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My BIG Idea. Viable? (Melbourne, Australia)

Discussion in 'Starting your journey' started by NoTreble, Jan 8, 2017.

  1. NoTreble

    NoTreble Member

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    When I first saw this video I was in love with the concept, we don't have anything like it in Melbourne. I've wanted to start a cafe for a while and I've finally started doing thorough research into it's viability, I have a friend who is an amazing chef with a great deal of experience in the industry.

    I want to combine my love of technology/gaming culture with my obsession over simple, tasty food. I want to start out small and use the main lounge as an area for consumption and socialising with a small room designed to be hired out with items like projectors and consoles, slowly expanding as funds allow.

    Am I crazy? I'm not in it for profit, as long as I can pay the bills and have some funds left over for the holiday savings. It would be great if some who have been in a similar predicament shared their insight but any contribution would be greatly appreciated. Take care everyone, hope you are all enjoying your year so far!

    Regards,

    Ryan
    MatthewKeath likes this.
  2. Dave - FS Concierge

    Dave - FS Concierge Administrator Staff Member

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    Looks very cool Ryan! Just be sure to aim for a healthy profit (so you have a buffer when things don't go quite to plan) rather than aim for break-even. :)

    Great to have you here.

    Dave
  3. bb1

    bb1 Renowned Member

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    You should be in it for profit, I can imagine it would take a lot of dollars to setup.

    My suspicion is the big thing you need to get right for this one, is location, location, location. You want an area where there will be a lot of the right type of gamers (ie. Age and demographic), possibly the right transport arrangements, etc. so that's one area of research.

    personally I don't see why it wouldn't be popular
  4. JamesMillar

    JamesMillar Well-Known Member

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    That's an impressive looking entertainment venue and having invested in a few here in Australia I can say that would cost a pretty penny to start / build. They would only be able to rent those rooms at such low prices because they are in USA (commercial rent and wages a a lot less than here) and because their game sales and food sales provide the margin. The problem I see is freeloaders. The last thing you want is people sitting around at your venue (which has a finite capacity) and not spending because they are playing low return / no return games.

    Agreed entirely with Bert. Location is key and would be very expensive. I'm not sure why you would consider investing hundreds of thousands of dollars (possibly more than) without profit motive. Do you have that sort of money available on a no yield basis?

    Its great to see that sort of innovation (not unlike the escape room centre that we invested in) but its a big play.
  5. NoTreble

    NoTreble Member

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    Really appreciate the feedback guys! Allow me to explain, in terms of profit I am not going into the venture with the expectation that I will be making money straight away and I don't expect that the venture will set me up for life. What I am committed to is setting up an income stream that can pay off all debts to such a degree that savings are healthy in the event of a rainy day. Some excellent points have been made, some more things to research! Really appreciate the time spent to join the discussion,

    Ryan
  6. Cody

    Cody Active Member

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    What a great concept. I'd definitely go along if it was in my area.

    What are your revenue options:
    • Food/drink
    • Renting out rooms
    • Selling games/merchandise
    • Any others??
    I guess it depends on your skills/money and the location.

    Keep posting, I'm interested to hear how your idea progresses.
  7. NoTreble

    NoTreble Member

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    Appreciate the response!

    Also looking at having a foosball table and some old arcade/pinball machines in the main lounge which would be coin operated. The area I am looking at would be Thornbury/Northcote/Preston/Brunswick as my initial search area.

    Really appreciate the feedback that everyone has offered, really helping everything come along!
  8. JamesMillar

    JamesMillar Well-Known Member

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  9. NoTreble

    NoTreble Member

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    My thoughts exactly! It's reassuring that everyone thinks it's a viable idea! Location is my biggest hurdle, I'll be on the hunt for a reliable real estate broker over the next few weeks to discuss options.
  10. JamesMillar

    JamesMillar Well-Known Member

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    Just to be clear. I think its a unique and potentially fun concept but am unsure whether the economics would stack up. You need to run some numbers and I would suggest doing that before spending time looking at properties. Northcote High street looks to be running at around $300 per square metre plus outgoings. Probably more for a decent site. I think you need between 200m and 300sm (based on the US facility). So that's $60k to $100k per annum rent.

