As part of the research into our ultimate guide to owning and running a café or coffee shop, we gathered statistics from 213 establishments across the UK on a range of issues including: average leasehold asking price, typical trading type, length of business established and other selling data.
We hope that the information we gleaned from this exercise will help give anyone thinking of buying or setting up their own cafe or coffee shop business and give them an expectation of what to come across in the industry.
Average cafe annual revenue
There’s no doubt that it’s a fairly competitive market. There are lots of coffee shops and cafes competing for custom on high streets all over the UK – from the big multi-nationals to the tiny artisan operators. That said, as a nation we’re drinking more coffee than ever before – with a whopping 1.7bn cups of coffee shop beverages consumed each year! Customers are becoming more discerning and are seeking out ethically produced sources where they can, as well as patronising independent stores who can offer great service as well as a consistently good brew. If you can tap into a lucrative niche, it can be a profitable business with many rewards.
Majority of cafes reported a turnover of between £75,000 and £100,000, with 15% claiming £250,000+
Average cafe asking price
Cafes in locations with high footfall – like in busy town centres or tourist areas – are likely to have the heftiest price tags, but they’re also likely to be the ones that deliver the best and most consistent profits. Profitability will largely determine any cafe’s asking price but expect to pay for the commercial equipment that is essential to the business’s day-to-day operations: industrial-sized refrigerators, cooking equipment, furniture and the like. If you’re considering the pros and cons of buying versus starting your own business, make sure to factor in the costs of kitting out your coffee shop.
The average leasehold asking price is between £50,000 and £75,000
In rented properties?
With the overwhelming majority of cafe businesses operating from leased premises, buyers need to make sure that the terms of the lease are aligned with their business aims. Commercial leases are often issued for a 10-15 year period. When you buy a leasehold business, you acquire the time remaining on that lease – the term. Be aware that if the remaining lease term is short, it could be more difficult to raise funds, as there’s no guarantee the lease will be renewed at the end of the term, and so cover the period of borrowing. In this case, it may be worth asking the landlord to extend the lease or to draw up a new one – though there’s no compulsion for them to do so.
Out of the total number of businesses sold, just 7% were freehold properties whilst 93% were leasehold.
Business trading type
The fact that so many of cafe owners reported that they operated their businesses on a sole trader basis means that there are plenty of thriving independent business owners out there! Despite the feeling that the high street is gradually being taken over by the big players – Starbucks, Costa and Caffe Nero – it’s good to know that the sector is still open to small business owners. If you’re looking to buy a cafe business and you’re planning to run it yourself – as opposed to employing a management team – it’s worth quizzing the current owner about their own work patterns and weekly commitment to make sure it suits your purposes and matches your ambition.
66% of the cafes and coffee shops polled were sole traders, 20% were limited companies and 14% partnerships
Business ownership length
In fact, 80% of the owners we polled had been running their business for less than seven years, with a sharp drop-off in numbers above that time period and only a dogged few sticking it out for 20 years or more. Obviously, running a café or coffee shop is a full-on job for many – which may explain the seven-year itch. On the other hand, many coffee shop owners start with a small business, honing their skills before selling up to take on a bigger challenge elsewhere.
32% cafe owners have been in the business for three to four years
Ready to take the next step?
Now you know everything about buying a cafe, the next thing to do would be to look at our cafes for sale to see what opportunities are available in your area. We’re always adding more to our selection, so be sure to keep checking back for new opportunities.