Cafe Investment Gone Wrong - Looking for Ideas!

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  ozprash on 09/03/2023 - 10:41

  Anecdotal, but I can personally see myself and many friends who have cut down on buying coffee with price rise and interest rate hikes.
  You said there's a school nearby, can do something to attract the parents after drop-off/before pickup?

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  tomfool on 09/03/2023 - 10:50

  +3

  Sounds like none of the owners are in the cafe, you are trusting someone else to run your business expecting the same enthusiasm and concern as yourself. Have your inventory costs dropped as well, as in does the maths add up with kg's coffee beans ordered vs number of coffees sold? Is there shrinkage you are maybe no aware of?

  • 

    Jaduqimon on 09/03/2023 - 10:54

    +1

    This, i don't think a Cafe is a side hustle… needs commitment cant have a 9-5 job and run a successful cafe…

    • 

      john_conner on 09/03/2023 - 12:38

      How is this not impacting your day to day job if you take turns? Even with 3 people you wouldn’t have enough annual leave to have a presence at all times. Perhaps the very lack of owner presence is causing employees to slack off or “under report” profits.

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  FlyingMiffy on 09/03/2023 - 10:55

  +2

  Family brought into a cafe a few years back. The books were good, sales solid etc. But after the take over, turnover dropped. Basically, most regulars will go elsewhere when the business changes hands, not much you can do to stop it.

  Have you considered reducing the menu to streamline your costs? Most cafe operates on a set of core ingredients that are basically shared by 70-80% of your dishes. Work on that 20%.

  Also, you might want to look at your clientele. While you may work oppositie a school, it doesnt mean the parents are locals and dropoffs and pickups are 15min transit jobs by the parents. They arent going to hang around for a bite. If you are pitching to a younger clientele, you'll need to be on the socials no matter how much it costs. And you mentioned posh, coupons and vouchers wont be that important, do some research on what affluent people like to see when looking for food and drinks - you might get some tips that way.

  Our family lost money on ours, good luck with yours!

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  ntt on 09/03/2023 - 11:02

  Hi OP, I don't want to make any negative assumptions or accusations, but have you seriously looked into those things:
  * Staffs steal your money.
  * Inflation and high interest rate make everyone spend a little less?
  * Bad management leads to unsatisfied/angry customers. Usually around 60% of customers don't confront you to tell you how their feelings are, they just left for another better option.

  After Christmas, a lot of businesses are struggling, as well as customers too, so that's one of many issues you should take into account.

  • 

    CowFrogHorse on 09/03/2023 - 18:05

    If the cafe is run the same as before, why would the public care who the manager is ?

    • 

      I like freestuff on 10/03/2023 - 15:23

      To be honest I immediately just assumed racism when OP said at the bottom of the post they were immigrants however in one of their replies they mentioned they were asian and the previous owners were as well.

      • 

        CowFrogHorse on 10/03/2023 - 17:11

        -2

        Racism exists everywhere. People who dont speak English well are always going to go visit their fellow countrymen. Its the same reason why kids who are 10 play with kids who are 10, and not 15. People like going to others who are the same or whom they share some simialrities.

        DOnt you just love how everyone like this blames Australians for being racist but when immigrants are racist by refusing to speak english thats not racist.

        • 

          ntt on 11/03/2023 - 16:41

          +1

          @CowFrogHorse: I agree and disagree with some of your opinions. "People who dont speak English well " ~~always~ usually go visit where they feel comfortable. If they don't speak English well enough, do you think they easy to order from that cafe, let alone taste bud. Not everyone like cappuccino, latte, mocha, etc… Some of them enjoy Turkish coffee, Vietnamese cofffee, for example.

          Every country is racist, you might be shocked to hear, Asians are more racist than people think. But accusing immigrants are racist because they don't speak English is wrong. How do you know they refuse or just their bad? How many people here go overseas and try to learn another language and come back to tell again? In the end, holding those thoughts is racist for sure.

          • 

            CowFrogHorse on 14/03/2023 - 23:16

            -1

            @ntt: Im sorry i actually tried to explain why behavours happen instead of being lame and trying to paint only Australians as racist. Not all Australians are racist, there are probably many. But the truth is that many non Australians for lack of a better word are also racist and also like you said pick non Australians.

            I was just trying to be fair without writing an encyclopedia with exact figures and exact precise definitions of words. The spirit was to show that SOME often MANY people everywhere do pick thing on what we can call race or other things.

            Problem is others previously were trying to unfairly paint Australians as the only racists around which is clearly not true.

