Cafe Investment Gone Wrong - Looking for Ideas!

ModBot on 09/03/2023 - 06:09
Last edited 12/03/2023 - 07:04

Hello Fellow Ozbargainers!

I'm long time follower of this forum and absolutely love so many insights from different people and thought it might be good to post this here.

Background
Come from an IT background and have a stable income. I've always wanted to be my own boss and have done quite a few small gigs myself and have always done well. Aimed at having a side-hustle which can generate some money by investment which has good ROI.

Situation
I recently invested in a cafe business (had 0 experience though have worked at a restaurant) with three partners(including myself). We did our due diligence of checking POS records and all other accounts. Spoke to a business consultant before taking over - the sales were good, and considering we continued with the same sales and an increased wages for staff, we would make our returns back in 8-10 months.

However, since we took over, the sales have reduced by about 30 - 40%. We retained 90% of the staff. Our Google reviews were ~4.5 stars when we took over and we have actually managed to increase our average to 4.8 stars. No matter how much effort we put in, we are not even breaking even. All of us have full time jobs and we all ensure that there is no impact to our full time jobs by taking turns of doing things.

I know interest rates are hiking but from what I can understand from other cafes is that their businesses are not seeing much of a drop. I'd not want to name the cafe over here but it's located in a posh suburb with about 3 cafes within 50m.

I'm here to ask my fellow Ozbargainers what would you have done if you were in the same situation?

So far we have -

  • Started the dinner service with an exciting menu but not many people know about it
  • Spoken to multiple social media marketing agencies - they are expensive!
  • Handed out flyers with discount coupons (we are right opposite to a school)
  • Started Happy hours in the evening
  • Tried Instagram advertising - didn't work that great.

Things we are considering:

  • Letterbox droppings (not sure if this will work - I usually throw away any junk from my mail but most of our customers have suggested doing this)
  • Updated website
  • Social media marketing
  • More signage
  • Google / Meta advertising

All of the above needs more $$$ to be pumped in to which everyone of us are a bit hesitant at this stage due to the uncertainty.

I understand that this is a very generic question and like I said, I would not want to name my cafe here as it won't be the right thing to do but I was hoping to gather some interesting feedback on this forum which has helped me in the past.

There has been a steep learning curve for all of us and we really want to make this a successful business but with the uncertainty, we feel that we are trying to win a lost battle!

Happy to answer any questions that you have as long as I don't breach OzB T&Cs.

Please note: All of us are immigrants and have worked on low wages when we came into this beautiful country. When we took over this business we were very clear that we are NOT going to underpay anyone and have a fair working arrangement with every staff. Please do not suggest to cut on wages / staff!

UPDATE

Thanks everyone for the feedback - looking for some specific feedback on offers that would pull you in to a cafe. I've gone through all the comments and there are very good suggestions out there. Here is the link to my comment with all feedback

Financial

Comments

  • apsilon on 09/03/2023 - 06:17
    +18

    Did you change anything? I've seen several cafes taken over by new owners and they've always changed the menu (which includes changing serving sizes) and/or pricing and many of the regular people have stopped going.

    If you've kept staff (most importantly those doing the food/coffee prep), suppliers and haven't changed anything then that is odd. While I'd expect a small drop due to current financial environment, cafes are generally a sure thing.

    • ModBot on 09/03/2023 - 06:25
      +1

      Nothing has been changed. The ONLY change we have done so far is to increase the coffee rates by 20c post the new year. Menu, portions, suppliers are all the same as previous management.

      • apsilon on 09/03/2023 - 06:46
        +5

        That could be part of it but I wouldn't expect 20%+. People see new owners, an immediate increase in their coffee price and just assume there's been price increases on other items as well so just go elsewhere.

        • ModBot on 09/03/2023 - 07:37
          +1

          The price was increased 2 months post takeover. The previous owners had last changed the price 1 Jan 2022. We followed the same, changed the price 1 Jan 2023.

          • apsilon on 09/03/2023 - 08:10
            +18

            @ModBot: Still seems like bad timing IMO. A lot of people are likely away over Xmas etc and come back to a price increase.

            FWIW, and I'm not sure if it applies to hospitality, but in retail Feb is always a poor month. Keep in mind the interest rate increases are specifically designed to curb spending. One of the first things many would cut back on are eating out.

