How to buy a Cafe?

| 2 min read

The cafe culture has become huge is the United Kingdom as well as across the world. Cafe business sounds like a good investment as the UK cafe sector has been less prone to the various pressures which many conventional high street retailers are facing.

Should you buy a cafe?

You should first think about your personal interests before you jump to buying a cafe. Owning a cafe requires you to be your own boss, work with others, and manage a team. It will require you to come up with creative solutions to problems.

Further, while you do not require any formal education in hospitality, you need to have realistic expectation which will help you in the long run. Running a successful case doesn’t only take good food and coffee, it is a very competitive industry so you will have to go the extra mile to make you stand out.

You will have to a high profile presence for most of the day, being the cafe owner. You will require having good communication skills as well as front of house role skills. Therefore, if you have experience of catering or of the industry, it can set your business straight.

Overall, you will require having plenty of energy and no little amount of patience.

What are the trending cafe types?

Cafes are different from coffee shops which specialise in coffee mostly. As a cafe owner you will have to offer a varied menu and often alcohol. Here are some of the most trendy cafe types:

Cycling cafes

Cycling has become a lot more common with transportations costs and fares on the rise. Some owners are choosing to cater to the cycling community by opening up their cafes along popular cycling routes.

Nostalgia cafes

To target customers will love to delve back into memories through food, nostalgia cafes are being opened up to cater such customer’s desires.

Pet cafes

Pet cafes are one of the most trending cafe types currently. The Food Standards Agency does allow animals in cafes, you will be requires to take reasonable precaution to ensure that the pets cannot access the food preparation areas.

Why is the owner selling the cafe?

When you come across a  cafe which you like, you should first ask yourself, why is this business for sale. You will have to do through research and ask the following key questions:

  • What is the owner’s motivation to sell? Is it due to viability or profitability?
  • Are the cafe licenses up to date?
  • Is the cafe part of a franchise? If so, how will the franchisor support you?
  • How well is the cafe reputed? You can find out using a quick online search.
  • What kind of relationship does the cafe have with the neighbours?

The owner might be trying to hide something if they aren’t open about the reason for selling.

What to look for in the business?

Customer and competition

You should take a look at the cafe’s surroundings. Is the neighbourhood getting a good footfall and whether that extends to the cafe? You should also consider why the restaurant is successful? It is because of the location and the heavy footfall? Or is it because of a vigorous marketing campaign?

There also may be other cafes in the vicinity. This does not mean it will be necessarily bad for you if you can cater to a niche which no one else is.

You should also tread carefully if the business has a seasonal element, in which case you will have to plan carefully about how you will keep the business afloat during the off season.

Business finances

Due diligence is an essential step before you set your mind to purchasing a business. You can get an experienced due diligence team to evaluate the business for you. The team will take a critical and professional look at the business.

You will need to double check all financial details to ensure it is a good investment. Make sure all the taxes are paid and that all the licenses are up to date. If the business is falling behind on them, it will be a cost to consider.

How to get finance to buy a cafe?

In order to get finance, you must have a clear business plan which shows how you will repay and evidence of your personal investment in the business.

However, you will find that some lenders are a bit reluctant to offer unsecured loans even if you have the above your things in order.

You also qualify for a government backed Start Up Loan which comes with a years’ free mentoring.

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 pizza restaurant.

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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