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              ntt on 14/03/2023 - 23:57

              @CowFrogHorse: I find that people in Australia mostly are nice, but again, the word Australians is very vast. Immigrants from every corner of the world come and become a part of Australia, and surprisingly some groups of ethnicities who were treated badly in the past are going to discriminate against other groups. I was been targeted and treated differently from people who were born here. It's understandable but not acceptable, no matter what I try, I can't speak Australian English like local, as I was not young when I came here. Only if you are just like me, you will understand what I'm saying. I had been told to speak English when we had private conversations, even though I had nothing to do with that person, and other colleagues mocked me behind my back, etc…All I can say is please don't hate/attack anyone because they are different.

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              CrowReally on 29/03/2023 - 09:47

              @CowFrogHorse: what an uneducated, stupid take.

              oh, look who wrote it. useless.

              stop making excuses for being ignorant/racist

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                CowFrogHorse on 31/03/2023 - 11:19

                @CrowReally: @Crow

                Big words, have you ever said anything nice or replied with your own idea ?

                Or is that too difficult ?

                No, all. you can do is call people names like a dumb coward.

    • 

      ntt on 11/03/2023 - 16:23

      +1

      You misunderstood my words. When I said my assumption about bad management, I meant new owners might treat staff differently from the previous one. Therefore unhappy or stressed staff could make the business goes down, consequently making unsatisfied customers. Why have to bring racism in here?

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  cheekymonkey on 09/03/2023 - 11:03

  if you are strongly relaying on locals to come in, it could be as simple as them losing loyalty as they knew the previous owner sold it. Was that owner a well known in local community?
  Otherwise, maybe as simple as end of the festive season and people just eat out little less. if it is a posh suburb, it would be hard to determine if these rate rises are having an effect on their spending.
  Any ideas to capture the work-from-home cohort? with some simple take aways or something

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  RSmith on 09/03/2023 - 11:21

  +2

  I used to go to a fish and chips shop which wasn't the closest one to my house. There are plenty more that were closer, however, the owners were good and knew me by name. Once the ownership changed, I never went to that shop. I found one closer to my place and have been going there for a last few years. The owners know that I am one of the regulars and they also know my name.

  So yeah, change in ownership can trigger the loss of customer base.

  • 

    Muzeeb on 09/03/2023 - 13:14

    +1

    Do you get the occasional free potatoe cake? I love it when my regular does that.

    • 

      RSmith on 09/03/2023 - 13:38

      Yeah. I do get every now and then. Good on them for doing it.

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  echelon6 on 09/03/2023 - 11:29

  Interest rates alone could account for what you're seeing

  How can you tell your competitors aren't also hurting? you can't just by looking at them

  personal anecdote: i love eating out. But times are tight, so now I avoid certain cuisines that are expensive in my view. This includes western cuisines. I am really exploring and becoming an enthusiast for Chinese food around Eastwood and Chatswood now, often my wife and I have a nice dinner under $50. We don't cut back, we substitute. This is the dining version of "just shop at Aldi" lmao

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  vchar on 09/03/2023 - 11:31

  +3

  briefly, I'm from a similar background as a software engineer, grew up in a family-run restaurant in my childhood, and used to run quite a successful business (electronic, mobile phone, computer, and various accessories) until I had to migrate here. more or less, I understand quite a bit about customer behaviors.

  when I ran my own business, I only opened my door when I got a call from my customers from the beginning but later after 6 months or so I had to open it full time as I got a long queue of customers. all I did to attract my customers is by using my own concept called "customers => friends => partners".

  many companies, shops, and restaurants are marketing hard and spending a truck load of money just to get people to know their business and only some could turn people into their customers. personally, I think the marketing strategy you used are taken from books or learn from those who learnt from schools/universities. don't get me wrong, I didn't mean it doesn't work but it is quite out dated, probably less effective and extremely expensive for some, especially small businesses.

  instead of paying those marketing agency, why not paying your customers? it is odd, right? let me explain. your customers are the one who know your foods and drinks. if they are happy after having meal at your restaurant, what would they do? definitely, they will recommend it to their friends if they will be asked for one. but that's not enough. you need to exert some more effort to get them helped you willingly but how? it is probably tricky but one way to do it is that you offer them to try your new foods/drink every time they come to have meal at your place and keep communicate with them if you have time. everyone feel very good after being taken care of and being treated well. this will make them feel like you are more of their acquaintances/friends than an owner of the restaurant. what friends would do to friends? of course, they will exert an extra effort to help you. kindness and friendship go a long way. then I leave the task turning them from friends to your partners as a homework :).