            So you took over around Oct/Nov? Might just have to tough it out for now. Xmas/new year is always rough as many aren't in their regular habits/timetable and you sound like you're still doing everything right.

            • ModBot on 09/03/2023 - 08:17
              +1

              @apsilon: Yep you are absolutely right in your understanding!

              We took over Nov, Xmas / new year were in loss, started dinner early Jan, started breaking even for a week or two, now losses are starting again. Dinner seems to perform better than morning service.

              Long run, we were thinking of shutting down the cafe and turning it into a restaurant cum bar… But again there are quite a few costs involved in that one.

              • iDroid on 09/03/2023 - 08:29
                +145

                @ModBot:

                turning it into a restaurant cum bar

                That could be a risky move - is that like a brothel?

                • filmer on 09/03/2023 - 10:05
                  +15

                  @iDroid: I have not seen anyone write come as cum since high school.

                  • onetwothreefour on 09/03/2023 - 10:25
                    +4

                    @filmer: You obviously have not been reading the comments on condom deals posted on here.

                  • ozprash on 09/03/2023 - 10:34
                    +3

                    @filmer: It's commonly used in business terms in certain regions of the world. Gives me an idea of OP's roots.

                    • filmer on 09/03/2023 - 10:35

                      @ozprash: Thanks for the hit of knowledge. The more you know hey.

                • corgi-runner on 09/03/2023 - 15:51
                  +15

                  @iDroid: Protein is back on the menu

                • drfuzzy on 09/03/2023 - 19:44
                  +1

                  @iDroid: I'm interested in trying that as I find mars bar is too sweet.

                • iCandy on 15/03/2023 - 11:20
                  +1

                  @iDroid: I laughed out loud. Take my upvote.

              • CalmLemons on 09/03/2023 - 11:42
                +4

                @ModBot: Also the economy went to shit since November, so this will be your big reason why. I imagine people around their have huge loans. Interest rate rises would mean and extra $2-3k a month for them.

              • rogerwilko on 10/03/2023 - 17:28
                +2

                @ModBot: When did we stop talking about cum.

          • MrMarket on 09/03/2023 - 10:57

            @ModBot: we got a local restaurant here very popular and very busy, then new owner took over increase price by 20%, the restaurant is now empty most day.
            Not sure what is it but probably human psychology at work

            He has a hard time recovering since

            • juki on 09/03/2023 - 20:41

              @MrMarket: it might just be the time of year, as for prices, it kind of depends what the neighbouring places price theirs and how you look compared to them. I would imagine opposite a school is a good spot, i'm not in a posh area and the coffee shops outside schools are packed in the morning

        • JimB on 10/03/2023 - 10:05

          From what I read, 20c increase to coffee not 20%.

        • uNoWhO on 10/03/2023 - 17:46
          +3

          if there are 3 cafes within 50m i can easily see 20%+ going somewhere else if they increased their prices, the customers are loyal to the old owners, the new owners are hardly ever there (as far as the regular customers see it) most neighborhoods if a few people say "we dont go to that cafe anymore" a lot of people will follow

          Would have been better off having one partner that is the "face" of the company or a manager you all trust, keeping the prices and everything the same for at least a year and during that year building loyalty and your customer base

          • littlemisslovely on 11/03/2023 - 08:38
            +1

            @uNoWhO: Exactly this 👆 I’m a regular coffee goer and it’s all about the feeling
            At least, you need a staff member that knows everyone’s name and coffee order!

            Also - have you asked your staff?
            Send in a friend to observe?
            Who’s your target market? Mums or SAH parents / retirees/ professionals? Ask them for feedback

        • cunningdrew on 12/03/2023 - 14:10
          +1

          Really good point. I would probably know the price of a coffee at my local, but doubtful other menu items. I see coffee go up and assume it's across the board.

      • CalmLemons on 09/03/2023 - 11:41
        +6

        It's just a decrease in spending, especially in a posh suburb where people are more economically aware.

        Who is leading the staff? Was the last owner very active and literally standing there building rapport with the customers? - This may be a big factor.

        You need a good manager/operator someone to lead the pack, not passive investors.

        Even McDonalds requires owners to be there.

        • stumo on 09/03/2023 - 15:02
          +9

          Yep the head staff are very important. I have a 25% shareholding of what OP would call a "restaurant cum bar". A good mate of mine runs it 100% including being front of house manager/host/barkeep, and owns the other 75%.