    Start with the revenue model first as there may be several streams to analyse. Food and Bev. Retail (games). Rental (games). Themed room rental. etc. Then develop a cost / expense model. This will involve a detailed HR payroll model because I could envisage this being staff intensive if you operate a café within.
    Paul - FS Concierge likes this.
  11. NoTreble

    NoTreble Member

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    Excellent points, this process will be slow. I don't want to rush into things and trip up because I haven't thought of every possible detail. I really appreciate your detailed responses, this forum has a wealth of knowledge that I hope to contribute to one day.
  12. Paul - FS Concierge

    Paul - FS Concierge Administrator Staff Member

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    Just to add to what @JamesMillar said above, commercial leases can be a high stakes gamble because they often generate an actual commitment to pay the lease payment for 3-5 years.

    So it is important to differentiate what you think might work, with industry-standard modelling that predict likely financial outcomes eg, could you afford to run at a loss for a month, 3 months, 6 months or more?
  13. NoTreble

    NoTreble Member

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    This is where the experience in the hospitality industry from my friend is in valuable. It's funny, I haven't asked him to join the venture yet. Wanting to do the groundwork and research to back up any questions he may have. Thank you for adding to the discussion!
    Paul - FS Concierge likes this.
  14. JamesMillar

    JamesMillar Well-Known Member

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    Extending on Paul's comments. You will find that in most high traffic commercial areas (like those you are looking at), the landlords will all typically seek to include a demolition clause in the lease. Generally exercisable at their discretion in the second term and beyond if they are redeveloping the property (most commonly for apartments now days). This is a major clause that you should check with any agent upfront. In most business models there is little point investing hundreds of thousands of dollars in bespoke fitout and building goodwill only to have the landlord issue a termination notice after five years (even if you have several term options beyond five years). Many landlords will not compromise on demolition clauses but as long as your minimum tenancy recovery period stacks up it can still work. We recently had a demolition clause activated on a Port Melbourne lease we held for an entertainment operation (after 9 years of tenancy). Fortunately it suited us as the business had past its peak. We knew it was always a possibility but punted on rezoning taking a long time (which worked in our case).
    Paul - FS Concierge likes this.
  15. NoTreble

    NoTreble Member

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    I have not heard of a demolition clause previously but it makes a lot of sense. I will have a lawyer scrutinise all agreements before signatures are obtained but I appreciate the point made.
  16. Johny

    Johny Well-Known Member

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  17. NoTreble

    NoTreble Member

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    Looks great! Definitely some ideas, thank you very much for your response!
  18. gingerbeardhs

    gingerbeardhs Member

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    You should probably have an early discussion with your friend now as a question finding mission, so that you don't waste time looking for answers you don't need. One of the things about drawing on experience is that the experienced know what needs to be asked.

    When they ask you "What are you going to do about X?" it's ok to not have a great answer the first time, or an answer at all. But you should be noting the question as it is important, and then research that question so when it is asked again, you will have an answer.
  19. NoTreble

    NoTreble Member

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    Excellent point! Thank you for your insight, I'll be writing the business plan over the next few weeks and discuss with him after its completion.
  20. Mischelle

    Mischelle Active Member

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    WOW, I loved this, my friends would never leave.... as James said that may be a problem other than setup costs etc

    I know someone (friend of a friend...so using the term "know" loosely) in the USA who are setting up the same thing BUT they are going down a different income path.... I will explain to give you more food for thought:

    Property - they are looking at warehouse environment, not on the main street areas but close to public transport for the non driving geeks and students. They are also looking near Universities.

    They are thinking along the lines of build it and they will come.

    Setup Costs: Due to not having a lot of money for set-up they started a Kickstarter campaign, offering different levels of free memberships to a set period to match the donations. This sort of campaign is suited to their target market as Geeks send things viral pretty quickly.

    Income: Other than payment for food and drinks or room bookings, they have set up membership levels, the higher the membership level the better offers they get, and they also get priority for bookings of booths and discounts on food and drink. Memberships are paid monthly.

    The membership model allows for them to draw income for the people not consuming a lot of food and drinks and hanging around for hours.

    Members can also book out games table and rooms for set times.

    They have over 8000 members already through the campaign (monthly membership payments will go live when they are built), no website yet, but I will keep you posted.

    Offering: Food, drinks, board games, card games, games sales etc etc Pretty much the same as Mox, maybe not as fancy.

    This is just food for thought for you :):)

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