COMMUNITY CAFES - THE GOLDEN INGREDIENTS
Community cafés are hard to make viable. This is due to a combination of factors such as location, the pressure to keep prices low, and objectives around healthy eating, fair trade, social aims, lack of skills and fair wages.
The golden agreements set out below, can help community cafés become more viable. If you would like to discuss any specific issues or would like support from Neal Howard, then please contact us for a free no obligation conversation.
· It may be a Community Cafe, but it is still a business.
· Establish your business objectives. Is the café an integral part of your community activity or is it a social enterprise with the aim of generating income to support other charitable or community use? Be careful if you may be straying beyond primary purpose trading and you may need to consider whether a trading subsidiary is needed.
· Spend time in a community café that works. You will learn a lot in a short period.
· Make sure you know how you will involve your community such as through activities or volunteering and training opportunities.
· Have a clear understanding of your business and cashflow. This will usually be in the form of a business plan and cashflow forecast.
· Understand your community and customers. How do you differ from other cafés? What makes you unique? Are you targeting similar or different customers and/or members of the community? Will there be any implications for opening times and daily or seasonal variations?
· Market your café effectively to your community. Be clear about how you attract and retain your customers and whether you need distinctive branding.
· Keep the menu simple and avoid it being too extensive. Monitor your sales and mix and update and change your menu regularly to reflect customer demand. Items should be clearly priced.
· Always price to your market and understand the prices that customers are prepared to pay. Use this as a basis for calculating what you should be spending on ingredients. As a rough guide, ingredients should be about 25% of the menu price if you are VAT registered, or 30% of menu price where you are not.
· Know your actual gross profit and make sure you know your target gross profit and manage it on an ongoing basis and keep wastage and stock levels to a minimum. You should be aiming for a gross profit of between 55% and 70%.
· Ensure you understand the potential implications of VAT. Be aware of the threshold for registration of VAT (currently £85k) and the accounting and pricing and cashflow implications.
· Ensure you have the right management and staff, including relevant skills, roles, responsibilities, monitoring, operational cover and opening hours. Understand requirements for any staff or volunteers with special support needs.
· Quality and consistency of service and food are absolutely essential to the success of a café. This includes having clear and effective controls and practices.
· Understand the regulations and good practice requirements for good food hygiene and health and safety requirements and provide clear procedures for staff and volunteers
· Ensure you have reliable and good quality suppliers and charging you the right price. Avoid committing to minimum monthly orders.
· Seek advice before purchasing equipment. Many community cafés are set up with the wrong or unnecessary equipment. Keep it simple: refrigeration, stainless steel work surfaces; cookers (maybe a Panini grill) and a decent coffee machine. Everything else is dispensable
· Always consider the implications for leases, contracts and other commitments you will be taking on.
· Keep good bookkeeping and accounting records. Have effective cash procedures and management accounts. You should use an electronic till at the point of sale and reconcile the cash at least once a day.
· Have adequate insurance in place and hold and comply with any licences needed such as for the sale of alcohol or live music.