          I wouldn't have invested if it wasn't for the fact that I know he is a very good people person.

          We are making a killing from it. I have NFI why because people are supposed to be cutting their spending. When I bought in we needed 32k per week turnover to break even. But this year we are having record turnover almost every week and never below 50k.

          • CalmLemons on 09/03/2023 - 19:37

            @stumo: Not sure why people downvote you but it's most likely up to OPs area.

          • drfuzzy on 09/03/2023 - 19:46

            @stumo: Interested what state that is and if city or regional?
            My local area has been dead as a door knob.

            • stumo on 11/03/2023 - 10:56

              @drfuzzy: Its actually in Auckland, suburban but in a well established group of shops in an older fairly wealthy suburb.

              If anything, NZ is about 9 months further down the inflationary road than Oz. But it hasnt stopped people spending at our joint yet.

          • TightLikeThisx on 09/03/2023 - 20:53

            @stumo: I think it's a combination of people being locked up for the last few years and the fact that not everyone owns a home or even plans too these days.

          • Jackson on 11/03/2023 - 09:22

            @stumo: You are making a killing because of post covid everyone is keen as mustard to get out and do something fun, and have just accepted the price isn't going to be cheap. I went out to town the other day and it was busier than precovid days, it was eye opening

        • ItsMeAgro on 11/03/2023 - 18:13
          +2

          Was the last owner very active and literally standing there building rapport with the customers? - This may be a big factor.

          Could be a big chunk of the business was people friendly with the old owner.

          Also OP says:

          All of us are immigrants

          And

          it's located in a posh suburb

          Could some of the old regulars be snobby people who are just a little bit racist?

      • bobwokeup on 09/03/2023 - 16:35
        +1

        Did you offer those who bring their own coffee cup a discount?

      • Zonty on 10/03/2023 - 22:30
        +1

        Fake pos I believe. Have you checked pos was cash based? If cash more then 10% mostly are not real. You can do some promotion happy hour and cost control by buying bulk. Also if is 30% less business then, Time for reduce worker and employer start back to work on busy days.
        Opening time can be also consider.if your cafe busy area may be open for dinner, if opening time first few hours dead then, Can open hour late will save a lot wages.

        • Jackson on 11/03/2023 - 09:24

          he's at a school so early opening would be a big deal

      • eggboi on 12/03/2023 - 11:20

        As a customer, i really appreciate it when businesses announce price changes along with a rationale. Doesn’t have to be an essay, just explaining which prices have risen and why, end with a thanks.

    • Tomcruise on 09/03/2023 - 13:50
      +2

      Coffe, haircuts are the first to go.

  • Adredocto on 09/03/2023 - 06:31
    +6

    Is it a cafe or a bar?
    Most cafes seem to do best in the morning and lunch peak times. I wouldnt choose a cafe for dinner service over a restaurant.

    Did anything change with your coffee production? A lot of cafes generate foot traffic by the quality of their coffee and anything else customers spend in addition is where the profit comes from, e.g coffee and cake/pastry.

    Has foot traffic decreased at all? You also mention being in a posh suburb. Has the vibe of your place changed at all? This bit is obv very subjective.

    • ModBot on 09/03/2023 - 06:38

      Is it a cafe or a bar?

      It's a blend of both but more of a cafe than a bar. We are open from breakfast to lunch. And also dinner on thu, Fri, sat.

      Did anything change with your coffee production?

      We've stuck to the same barista and the same coffee beans used.

      Has foot traffic decreased at all?

      Yes, we have seen a 20-30% decrease in foot traffic. Which is impacting the sales directly. We haven't changed the vibe / decor. Like I mentioned, everything is exactly like it was previously, zero changes except the management.

      • Zeph101 on 09/03/2023 - 11:17
        +1

        Did the previous owner do dinner service on the weekends?
        Could there be more expenses there via wages and food costs that weren't there previously?

      • TightLikeThisx on 09/03/2023 - 20:54

        What caused the change in foot traffic?

  • MS Paint on 09/03/2023 - 06:31
    +21

    Cooked books by previous owner?

    • ModBot on 09/03/2023 - 06:33
      +3

      Have ruled that out. Not tech savvy, impossible to manipulate all records worth three years. Looked at tax records before buying.