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  GG57 on 09/03/2023 - 11:40

  +2

  A cafe near my home recently changed hands.
  The new owners have kept the existing menu and hours, and have taken the time to get to know the customers and what they like / don't like.
  They have also, after about 6 months, added a couple of new items to the lunch menu. I imagine they will review how those go, and either retain or replace with something else. It's trial and error.
  They also noticed that a lot of locals are now working away from the area (now that WFH is reducing), so have introduced a pre-order service for pre-packaged dinners. They offer three selections (usually different curries) each week, advertise and take orders via text and Instragram, and let subscribers know when sold out. They are limiting their risk, but growing the business at the same time. The meals are made during cafe hours, so no need for a dinner service and the associated costs. After 3 weeks, they are sold out pretty early.

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  echelon6 on 09/03/2023 - 11:40

  +1

  I find it surprising the prev owners declared all revenue in previous tax returns. No cafe does this. So what financials did you even get to see while you were doing due diligence? There must've been some management accounts that reported the true figures that were higher than the revenue reported in the tax return, in this case - how can you truly verify the revenue is genuine?

  And even the ATO reported revenue could be fake. It might be worthwhile for the owner to have amended previous tax returns with higher revenues, pay the tax, just to sell the business at a higher amount. The only way to verify sales is to observe all day for a few days, over a sufficient time period to account for seasonality effects. And even then, its a guess. Did you do this step? or did you just take their ATO revenue figure to be truth?

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  lostgoat on 09/03/2023 - 11:43

  I can imagine Milk Bars using previous best biz initiatives to stay alive and even if they did . Very few have survived today . Cafes have a similar onslaught of changes occurring now and to be frank it probably best to be out . Much better business opportunities are elsewhere . If not embrace the new competition from all angles and figure out strategies for the new world.

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  apple2016 on 09/03/2023 - 12:01

  Social media marketing

  This is a tricky item. Some business use social media to market very effectively.
  Maybe you have considered this already but the below is what I would do.

  As a cafe in the suburb, it would make sense to get involved with the community.
  Sponsoring or partnering with a local footy club etc could give you access to local residents and its usually not very expensive.
  Be part of the local facebook groups and message admins to advertise / offer deals to local residents.
  Offer employment to locals.
  reward repeat customer by offering 7th coffee free etc.
  Lastly getting feedback from your customer.

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  7ekn00 on 09/03/2023 - 12:06

  +3

  but it's located in a posh suburb

  I would hazard a guess that this is the issue, these are the type of suburbs that are going to get hit hardest by rate hikes and inflation :/

  0.5% rate increase is much harder on a $1mil+ mortgage than it is on a $250-$500k mortgage …

  10% inflation is more on caviar than it is on carrots …

  Combine the two and these suburbs have far less discretionary income than others ;)

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  Drakesy on 09/03/2023 - 12:12

  +3

  Previous owners likely cooked the books and hiked the number of sales to make it look like a palatable option.

  You may've taken it hook line and sinker.
  Cafe's (even the best ones) are marginal. The ones who make decent money open one and then apply the same template to multiple cafes.

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  alkalinity on 09/03/2023 - 12:22

  No one eats dinner at a cafe

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  JIMB0 on 09/03/2023 - 12:32

  +5

  The only way most of these businesses make a profit is if the owners work in it for free. You haven't purchased a business, you just bought yourself a low paid job with long hours.

  • 

    binti33 on 23/03/2023 - 08:34

    They make profit by selling the business to someone for a profit

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  john_conner on 09/03/2023 - 12:34

  +1

  Did you work at the restaurant / independently verify their sales? Don’t think you can trust their accounting unless it was consistent for several years. Even tax returns for a few periods can be inflated quite easily.
  Could count patrons per night for a week and compare to receipts to see if numbers were inflated.
  Why would previous owners sell if it were profitable?

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  hashtagbargain on 09/03/2023 - 12:40

  -2

  Have you tried advertising on groupon and thefork? It is a great way to invite new customers in store.

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  zyj494949 on 09/03/2023 - 12:49

  Investment is sort of gambling. The universe will deicide if you can win…

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  relentless on 09/03/2023 - 13:17

  +2

  Maybe previous owners cooked the books prior to selling to you

  • 

    nwa on 09/03/2023 - 13:21

    Was going to suggest same. Also I have heard of previous owners staging customers when a prospective buyer comes to view.

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  Empharand on 09/03/2023 - 13:35

  +6

  Could be a number of factors

  Consecutive Interest rate rises, which are suspected to keep increasing until the end of 2023 = Less consumer spending
  Recession = Less consumer spending
  Prices of every day items going up (Groceries, fuel etc) = Less consumer spending

  Did I mention Less Consumer Spending?

  Businesses are shutting down daily as they're unable to keep the doors open so this isn't an isolated case.. I'd say most small businesses are feeling the crunch right now. If everything was booming then you could easily isolate the problem.

  Unfortunately to survive you're either going to need to reduce your work-force, or cut employee hours or reduce your overall business trading hours, otherwise you're going to be another causality of this recession. It's painful to say, but it's the harsh reality of the world we currently live in.

