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If you plan to open a cafe soon, the following question has surely crossed your mind: how much money do you need to open a cafe in Australia? Obviously, the costs might vary a lot, especially if you compare buying an existing business with starting your own café from scratch. For the purpose of this article, we will discuss the latter. So, the answer is: a cafe start-up in Australia will cost you around $500,000.
Don’t be scared about this number. Setting up a café from scratch is a big challenge that comes with an even greater reward. But if it sounds too daunting for you, we have a whole article comparing starting from scratch with actually buying an already existing business. If you feel like this might be an option for you, here is the link for that post. Genuinely, this is the best route for most people.
With our more than 10 years of experience in the coffee industry, we’ve seen many cafes starting from zero and growing to be the most relevant coffee shops in their neighbourhood. Of course, this is the outcome of great planning and a lot of hard work. To help new business owners in this venture, we’ve made the entire calculation of the investment you’ll need, rather than proposing a rough estimation.
Cafe Start-Up: Complete Cost Break down open a cafe
Creating a proper cost plan to estimate and follow up your budget can be the solution that will save quite a few bucks in unexpected costs during the first year of your cafe business.
Have you heard about the six months’ plan? Generally, the Australian Government advises you to calculate 6-month costs for a new venture. However, it’s a major mistake that every new cafe business must avoid. The reason is, the planning for six months surprises you after 1 year — of no help at this point. So, our advice is: instead, plan for 1 year and work on a balance after six months. Follow this pattern until you feel comfortable with your results.
We have previously written a post on how to make your cafe successful, which might bring you some insight on future challenges if you are opening a new coffee shop in Australia.
If you never worked in the industry and have no experience managing a coffee shop, starting with a small cafe might be a good idea if you are someone who wants to play on the safer side. That sort of venue can generate an income of between $50,000 and 180,000 a year as a new business. So, here are a few insights for your business costing.
Registering your Cafe Business
To open a cafe business in Australia, you need to register your business after getting your ABN from the AU government and deciding on your business name. Your cafe registration cost falls under $600, including the business name registration for three years.
Leasing an Area for Cafe
As a cafe owner, pay great attention to your cafe rent. Your cafe location is a very significant piece of this puzzle. You can read more about location specifically in this previous post. For instance, renting a wrong and cheap location will devastate your business compared to an expensive but busy street. Poor location is one of the reason why most cafes fail after their first year. So, to find a great location in a big city in Australia, you’ll be paying around AUD$1000, which amounts to AUD$52,000 per year. Ideally you could dig a little further and find a hidden gem, which will allow you to pay AUD$700 a week, coming up to a total of AUD$40,000 / year.
Renovations and thematic interior design set the tone for your brand. At this point, being creative, you can save you a lot. A well-thought interior modification will cost you nearly AU$10,000. However, if you can save with DIY projects, add the remainder in the “hidden cost section”, which we’ll discuss later.
Commercial Equipment and Furniture needed to open a cafe
Now regarding the basic equipment needs of your cafe. Considering it all, from the coffee machine and other appliances to refrigerators, security equipment and furniture. So, it will cost you nearly AUD$ 100,000, of course depending on the chosen concept and size of your business.
Food and Beverages Stocks
By now, you’ve done with your initial costing. So, now add the inventory cost to your plan. Your stock cost depends on the menu of your cafe. For instance, if you’re mainly dealing with some essential items besides your coffee beverages, you’ll need AUD$20,000.
Your cafe staff is the critical part of your business. No matter if you’re managing your cafe yourself, you’ll need the help of a server, chef, manager, security guard, etc. In comparison, their wages can vary according to the hourly rates. So, having a staff of 4 for minimum hourly wages of $20 for 6-8 hours a day will bill you AU$250,000/year approximately.
Marketing to open a cafe
The least considered investment for a cafe is marketing. It doesn’t cost you a lot. However, by spending zero, you miss the chance to boost your business. You can invest as little as AUD$5,000 a year in marketing and still get reasonable results by getting your concept right from day one
A POS system is a dire need of your cafe. By tracking your sales, cash flow, and cafe inventory and evaluating the records, you can manage your expenses and get more profit. The POS for a small business will charge you over AU$1500 per year.
By now, most of the cafe owners feel exhausted, so they neglect the hidden costs of their business. Which will eventually affect their business plan. For example, your own wages, number of hired staff, breakage funds, little compensations, insurances, taxes, GST and superannuation can add a positive curve in your business cost. So, add up to AU$ 50,000 to your all-inclusive plan.
Cost to open a cafe in Australia: Our Take-away
By now, I believe it is possible to have a rough idea of where you stand. So, here is our model that you can follow.
|Rent||Business Structure||Interior Designing||Cafe Equipment||Staff Salary||CafeStock||POS||Marketing||Hidden Costs||Total|
In a nutshell,
You’ll need AU$500,000 to set up a small cafe that’ll help you generate lucrative profit at the end. However, to launch a large scale business, you can multiply the figures, though not ideal for newbies. Overlooking the monetary details or cutting on them helps little with your business. In contrast, an incredible plan with powerful follow up surely guarantees the success of your cafe. Good Luck!