      • MS Paint on 09/03/2023 - 06:52
        +34

        Hmmmm. Your target audience is most likely local so I would save on all that fancy internet advertising and focus on the business facade. They need to walk/drive by and go…

        Woah, that place looks neat. I'm going there for my coffee tomorrow.

      • AustriaBargain on 09/03/2023 - 07:59

        What was the previous owner doing in terms of social media?

        • ModBot on 09/03/2023 - 08:39

          Nothing much. They weren't very tech savvy. The area that we are in have an average age of late 30s and quite a few old people!

          On the other hand, we are also in a similar boat, we know the tech, but just don't have the time to do everything, we are firefighting most of the day either with the full time job or with the cafe.

          Very soon planning to outsource the whole social media

          • xis123 on 09/03/2023 - 10:23
            +1

            @ModBot: An Instagram page & word of mouth / post on Facebook e.g: listing on a community page may help!

            • hdog on 11/03/2023 - 19:08
              +2

              @xis123: Yes our local was offering a free small coffee for features on customer social media.. literally simple post a pic or story of your coffee or food, make sure we’re tagged and we’ll give you another coffee for free. Not brain surgery but spreads word of mouth pretty organically.

      • coffeeinmyveins on 09/03/2023 - 08:44
        +4

        Looked at tax records before buying.

        I once looked at a cafe. They reported 30% of their income to the ATO and the rest was cash in hand and under the table.

        • Hasbulla on 09/03/2023 - 10:33
          -1

          this

        • Randolph Duke on 09/03/2023 - 12:35
          +16

          That would imply it's doing than OP says, not worse.

      • stratbargain on 09/03/2023 - 10:58
        +36

        Three years? So the peak of Covid lockdown (Not sure if you're in Vic or somewhere else)

        But it's very possible you just looked at books that were 'cooked' by Covid and the behaviors that went with that.

        Our local suburban coffee shops were never so busy then during Covid. Everyone going out for their one or two walks a day and buying a coffee out.

        This year is the year of return to work. Everyone back in the CBD etc.I don't think you can compare your books from last year and the year before to today.

        Good Luck

        • [Deactivated] on 09/03/2023 - 12:44
          +3

          This makes the most sense.

      • trapper on 09/03/2023 - 13:41

        Wait, so the sales during covid was higher than now?

        • stratbargain on 09/03/2023 - 18:35
          +6

          I’d say for a lot of suburban cafes in VIC they would have been. Especially during the week. I of course have nothing to back that up except my own experience.

          • Nebargains on 10/03/2023 - 10:13
            +1

            @stratbargain: Find that hard to believe tbh. With nothing else to do I visited a local cafe a number of times during lockdowns and generally there were a few people getting coffee and maybe a couple of people getting food takeaway. Obviously this requires less staff but there is no way these cafes (Melb - eastern suburbs) were doing better than now when they have a full dining room most of the morning and lunch.

            • MrTweek on 10/03/2023 - 10:32
              +3

              @Nebargains: Before covid, I worked in the CBD and get coffees and lunch there almost every day.

              Since covid I'm working 95% from home and spend got my coffee and lunch in my suburb. Surely I'm not the only one like that. Cafes in my area haven't really closed, a couple of them have upsized though.

        • AndyC1 on 09/03/2023 - 20:07

          Sure were in the burbs.

      • MrFrugalSpend on 10/03/2023 - 00:21
        +8

        This was my thoughts exactly - it's unfortunately common because not many people sell out of businesses that are truly going great and rewarding everyone well for their efforts!! You don't need to be tech savvy as it doesn't have to be anything to do with sales - it can be the expenses side.
        Also, some do it accidentally not maliciously (or are doing it knowing they want to sell out), and an easy way to accidentally skew the books is get family to volunteer in the business or don't pay the shareholders an arm's length wage when they actually work there a lot for free as it maximises returns by having less properly paid staff on the books. Wages are a big expense.

        Others have different overheads expenses for other reasons - e.g. they don't need dedicated accounting services as they have another family member's business that shares the costs, or this is one of many businesses they run getting economy of scale or reflecting part expenses in a different entity. Others do it by controlling the freehold and leasing the business, and making the business look better by paying low rent or not charging outgoings knowing they are going to sell it. It could be as simple as paying some bills in their own name or another company.

