How to buy a coffee shop?

| 2 min read

Click here to download a business sale agreement to purchase a coffee shop.

Coffee is one of the largest businesses in the UK. It has become a part of the daily routine of consumers who have become more discerning to what they expect from their coffee.

To buy a coffee shop and make it successful you will need good knowledge of this industry and the shifting trends. This article will equip you with information you need to buy a coffee shop.

What to look for in a coffee shop

When it comes to coffee shops, location is the key. You need a certain amount of footfall to make the business successful. This will allow you to determine who you will be targeting as your customer. For instance, consider the following coffee drinkers:

  • Commuters – if you want to target such consumers, the best place for the coffee shop will be next to a transport hub with your main business as takeaway coffee. You will busiest in the morning and need a rapid turnaround so that the consumers can get where they want on time.
  • Workers – they usually tend to pick up coffee on their way to office or grab a quick coffee in between mid morning meetings. Therefore, the service you provide will have to be quick.
  • Weekday crowds – usually families with babies and toddlers. You will have to make the shop welcoming spot for kids.

You will need a highly trained staff working at the establishment and it can be difficult to find and train good baristas. So you should consider the staff already working at the establishment.

Further, you want the business to have a great atmosphere. Coffee shops today are looking to cater to the gaps in the market. For instance, many coffee shops are popping up which are designed to enable people to stay as long as they like, work productively, and carry out business meetings.

Additionally, you should look for a business which incorporates different kinds of seating and working areas; you want people to be able to work individual and also have private meetings.

You will also need a high speed Wifi to ensure that it can handle the people who use it on a daily basis.

Business valuation

The seller usually hires a business broker to value the business. However, it should not stop you from hiring you own professional valuer to conduct an independent valuation.

Coffee shops are valued according to the average profits earned by the business over several years, together with the value of the premises, equipment and stock.

Due diligence

The process of due diligence is one that provides a thorough investigation into a proposed investment transaction. It means you check the investment worthiness, and assess the full claims made by the owner. This check is usually performed by a solicitor and accountant who act on behalf of the buyer. A large portion of due diligence will involve checking financial statements and accounts.

Click here to find more about due diligence.

If you buy wisely and do thorough research of the background and potential of the business which attracts your interest, you will get immediate access to the existing base of customers and suppliers. This ensures that you know what you are getting into.

Amongst other things you should check the following:

  • Condition and appeal of the fixture and fittings
  • Condition of equipment like the coffee machines and kitchen facilities
  • How many people the business can accommodate
  • Whether the baristas are skilled and good at customer service
  • Footfall
  • When is the shop the busiest

If you are afraid of buying an independent business, another option is to purchase a franchise. If that is what you want to do then you should ask the following questions:

  • How extensive is the training
  • What level of support and advice will be provided by the franchiser
  • How good is their coffee
  • What is the impact of their marketing campaigns
  • Can the franchisor help you with finding a location with high footfall

You need a solid contract

You, as the buyer, will have to produce the sale document. This agreement will have to cover the mechanics of the deal – what is being sold, where it is, how it is to be transferred, and so on. This is where warranties come in. Click here to download a business sale agreement if you are purchasing a coffee shop.

Warranties which are legally binding promise as facts about the business, which provide information relating to the business. Click here to know about how warranties work and why they are important.

Other documents you need

The starting point for documents are those relating to the sale and purchase – of company shares, or of business assets.

Additionally, you may need assignment and novation agreements to transfer contracts the seller is a party to.

If company shares are being sold, then you will need directors service agreements, board minutes to document approvals to changes, and possibly, a new shareholders agreement and new articles of association.

We can help you find exactly what you need for your circumstances if you contact us and ask.

Please note that the information provided on this page:

  • Does not provide a complete or authoritative statement of the law;
  • Does not constitute legal advice by Net Lawman;
  • Does not create a contractual relationship;
  • Does not form part of any other advice, whether paid or free.
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