AND Business Consulting Blog Post - Cafe

How to make your Café flourish

Café culture in India has witnessed a tremendous boom in the last few years due to factors such as expanding working population, increase in disposable income, change in consumer lifestyle and growing influence of western culture.

India is the world’s 10th fastest growing market for specialist coffee and tea retail chains, valued at Rs 2,570 crore in 2018 and is estimated to grow at 7% every year.

A café business is all about the customer, their demands, new trends and delicious food. For example, a cafe must offer free Wi-fi service and plug-points; this helps customers carry-out their work peacefully. Unlike restaurants, customers should get ample time to relax. 

A few things to consider before opening a café are outlined below. 

Create a Unique Selling Point Before starting a café, it is important to identify a unique selling point, something that defines how the cafe stands out from the crowd. A few novel concepts across India include:

  • Roastery Café in Hyderabad roasts and processes coffee beans in-house 
  • Kunzum Travel Café in Delhi targets travelers and avid readers. Visitors are encouraged to share stories about their excursions and can attend workshops by photographers and writers. It’s run by a team of travel writers. Another differentiator is that customers don’t receive a bill, the cafe lets you pay as you wish to
  • The Gallery Café in Hyderabad is a great space for art enthusiasts. The industrial lights, the art corner, the music session are ideal for creative folk 
  • Cafe Mocha is a popular coffee chain which draws inspiration from coffee houses of Morocco and Turkey where people gather to spend time over coffee and conversations

Menu Engineering ‘Quality over Quantity’ should be the motto of the cafe. Focus should be on creating 10-15 great dishes. The menu should reflect the theme of the café and at the same time ensure profitability. While preparing a menu it is important to understand the prime real estate in a menu – what gets looked at in the first 100 seconds. A few ideas for a good menu include making section headings, emphasizing certain menu items either with an image or shaded/outlined box, including a brief description of dishes, etc. 

Ambiance/Interior Design The interior design, furniture, lighting, music, colors, etc. give the café character which influences how people perceive the cafe. The interior design should be aligned to the concept. According to Total Food Service, the average seating plan for a café is 15-20 sq. ft per person. The dining area approximately constitutes 60% of the total area where as the kitchen, storage and preparation area constitutes balance 40%.

Location According to CNBC, around 60% of new restaurants fail within the 1st year and the No. 1 reason for failure is choosing the wrong location. Listing and analyzing potential locations based on the target audience makes a big difference to the success of any coffee shop. Good locations for cafés include college/university areas, shopping streets or malls. But more importantly, the café must be easily accessible, have good parking, and be reasonably close to vendors and suppliers. 

People Management It is very important to hire people who are well trained, punctual and sincere. Scheduled training programs ensure quality of service. There are several categories of personnel in the café business: managers, chefs, servers, and hosts. Each person has a specific function but when the café is new some responsibilities get shared. Another important person in the business is the accounts manager who, will take care of profits, expenses, salaries and billings.

Marketing your café Mark your cafe’s presence on social networking sites such as Facebook, Instagram, LinkedIn and Twitter. For example:

  • You could advertise promotional offers for first-timers, weekend-special offers, a contest or an upcoming live performance etc.
  • Put up a small section with photo frames, props and catchy captions where customers can take pictures 
  • Create your cafe’s URL and highlight within the store
  • Invite blog-writers to write about your cafe, its USP and concept

Technology Investing in technology solutions such as self-ordering kiosks, kitchen display systems, tablet menus, etc is a good way to reduce the dependency on manual labour. 

Investment The investment required to start a cafe will differ based on the concept, location, and size of the café. Some of the key costs include 

  • Interior design including furniture: INR 1,500 – 2,500 per sq. ft
  • License cost: INR 1 – 1.5 Lakhs
  • Kitchen and electrical appliances: INR 10 – 20 Lakhs

Operating Expenses and Profitability A few benchmarks to keep in mind while running a café are given below. The numbers are expressed as a percentage of revenue. 

  • Rental: 10-20%
  • Labour costs (hiring & training): 20-30% 
  • Marketing costs: 10-20%
  • Food Costs: 30-40%

Profitability of a well-managed café can be as high as 40%. 

Sources: TechSci Research, Economic Times article on Indian cafe chain market, Total Food article on How to create cafe floor plan, PerfectDailyGrind article on How to successfully market your specialty cafe and UpServe report on Cafe marketing

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