        There's a whole host of reasons why costs can look completely different for different operators based on related third parties' support that doesn't hit those set of books.
        Was an analysis to 'normalise' the costs done?

        For example, another way is maintenance or equipment replacement - some people delay servicing equipment or replacing it knowing they want to sell the business, running it into the ground to avoid costs and make it someone else's problem.

        Other key changes are finance costs, not just interest rates having gone up - you may have different finance arrangements for equipment whereas they owned it all, had it all written down, and paid no interest or had low fixed finance costs.

        Presumably you got Profit and Loss statements - compare the exact lines for lines to understand where the change has occured.
        Is it only revenue down, or are costs up, which costs? etc.

        Further to that, inflation and interest, energy costs are all higher now. It's what happens in an inflationary economy when you can't increase your costs sufficiently without risking impacting your sales.

        If you can narrow it down to just lower sales, it could be as simple as different supervision of staff leading to them not delivering as good of a customer service whereas the previous owner was very hands on in ensuring service delivery. Also note that with inflation eating out / coffee is a discretionary cost and in a tighter economy people will cut back on luxuries. Also with a cafe it can be a lot of personal rapport with the former owner. How is everyone's customer service skills? Language and communication skills with their market? How well do they make coffee really - is it the same as before, it could be overexpressed, too hot etc - coffee is a skilled art…? People may be too polite to say - it needs to be critiqued. "Servicescape" marketing is also important, have you changed decor, menus, appearance of anything, cheapened anything? People judge services based on appearances - maybe it has not been well received by the customers.

  • first in line on 09/03/2023 - 06:42
    +2

    Maybe your competitors have lifted their game?

    • ModBot on 09/03/2023 - 07:17

      Checked this, I know I'm bragging but we have upped our game by bringing in the dinner service. We have won customers that go to another restaurant within the 50m circle.

      • mintygirl on 09/03/2023 - 10:35
        +20

        You know, the cost of wages etc by bringing in the dinner service might be impacting it. How much profit are you generating from the dinner service?

      • Kangal on 09/03/2023 - 22:39
        +2

        Do you think the previous owners had a Drug Syndicate, and was using the cafe to launder their gains?

        So you may have actually improved the business by +30%, but the revenue is down -40%, meaning there's a 70% discrepancy. That my friend could be it, and they simply retired to start Tegridy Farms.

      • iCandy on 15/03/2023 - 11:30

        Do you have a card for customers that u stamp every time they get a coffee and they get the 10th one free? Do you have a day where pensioners get a discounted coffee? Got to do something to make them regulars.

        • ModBot on 15/03/2023 - 13:29

          Yep, we do!

      • stjep on 24/03/2023 - 12:05

        we have upped our game by bringing in the dinner service

        Is it successful? As in, is your dinner service packed?

        Cafe down the road from me has a huge space with a line out the door for breakfast and lunch. Brought in a dinner service that they wouldn't stop talking about. Stopped doing it about a month in because absolutely nobody turned up.

        • ModBot on 24/03/2023 - 13:49

          Fridays are fully packed

    • Nickels n Dimes on 09/03/2023 - 19:29

      This is really likely — if the competition has refreshed their interior to make it more modern, comfortable, or inviting somehow, or if they improved their beans, that can make all the difference in a discerning (esp. hipster) area, particularly if you have 3 other cafes within 50m — for example, in my local shopping strip, there are 4-5 cafes within a short stroll, but they have a high turnover because the local population patronizing them has reached saturation point, so the customers will patronize the most visually appealing option or the ones with the best coffee or most engaging baristas. In some places that won't really matter, it depends on the market.

      Switching to a more full menu is great for the customer, as they now have more food choices, and typically longer opening hours (most cafes close by 3 pm, and most casual dining is open till 8 or 9 pm), but the prospect of squeezing between packed tables of a restaurant won't appeal much to your take-out coffee buyers.

    • ModBot on 09/03/2023 - 07:33

      How closely do you monitor local competitors?

      I got to know this from the previous owners. They have been very helpful. They have a few contacts with the local area cafes and have asked around and let us know.

      How long had the business been trading under previous owners?

      3 years

  • lostgoat on 09/03/2023 - 06:57
    +1

    OP you don't mention if you are on the 3 delivery platforms, and I can assure you with the current interest rate increasing more people are looking for deals via them only .