  Would also be interested to know how OP's prices differ to their local competition, could be asking +20% for items that the local 3 competitors aren't

  As a suggestion, as the business is near a school, you could offer the teachers, principal etc of that school a free coffee or drink with every meal over $X, call it a PR move in the form of respect for teachers and what they do. Offer it in the form of something that can't be exploited by others - You might start seeing them come over, and word-of-mouth may set in (thus bringing in more customers).

  • 

    RandomNinja on 10/03/2023 - 11:46

    Yeah, OP needs to understand the reason for the drop in revenue/traffic before taking action. Otherwise they're just throwing money at the problem blindly.

    In addition to increased living costs, a shift in work patterns may also be a factor. OP mentioned their cafe is in a residential area, yet there's been a push to return to working from office. It may be worth researching whether cafes in nearby business areas are seeing a pickup in business/remaining flat vs. declining.

    Additionally, other cafes may not be OP's only competition. If new lunch options (eg: food court, fast food place, food trucks) have opened up or have been more aggressively attracting customers, that could cut in to OP's revenue as well.

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  ihbh on 09/03/2023 - 13:41

  located in a posh suburb; all of us are immigrants

  Were the previous owners migrants like you guys or the same/similar nationality as the locals?

  If not, could it be a racial/unconscious racial thing? Maybe you guys don't work in the business for a while to see what happens; it might take a while because the customers have seen you working there..

  • 

    SpainKing on 10/03/2023 - 10:25

    They've stated that they're the same ethnicity as the previous owners

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  mrvaluepack on 09/03/2023 - 13:59

  The most effective solution and best idea is to have one of the partners full time in sales. In todays terms, that means being full time on and having a presence on insta, fb, twitter, uber eats, google maps, tripadvisor, etc. I would appreciate some kickbacks once you see this taking off.

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  Tomcruise on 09/03/2023 - 14:01

  -5

  This isn't RACIST, it's FACT.
  What ethnicity were the previous owners?

  Example: The amount of takeaways that fail with change of ownership would be above 50%, i can"t see Coffee being any different.

  Previous owners buying Meat of the back of the truck, Drinks that had fallen off the Pallet, Fruit/Veg that was apparently no Good etc, etc. Pumping funds into the business to Clean money etc. The list goes on.

  • 

    bemybubble on 09/03/2023 - 14:31

    Cool story - but you missed the fact part…

  • 

    michaelTito on 09/03/2023 - 14:34

    +1

    bro this aint 2001.

    • 

      CowFrogHorse on 09/03/2023 - 18:07

      Bro many customers are racist, they prefer to buy from people they are relate too or are the same race. Call it whatever you like but thats a fact.

    • 

      Tomcruise on 09/03/2023 - 20:54

      I know. It still happens.

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  trapper on 09/03/2023 - 14:03

  +3

  Maybe the old owners were laundering money with fake sales.

  Before purchase did you sit outside for a few days and actually count the customers coming in?

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  MrMoo on 09/03/2023 - 15:13

  We need more information about your neighbors. It's weird you say they are not experiencing a customer drop. Have you asked them personally or are you just looking at how full it is at a given time?

  Also the previous owners, do they own another café or are they retired? Is it possible they took some of their regulars with them?

  Also you cut 10% of the staff, is it possible the 10% you cut is affecting the customers (They took regulars when they left or bad mouthed your café when you gave them 2 weeks notice)?

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  Bid Sniper on 09/03/2023 - 15:41

  +1

  Focus on core business, things you mentioned isn't about coffee. Said its the same, that's ok but isn't going to draw people, quality and price will. Do you make a different coffee, is there something unique you can do? Coffee + croissant $5 for example. Need to temp people from tighenting their belt.

  Trading hours the same? Are you missing people not opening earlier?

  Coffee more expensive? if so probably your answer. Family member owns a cafe in a posh area, those rich plicks are the cheap @$$holes. How she makes money on upsell to pastries and sandwiches.

  Dinner menu will take time but also additional expense, value add once core business is in place. Id reconsider it.

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  dasher86 on 09/03/2023 - 16:02

  +3

  Does your barista have a beard and tattoos?

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  kalithreaver on 09/03/2023 - 16:15

  My guess is the rate rises and inflation have caused people to second guess spending money on cafes.

  Don't spend money on all that advertising, Maybe lower your prices compared to your competitors to steal their customers.

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  Earl of Lemongrab on 09/03/2023 - 16:20

  +2

  I'd say there's probably something wrong with your coffee…

  Does your machine need servicing, does it get cleaned daily? Are the coffee beans fresh? Has the bean quality changed? Can your barista make a consistent cup of coffee?

