Home – New Forums New here? Share your story Do I sell or lease my cafe?

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  • #996374
    Zest11
    Member
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    Hi, I am looking for possible ideas in relation to the sale of my cafe. I have been in business for 2 years. It was not a going concern when I bought it. My partner has worked away for this same time and I am wanting to move to where he is. The cafe is currently on the market but no serious buyers as yet. Someone suggested I could get someone else to run it, thereby keeping it as the area is quickly developing around me. However I am just breaking even and can’t see how someone else could take it on. Do I need to sell or are there other options available? I do have some debt with the business also and can’t see any other option than to sell. Looking for ideas please.

    #1207162
    Paul – FS Concierge
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    Hi And Welcome to the Forums. It is great to have you!

    Thank you for joining Flying Solo and posting today.

    If you are generating a wage, you could hire somebody to run the cafe.

    Buyers generally will be looking at a multiple of full year profit which you don’t have so it is a tough situation.

    Hopefully you will receive some other suggestions from our members.

    Cheers

    #1207163
    Paul Leach
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    If you are taking a wage then that figure could be used to demonstrate that the business is making money to prospective buyers.

    In a smaller cafe is very hard to make good money unless you are working it yourself so I would be careful about putting somebody in there to run it.

    It sounds like the area is growing so the ideal thing would be to focus on what you can do to increase the sales and, at the same time stay focused on your food cost % and wage % as these two make a huge difference to the profit of a cafe.

    Ideally your food cost should be around the high 20% to early 30% mark and wages around 25% [both net of GST]

    If you can build a strong team around you then you will make your life a lot easier and the business will also become more profitable and saleable.

    You may find that one of your team i.e. Barista, Chef, Manager are looking for their own business and you could consider a vendor financed deal if you are confident in their ability. I did this will my first cafe and my two managers ran the business very successfully for 10+ years.
    This was a good deal all round, I sold for above market value, earned good interest and they got a head start into business that they could not have got elsewhere.

    I notice this post is a few months old but thought I would reply anyway, I hope you have found a solution.

    Paul

    #1207164
    Mischelle
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    Hi Zest,

    Paul’s idea of vendor finance it brilliant, have you spoken to any of your staff?

    It is very hard to sell a small business, especially if just breaking even and holding debt.

    ALSO, do you lease the premises or own them? How much longer on the lease – if leased? As this could impact the people looking to buy if there is only one year left on the lease.

    I think creative thinking is needed. BUT the bottom line is are you drawing a wage? If so that could be used to put a Manager in place while you find a buyer.

    Good luck and I truly hope you find someone to take over for you.

    Cheers
    Mischelle

    #1207165
    bb1
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    Both

    A real estate agent friend of mine said that some business’s he couldn’t sell , but put them up lease and they are snapped up. Or the other way around.

    In the end any property that didn’t appear to have an obvious direction, he offered both options.

    You have nothing to lose trying both.

    #1207166
    Brad Horan
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    Paul’s note is a good one.
    Whether leasing or selling you need to demonstrate it is a valuable business.

    If you are leasing you will need to show it can turn a profit whilst paying wage, an you will require a decent length of premise accessibility i.e long lease if you are leasing). It sounds like the issue here may be sales conversion is just not where it needs to be.

    In the meantime look at the following to see what can be improved:
    1. Foot traffic conversion – hoe many people that pass by actually come in – are you getting the most out of foot traffic.
    2. Menu conversion – What are best sellers, how many items do people average – talk to customers find out what is missing (but for every item added to a menu think of what can come off and make sure you do not increase food waste) – most business fail to convert the extra sale by failing to offer customers extras. “oh X is a great choice it goes down really well with Y”. Get rid of low sellers they cost you money and are not inviting.
    3. Hourly conversion – are the peak and low times can you offer something special in the low peak times to increase revenue at those times?

    Cafe’s are a tough business and there is usually plenty of competition in the space. Good Luck!

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