    • ModBot on 09/03/2023 - 07:34

      The previous owners were not on the delivery platforms.

      We have started UberEats and Menulog but I get about 5-10 orders a week via them per week which is way too low.

      • emoticon on 09/03/2023 - 17:08
        +6

        Don't forget Doordash

  • garetz on 09/03/2023 - 07:03
    +5

    What do you account the 30-40% drop to ? Unless you can identify the factors that led to that drop you are going to get nowhere.

    Is it possible the books were artificially inflated before you bought the business ? It could explain such a large drop in sales straight after taking it over.
    especially since nothing else has drastically changed as you said.

    Although you should check your competitors pricing, if you increased your coffees price by 20c and everyone else is 20c cheaper, people will go out of their way to get the cheapest coffee. Could be you are no longer competitive.

    The way a cafe is profitable is through volume and margin, if you have a barista doing nothing that is a big drain on the business. You need to drop hours by 20-30% to reflect a decrease in sales, you have no choice, would you rather reduce hours or go out of business and your employees lose their job entirely. When the sales improve increase the hours again. I hope you track inventory and what is selling and what is not selling, cut out what is not selling.

    • ModBot on 09/03/2023 - 07:23

      Unless you can identify the factors that led to that drop you are going to get nowhere.

      This is where we are struggling, we have not been able to find where we are going wrong. We've spoken to our customers and they don't feel any change in the quality of food / coffee.

      Although you should check your competitors pricing, if you increased your coffees price by 20c and everyone else is 20c cheaper, people will go out of their way to get the cheapest coffee. Could be you are no longer competitive.

      We use very high quality beans, most of the cafes in the area have also increased post new year (happens every year)

      You need to drop hours by 20-30% to reflect a decrease in sales.

      We've reduced it to as minimal as possible since the last 2 weeks. Saved about 500$ a week in reduced hours.

      • garetz on 09/03/2023 - 07:27
        +1

        This is where we are struggling, we have not been able to find where we are going wrong. We've spoken to our customers and they don't feel any change in the quality of food / coffee.

        There is a gap here, maybe due to your inexperience, that is why you cannot identify the problem, maybe attempt to talk to the previous owners and try to get their experienced point of view.

        • ModBot on 09/03/2023 - 07:31
          +1

          They have given us some valuable suggestions and came and helped us again over the last 2 weeks to see where we are going wrong. They are so sad to see the cafe not doing as much as they did. They have been in constant touch with me to see if they can help.

          They have also suggested bringing in a new menu so that it pulls more people in.

          • garetz on 09/03/2023 - 07:37
            +11

            @ModBot: Is it possible that this affluent area is mostly white or a specific race that the previous owners also were, as you yourself are self professed immigrants that you no longer racially align with these people ?

            I have seen something like this happen before where most of the customers were european descent, mostly greek, the owners were also greek in a deli that operated for 10 years. Then vietnamese people bought the business and there was a precipitous drop of about 50% of the customer base. They were out of business 12 months later.

            • ModBot on 09/03/2023 - 07:42
              +4

              @garetz:

              Is it possible that this affluent area is mostly white or a specific race that the previous owners also were

              It is mostly white, previous owners were Asians, we are Asians as well.
              Like you mentioned, I've had this thought but the local community have been great at supporting us. The regular customers have been coming and telling us that we have been doing a great job! So we ruled that out, but you might be right here

              • garetz on 09/03/2023 - 07:47
                +5

                @ModBot: With bistros and places that do food, alot of places make their menus bigger and bigger over time which leads to confusion to customers which have too much choice. A lot of the time it is better to concentrate on a smaller menu done better that more people will buy than adding new dishes constantly.

                With my coffee I usually like a good croissant or a ham and cheese toastie. There just seems to be something you are fundamentally missing here.

                • ModBot on 09/03/2023 - 07:49
                  +2

                  @garetz: Thanks for the feedback!

                  You're right - toasties are something that we never did and I've added them to the menu going live next week. We are adding wraps, croissants and other stuff that is not too expensive and can easily be taken away!

                  • garetz on 09/03/2023 - 07:53
                    +3

                    @ModBot: Maybe add a soup of the week, make your menu more seasonal. A good cold soup during summer can be very refreshing, while fresh pumpkin soup in the cold times of the year is also very good.