  Doesn't matter what improvements you make to your establishment, if you can't make consistent and delicious coffee then you'll lose customers. Get your staff to do a taste blind test of the coffee from your competition.

  Speaking as a coffee addict, a delicious cup of coffee can make someone feel great and productive. If you can make customers feel good through coffee then you'll thrive.

  If you serve me a shit cup of coffee that costs $5-6.. your place is dead to me.

  Harsh words, but make sure you are perfecting the basics.

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  Metcash on 09/03/2023 - 16:33

  As others have mentioned, the owner plays a big part on why customers stay. Once the owner left the customers also have no issue leaving.
  The customers mostly stay due to loyalty and once the owner leaves the loyalty leaves with them.

  The same situation happened to a cafe I used to visit. Over the years I got to know the owner and her family really well and was also happy to go and have a coffee there even though it might not have been the best coffee.
  Once she sold the business, even though the menu and staff stayed I didn't really feel like going back there.
  The new owner isn't as friendly and the staff isnt as friendly anymore due to being over worked by him..

  So as a result I no longer go back. From the outside it looks like the cafe is the same but it lost a big part of why people visited it.

  I suspect the same thing is happening to you.
  You probably have to build rapport with your customers for them to come back.

  • 

    cupcake on 09/03/2023 - 16:50

    I agree. The owner plays a very big part.
    My local charcoal chicken place has the friendliest owner ever - so we always come back.
    If we eat in, he will put a few extra hot chips on our plate with our beef kebabs.
    If I'm with my toddler son, he will give my son a piece of fresh turkish bread.
    If he sees us sitting outside to eat, he will bring over tissues.
    He even buys flowers for customers on Valentines day!
    One time, his baby grand-daughter was there and he just handed her over to me to hold while he cooked up some food. He speaks to everyone!

    So maybe get friendlier and allow your staff to be as well!

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  Stromae on 09/03/2023 - 16:42

  Maybe the previous owner was french or italian and consequently customers were more enticed to buy croissants from a french café or coffee from an Italian barrista as customers felt the food was more authentic? Someone mentioned uconscious bias in a previous comment and that might be a thing.

  • 

    SpainKing on 10/03/2023 - 10:29

    The previous owners were also Asian

    • 

      Stromae on 10/03/2023 - 20:21

      Maybe the previous owners were a family instead of a group of owners. If customers saw the same owners every time instead of a group of 4 owners, they were more familiar with them.

      You should maybe choose one person in your group to be seen as the owner and to build that relationship with the customer.

      Either way if you are successful in I.T, why not pursue a side hussle in I.T where you master the skills better instead of a café business.

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  malich on 09/03/2023 - 16:48

  I used to work in an office which had a relationship with a local cafe. The cafe left an iPad with an ordering system in the office. It allowed us to order in advance and not wait in a queue once we got there

  I always thought it was a great way to build loyalty

  'm sure the same could be achieved without an iPad with all the web based ordering systems available nowadays

  • 

    dasher86 on 10/03/2023 - 09:11

    Considering this is near a school, would suggest some type of relationship like this with the school, and have coffees ready to go at lunch, and break times.

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  bobwokeup on 09/03/2023 - 16:50

  I personally would rather bring my own cup than save on time, as the takeaway culture is a huge issue across Australia, sorry the world. So if you can provide discounts to those who bring their own that would be helpful and would attract customers who do that.

  • 

    ModBot on 09/03/2023 - 17:33

    +1

    yep, already doing this!

    • 

      bobwokeup on 09/03/2023 - 18:04

      Love it, in my eyes you’re already ahead of the competition. Good luck figuring out what is happening, it’s a hard industry that’s for sure.

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  dcep on 09/03/2023 - 17:10

  +2

  National data (up to Jan.2023) certainly doesn't suggests people cutting down their spending on cafe/restaurants/takeaway food services.

  In fact they're on highest ever splurging on eating out and takeaways.

  https://files.ozbargain.com.au/upload/48214/102223/cafes_res…

  https://www.abs.gov.au/statistics/industry/retail-and-wholes…

  • 

    lostgoat on 09/03/2023 - 17:47

    Cafes, restaurants and takeaway food services rose 1.2% ($61.6m) in January, in seasonally adjusted terms

    Taking into account in the strong growth of the 3 delivery services . Those that aren't aboard would be struggling .

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  OZBargain 2019 on 09/03/2023 - 17:45

  +4

  Sorry to hear about your experience. We had similar experince where weekly sale was 15k and selling price was 70k. We did numbers and return were coming in less than a year, wow. Luckly we did not went ahead bcoz it was too Good To Be True.
  I see you had unrealistic expectation of return in 1 year. The normal rule is 3-5 years.
  In terms for business, I have learnt over the period:
  1. Whenever someone sells a business, they will give similar reason - family or moving interstate but actual reason is impact of business on their financial or personal life
  2. The sale during trial could be manipulated - you could pay friends to come during trial period to boost sale.

