Beginner’s Guide on Starting a Cafe Business in the United Kingdom
Picture this: today is a good day to take a walk and you stumble upon your favourite café just around the corner from your home. You go in, order your usual meal and drink, and begin planning for the day. Such a place is indeed where everyone can start the day with peace and good food. Now, you might begin wondering if you should consider starting a café business as well to establish a place where people can find comfort and food.
But starting a café business is not as easy as sipping your cup of creamy coffee. You have to do your assignment and review the business aspect of setting up a cafe. This includes creating the concept, company incorporation, budget preparation, and marketing, among others. Allow us to break everything down for you.
What is Cafe Business?
Business trends may come and go, but cafes have stayed the course throughout history. From as early as the eighteenth century, cafes have been sprouting all over Europe. Pre-pandemic figures show that there were more than twenty-six thousand food and beverage (F&B) establishments in the United Kingdom. While this figure dipped during the subsequent lockdowns, the pace is slowly but surely picking up.
Starting a cafe business in the United Kingdom has been gaining traction in recent years. The UK consumers have been gravitating towards cafes, especially those inspired by establishments in France and Italy.
Cafes have been the place to be as well for friends looking to meet and gab as they provide a very welcoming atmosphere. People who like reading books while drinking coffee also flock to cafes nowadays. Truly, cafes have become a major part of the food and restaurant industry not only in the UK but in the rest of the world.
Steps for Starting a Cafe Business in the United Kingdom
If you are planning on starting a cafe business, here are some of the things you should consider so you can get on the right path.
Crafting a Business Plan
Starting a cafe business, or any venture for that matter, requires crafting a solid and detailed business plan.
In your business plan, you must be able to identify your position in the market. What does this mean? You need to know what the primary menu items you will be offering. Can you provide meals for breakfast and lunch? Or will you just stick to offering pastries and beverages? Also, you need to point out how you will differentiate your cafe and menu items from other establishments.
Speaking of other cafes, you also have to conduct competitor analysis. Checking out your competitors is necessary so you will know how you can also establish your own customers. With this, it is important for you to pick the perfect location.
For sales and marketing, you have to set pricing policies for your products—which should be competitive and worthy of the customer’s money. In addition, cafe business owners should exert efforts in promoting their establishments to attract more customers.
Securing Financing For Your Business
Financing plays a major role in starting a cafe business. Cafes, like any other micro, small and medium enterprises, require the right amount of financial backing to turn the business plan into reality.
Here are some of the major expenses or spending you have to account for with your budget:
- rental fee or amortization fee for the premises
- equipment for kitchen and general use
- salaries of employees
- furniture and fixture
- insurance for the business and employees
While it is ideal to use your own money for the initial capital requirement, getting a loan can also be a very good alternative. You can pay it off from the eventual earnings from your operations without having to use your savings immediately.
In securing a loan, however, be prepared to submit the necessary documents, which include your credit history. There is a possibility that your loan request will be denied so you have to make sure that you meet all the bank requirements.
That being said, you should be able to manage your finances well too so you can meet the deadline of loan payment when the time comes.
Remember that money is the lifeline of your business.
Projecting Income of Your Business
When you consider starting a cafe business, you hope to make some money out of this venture. Profitability is one of the primary sources of motivation when one starts a business.
With this, you have to make some income projection so you can know if you will be churning some profits in the future.
Here are some considerations when computing your projected income:
- seating capacity
- daily customer traffic
- average spending per customer
- regularly ordered menu items
Take note, having more seats for your customers increases the chances of earning more for your business. However, you also have to consider how many customers visit you in a day. There can be slow days where only a few place their orders, while there are days when the cafe is overflowing. The latter usually happens during weekends.
In addition, you also need to identify how much the customers spend when they visit your cafe on average. Which are the usual menu items they order? By doing so, you can pinpoint which products are your sales drivers so you can stock them more.
Business Registration Process
When starting a cafe business, you have to be mindful of the regulations and policies so you will not be penalized. Here are a few reminders about company registration in United Kingdom.
Take note: you must register your cafe, which is considered under the food sector, with the local authority before operating. This must be done at least 28 days prior to the commercial opening of your cafe. If you are already operating without registration, do it immediately so you will not have any legal problems moving forward.
Cafes, restaurants, takeaway stalls are required to register because they sell, cook, store, prepare or distribute food and beverages.
Having your business registered early can also allow you to prepare the place for potential inspection by the local authority. During those inspections, you will be given a rating under the Food Hygiene Rating Scheme.
You would want to have a high rating for this inspection because it would help you attract customers.
Necessary Permits and Licenses
Like in any establishment, starting a cafe business requires you to secure a license to operate by registration. However, your cafe should acquire other licenses if you wish to sell liquor or hold events in your establishment.
License to Sell Alcohol
If you are acquiring a license to sell alcohol, you must also secure a premises license for your cafe. This will include permission to serve food and drinks between 11 PM and 5 AM while offering some form of entertainment. For cafes, it is usually live performances or recorded music. You must also assign a designated premises supervisor, who is over 18 years old, to sell alcohol.
You can secure this license from a local council in your area.
Apply for a temporary event notice if you are serving alcohol only on an occasional basis, like special events such as birthdays. Such a permit will allow you to serve alcohol and provide entertainment between 11 PM and 5 AM.
Per year, you can only apply for up to five temporary event notices. But if you can apply for 50 if you already have a personal license yourself to sell liquor.
A local council in your vicinity can provide you with temporary event notices.
As discussed, there are many things you have to put in mind when starting a cafe business. With this, you might want to seek professional help from corporate service provider in United Kingdom. This kind of assistance is something you might need to make sure everything will go smoothly and according to plan.
Contact 3E Accounting today. We are ready to help you turn your business plan into reality.