for sale, read this article and let us know if we can help you in your search.
Here are some points that you’ll need to know about before you consider buying a café a coffeeshop or a restaurant;
- Is the business in a location with high foot traffic?
First of all, Kiwi’s love coffee and they don’t mind paying a premium…. If it is good coffee and it is convenient to access.
Because Auckland is a big city, people are used to travel much further for a decent cuppa. In regional towns like Whangarei or Tauranga much less! Being 200 meters from the work place may already be too far if there are other options to access their cup of coffee.
Being in high foot traffic areas (preferably on the way to work) seems to be the perfect place to have a coffee shop or café.
- What are you doing different than your local competitors?
As mentioned above, there is loads of competition and we assume everyone has great coffee!
Especially relevant is that when purchasing a local coffee shop, ensure that they are known for delivering memorable service.
Other ways to stand out:
- Serving food, sweets, pies or pastries
- Hosting a BNI group or book club
- Live music events
- Offer free WI-FI to customers
- Authenticate the shop with a local theme
In regional areas, like Northland, people seemed to be drawn more to locally owned cafés and coffeeshops than to franchised cafés.
- Are the furnishings & coffee equipment included in the sale?
Coffee machines are often leased and don’t belong to the café. These machines can cost anywhere from a couple of thousand dollars to $10,000 dollars. You can see now why it’s worth finding out who owns it!
The same could be possible for the fit out of a kitchen (or the whole fit out). In some cases it is the landlord that fitted out the kitchen, in which case you don’t own much at all. When it comes to rebranding (or converting into a franchise) it may not be permitted to make changes to the lay-out or selling excess equipment.
Besides the practical complications you now pay more goodwill for the business and you can’t depreciate assets to have some tax advantages.
- Why are the owners selling the business?
The biggest misconception about business sales is that only bad businesses sell. This is factually untrue! People sell businesses for many reasons.
Common reasons for a café to sell are retirement, burnout, illness, financial issues, new opportunities and yes, ….poor performance.
If poor performance or financial stress are the reason it may be a red flag! Therefore you should do further investigation. You may find that the owners are just bad operators with no actual experience prior to opening the shop. In that case you may be buying at a low price and you can improve performance and sell for a higher price once you are ready to sell yourself.
- How is the asking price established?
There are many aspects of a café / coffeeshop’s valuation; location, performance, shop fit out and quality of staff seem to be the main drivers.
If there is a good method of valuation in place it may be harder to bargain in the negotiation process. There is lots of historical sales data available to see if the asking price is justified.
At LINK Northland we can help you find a suitable local cafe for sale. We are well connected in the Whangarei and Northland areas so it shouldn’t be too hard to find a business that fits all your needs.
FREE LINK Northland downloads:
- FREE Download; Must-Have GUIDE to a successful Restaurant Business!
- FREE Download; Buying a Business
- FREE Download: Buying a Franchise
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