  It seems numbers have been manipulated otherwise there is no valid reason for 30-40% sale drop apart from you are providing a shitty customer experience.

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  CowFrogHorse on 09/03/2023 - 18:03

  who would have guessed being another boring cafe, doing exactly the same things as everyone else might not win.

  • 

    bobwokeup on 09/03/2023 - 18:05

    +1

    What would you suggest OP does differently to standout?

    • 

      CowFrogHorse on 09/03/2023 - 18:11

      Perhaps theres an oversaturation of cafes in that spot. Possibly the sellers themselves realised this and thats why they left.

      I knew someone who paid people in the office to visit his cafe, buy anything you want and he would refund you, just so the books looked better. Not saying its right but hey there are many ways to fake things.

      Thena gain our friend mentions all the other fake stuff they are trying - like social media and advertising the very definition of fakeness.

      • 

        bobwokeup on 09/03/2023 - 18:23

        Yeah very possible but that doesn’t help OP. We have no idea why they left you’re guessing!!

        Can’t say I’m surprised…

        I disagree social media is a necessary evil. What is posted by a lot of people is fake but to reach your target market you have to use social media today.

        • 

          CowFrogHorse on 09/03/2023 - 19:00

          @bobwokeup: Well it seems our friend seems to think they can fake people via social media, and perhaps they themselves made their decision based on other fake sources like social media etc.

          Some races are just not worth participating in because everybody is cheating and lying like this.

          • 

            bobwokeup on 09/03/2023 - 20:39

            @CowFrogHorse: True that I’m out as soon as I realise someone is lying, they’ll get their karma. Not saying OP is lying but people that do that will find out the hard way at some stage.

            • 

              CowFrogHorse on 09/03/2023 - 22:52

              @bobwokeup: When you advertise or paritcipate in social media you are lowering yourself to their standards, and unfortunately there are no standards in advertising or social media.

              People who endorse something do it for the money, they will literally say anything for a dollar - thats a fact. There is no trust in the concept.

              • 

                bobwokeup on 09/03/2023 - 23:08

                @CowFrogHorse: No doubt about it. I think it’s good to get your name out there by advertising on social media, especially for a physical store. For online stores it’s a different matter as the trust factor is not there, like you pointed out there are no standards so you don’t know what to believe. It’s sad but it’s the world we live in we just have to learn how to identify “dodgy businesses”.

    • 

      wolvesaussie on 12/03/2023 - 20:48

      Not sure what people think of this idea, but as an oz bargainer I love a bargain. I also used to live in the UK and miss having cafes where u can get a cheap breakfast, bacon or sausage sandwich for a couple of quid. All the aussies ones seem to be fancy and expensive. The only coffee shop I got to has a $10 coffee and breakfast roll deal :)

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  namanuu on 09/03/2023 - 18:04

  -3

  I am a google local guide happy to leave you a good review

  • 

    CowFrogHorse on 09/03/2023 - 18:12

    +5

    And this is why social media has no value too a lot of people, its all fake from google to reviews.

    • 

      helpme on 09/03/2023 - 18:35

      +3

      I don't trust google reviews anymore. Too many high 4 star places that just end up being total garbage.

      • 

        CowFrogHorse on 09/03/2023 - 22:53

        -1

        I meant Google the company itself cannot be trusted. Google anything is all bullshite, especial ads, they will literally try and lie and sell you anything as long as the advertising paid their fee, almost anyting can be claimed.

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  vice on 09/03/2023 - 18:26

  Just a couple thoughts as a customer

  Opposite a school - any opportunity to do lunch orders via an app my local cafes do a lot of this

  Customer facing staff - my old work cafe saw tradie business drop off when they replaced young female backers with a male barista. Didn’t matter to me but some customers have a preference, sounds like yours are great though.

  Best of luck!

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  SpotTheOzzie on 09/03/2023 - 19:11

  +7

  So if I'm understanding this correctly. A Business owner, who sweated ownership all throughout COVID, sold you a business that you're expecting the initial investment to have fully returned within 8 months and profit thereafter.

  Mate..c'mon.

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  Jimmycfc on 09/03/2023 - 19:13

  How long is it been?
  Hospitality venues have seasons, from what i have heard February is notorious for being quiet.
  Perhaps compare to the sales in the previous years, not just since you have taken over

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  Rocket on 09/03/2023 - 19:53

  I don’t think this has been asked, but where is the business?

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  mousie on 09/03/2023 - 20:11

  +1

  Cafes are a very me too business.

  I am sceptical for people who sell successful businesses.

  I think your expectations of breaking even in such a short time frame may be unrealistic to then be a passive business.

  Work in it for 3 months, take some leave and listen to your customers.

  Alternatively maybe hire a mystery shopper / diner agency to give qualitative feedback once a month.

  The dine and discover vouchers added a huge sugar hit to food service for a comparable period, belts are shrinking because of cost of living pressures.

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  TightLikeThisx on 09/03/2023 - 20:21

  It's hard to give advice when so little is known about the venue and it's competition. You said you work full time so how do you know it's just your businesses trade that has dropped?

  I suspect that some of that loss of trade is people slowly trickling back to the office. When the pandemic hit people didn't stop going to cafes. They just relocated to the suburbs. All of a sudden cafes in the suburbs were consistently breaking records while serving only take away. At least this is the way it was in Sydney.

  You lose customers due to value (better product/service/ambience elsewhere), convenience (less wait/walk or access to parking elsewhere) or just novelty (somewhere new opens that's just as good but different. External factors can drive these things like offices moving out of the area, roadworks, parking changes etc.

  I would start by asking your manager and other staff. If they are good they would have built rapport with the customer base and know what is going on and why they have stopped coming in. Most customers are pretty forgiving and will tolerate a little disappointment on non frequent occasions. The ones that aren't forgiving will generally be quite vocal about it. Be careful though you could just have a bad manager that if full of excuses or just mediocre staff. If I had to guess I would say that the previous owner might have been a very hands on operator and good with people and now that they are not there no one is stepping up to fill that role.

  I get the feeling that you think you can market yourself out of this situation without looking at the reasons why people are no longer coming into the business. This might not be the right approach if you have changed little about the business and there isn't a large enough turn over of residents in the area. Props for not making sudden changes though. So many first time owners make too many changes too quickly effectively torching the goodwill they just purchased.

  8-10 Months to recoup your initial investment seems unrealistic too. If trade has consistently dropped then I can't understand why you still have 90% of your staff unless you have reduced their hours.

  Cafes are pretty hands on businesses. Unless you have a reliable, motivated, switched on manager that is going to treat the business like their own I wouldn't recommend investing in a cafe unless you have experience in the industry and plan to work there at least initially.

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  Krankite on 09/03/2023 - 20:33

  +1

  Have you seen a drop in transactions or is it just a drop in sales? With the cost of living I've switched to a coffee only order.

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  Typical16-bitEnjoyer on 09/03/2023 - 20:40

  +5

  Lmao, this is a story as old as time. A cafe isn't a side hustle. It certainly won't pay good returns to THREE partners who don't even show up.

  Everything you've mentioned is pointless as the key issue is probably expenditure. How much are you paying yourselves, paying off your initial investment and paying the peeps who actually run your "side hustle" when you're not actually there?

  Peeps who sold you the business laughing from the beach right now.

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  squaredonut on 09/03/2023 - 21:28

  I think it's too many variables to figure out why the sudden drop, but as someone has pointed out, the human loyalty plays a big psychological factor. I've been to a few places regularly to eat out, and when I notice their waiters, front of house etc seem completely different I immediately assume business sold, and also it's like a knock on effect because you think the food also tastes different.

  I think by the way it's going, you either continue with the effort and hope to earn the customer base back one customer at a time. Or you spice it up with ideas to bring it to life.

  • Instagram advertising seems like throwing money down the drain, what about all those entitled and whinging Instagram influencers, the irony is they might actually bring some foot traffic, offer the entire menu for them to eat for free to take photos, probably cheaper than just paying for adverts, those influencers posts is enough to be an advert. I don't know how the influencers go by in terms of expecting payment, but to me it's like one of those give and take situations, I'm sure the ones that have millions of followers probably demand some payment, but there are still foodies who are in the 20k, 30k or whatever who probably could do with some free meals to make content for their own profile, which in turn is still good advert for you.

  • Maybe you need to introduce and interesting niche item as well, which will really drive foot traffic. There's a Chinese Cafe in Rhodes, just like any Chinese Cafe, but one of their instagram-worthy products is literally a lemon tea/coke or whatever with a ice moulded Bear that they put in it. It attracts people who like to take photos, kids like to order it as well, works well, and is easy to do. Then there was some place in St Leonards, I forgot what it sold, but it's like cafe food as well, but their signature was an ice cream cake thats moulded like a small sleeping puppy, it's kind of cute and creepy, but I checked ebay and the mould was only $30 bucks lol, But because it looks cool, and there's fresh flowers garnished around it, big hit, people need to eat other meals too right, so, they order that with other ordinary dishes as well.

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  diceman99 on 09/03/2023 - 21:38

  +8

  Who goes to a coffee shop because of their Instagram Facebook profile. You go there because it is convenient.
  If you've got three to pick from you choose how quickly they serve you, cup size, don't be stingy, price, can I get a seat, free newspapers to read, loyalty card 10th coffee free or something, staff friendly.

  • 

    jason101 on 09/03/2023 - 21:47

    @diceman99 Exactly this….op read his comment to yourself 20x

  • 

    gimme on 10/03/2023 - 05:42

    +1

    You lost me at newspapers

    • 

      Nillionaire on 10/03/2023 - 22:53

      +1

      do we win you back if we replace newspapers with fidget spinners

      • 

        gimme on 11/03/2023 - 05:11

        +1

        More mentally stimulating than local rags for sure

        • 

          Typical16-bitEnjoyer on 12/03/2023 - 16:30

          @gimme: Unfortunately Zoo magazine went out of business

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  twotwotwo on 09/03/2023 - 21:50

  Like others have suggested, I think it is because owners have left. I used to go to this coffee shop because of the owner. We would chat about our lives and family. Wasn't the best coffee and she took ages to make anything but she was nice.

• 

  Hirolol on 09/03/2023 - 22:26

  Did previous owners work there themselves?
  I think it’s different if the owner doesn’t work there.
  They don’t do as welll do they?

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  GourmetFoodie on 09/03/2023 - 22:46

  I suspect the sales numbers you were given by the previous owners were false. Very common. The red flag is you said you would make your investment back in 8-10 months. If a business is generating that much profit, someone is not going to sell it and those kinds of margins are almost impossible in hospitality.

  Going forward, I think you need to ask your customers what they want. Who are your regulars. Why do they come. What can you do better. Cut your menu size to reduce waste. Do a few things but really well. Expand into catering, do take home meals for busy families. Ask the school if you can offer a school family discount for take home meal orders and advertise in their newsletter or social media ect. If you’re in a posh suburb, raise your prices but keep the quality and offering high end.

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  prinsenhof on 09/03/2023 - 23:03

  What I find lacking in most cafes is information about what blend they are using. If they offered multiple blends and put them on the menu board ,then I can experiment until I find the one I like. Having some certainty of what i'll be getting would make me return.

  Don't know how many others would agree though.

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  moo on 09/03/2023 - 23:21

  Have you considered going the opposite by reducing the hours or offerings? Have you modelled for this scenario?

• 

  GuitarXXX on 09/03/2023 - 23:26

  In your due deligence, on top of checking the accounts / books, did you actually stay there and counting customers / orders? Books can easily be cooked for business of this size but not so much for the real customers.

• 

  shreav on 10/03/2023 - 01:09

  Have you considered coffee loyalty? Like, every 6th coffee is free?

  I would think that you want to get customers in for coffee to get them interested in everything else that you have available.

• 

  Prosp24 on 10/03/2023 - 02:39

  There are too many factors to consider specifics, here is a general view from a consumer:

  • if paying for coffee outside of work, i would expect an experience, this could be social (a great ambience or vibe, a fantastic relationship with a service provider, or a place to hang out with friends which would ideally impress and make me look good/outgoing/knowledgable. Is the place giving off positive vibes?

  -in general and from my experience and observation, it is much easier to put someone off with something small than it is to impress them. The smallest characteridtic could put customers off and have them not returning, this could be as simple as a bad smell, a dull conversation/forced small talk, oudated furnishings, an ambient that is isolated/awkward, a lack of/empty food offerings (fear of wastage) or an impression that a business is struggling/calculating of every dollar. No one wants to feel sorry for a small business when getting a coffee… They want a carefree social vibe or a warm homely vibe, and often businesses arent given much of a chance to leave a lasting impression (e.g. you often get one shot early on before being labelled). What you are proud of, may also not impress other people

  • External factors are very important such as your source of demand. If located near other businesses multi trips are very beneficial (e.g. stopping for a coffee next door to the..or while doing ….., impacts to other businesses nearby may reduce traffic), Parking imposes limitations, and if your cafe is isolated then it really needs to differentiate itself to draw in customers particularly those non local to the area. As in that case, people would really need to make an effort and find time to go out of their way just for your offerings, would you?

  Unfortunately mediocre is far too common. Once customers start leaving it can really go into a downward spiral (people like full cafes, not awkward empty ones), if a stigma is established amongst locals it may be better to move on. a critical eye is needed to really understand the current/existing customer base and whether it is feasible to draw in more customers and from what nearby/existing source (e.g. where are they coming from and why), are you retaining new customers and/or why not? Only you can answer this with your specifics

  These are fundamental questions. Looking at old reccords and scratching your head about what once was or might have been probably isnt helpful and irrelevant.
  You need to look at it for what it is now, with a critical nind and to adjust your decision making in real time.

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