                    Maybe your best bet is to give it time and business will pick back up, increasing your google rating from 4.5 to 4.8 is actually an amazing achievement in itself.

                  • juki on 09/03/2023 - 20:51
                    +4

                    @ModBot: i think you may be adding too many things people walking by arent sure of what you really do (ie if you look too dinner-like i wont go there for coffee, if you look too much like a bar i wont go there for coffee, if you look too much like a coffee shop i wont go there for coffee)

                    I dont really care what ethnic background you are from, you arent a greek deli in which i am planning to buy greek food ect

                    it might be a bad time of year and people havent yet noticed the place has changed, improved

                • cupcake on 09/03/2023 - 10:03
                  +6

                  @garetz: I agree. When I go to a cafe, I just want the simple classics.
                  I want my flat white or iced coffee in Summer. I want my croissants, almond croissants, vanilla slice, lamingtons or custard tarts. I want gourmet sandwiches, toasties and salads. I want fresh juices etc.
                  An exciting new menu is a bit meh for me. Weekends I want a classic full breakfast.
                  When I went up to The Entrance, there was a cafe there that did the best full breakfasts and I went there every day!
                  Like Whale Beach Deli, keep the ingredients fresh, the quality high. I loved their boathouse salad - I could eat it every day.
                  I just think that with 10 interest rate rises in 10 months, people are just not spending like they normally would.
                  Good luck.

                • od810 on 09/03/2023 - 14:31
                  +3

                  @garetz: I think this is the right advise. You should have smaller menu but do really well on these items, you will cut down waste and have a streamline process.

            • trapper on 09/03/2023 - 13:54
              +5

              @garetz:

              Then vietnamese people bought the business and there was a precipitous drop of about 50% of the customer base. They were out of business 12 months later.

              And you attribute that to racism?

              In a lot of small businesses the customer loyalty rests almost entirely on the relationship with the owner.

              I have a favorite place to go get my Pho, tastes the same as anywhere else, but the Vietnamese owner is a great guy; friendly, happy, knows me, knows what I order and always adds a little extra friendly chat to the interaction. I see him in public sometime too, he will always acknowledge me with a wave and a smile. etc

              If he sold up and left the business, I would have absolutely zero connection to that place.

            • ass3ts on 09/03/2023 - 16:37
              +1

              @garetz: It's sad but I've seen this too often.

            • morse on 10/03/2023 - 11:34

              @garetz: Opposite has happened at a traditional Aussie bakery near me. The Vietnamese couple bought from and older white Australian couple. They did a 4 week handover where the old owners worked in with the new owners and introduced them to the customers. The kept the traditional Aussie stuff like pies, cakes etc and add Vietnamese options. Banh mi, rice paper rolls, vermicelli salads. They make and absolute killing. So busy! And very delicious. I think owning being Vietnamese and bringing that into the mix really helped.

    • Nickels n Dimes on 09/03/2023 - 19:38
      +6

      Psychology is a factor there :
      - if you increase prices from $4.30 to $4.50, most customers won't even notice, unless they're still juggling coins.
      - if you increase prices from $4.80 to $5.00, every customer will take a subconscious note, and if they recalled the last cafe 'only' charging $4.90 they will be somewhat more inclined to shift.

      If the quality (flavor profiles, aroma/acidity/body/flavour) of your coffee doesn't exceed your competitor's you may have lost a customer for only 10c.

      • MrFrugalSpend on 11/03/2023 - 11:56
        +3

        It really does work

        "The most definitive study, or at least the current fan favorite, has been put together by William Poundstone in his book Priceless. he takes eight case studies of these “charm prices,” as they're dubbed, and shows case after case that those prices ending in 9 boosted sales by an average of 24 percent, compared to rounded figures. That's amazing! In other words, pricing your product at $99 will, on average, yield 24 percent more sales than if you priced it at $100."Does 99 cent pricing really work? Absolutely."

        https://tech.co/news/99-cent-pricing-really-work-2016-05

        They should be $4.99 due to left digit bias…. not $5
        or $5.99 instead of $6 etc

  • fantombloo on 09/03/2023 - 07:17
    +22

    Traditional business sold with ROI promised in < 1year? Sounds too good to be true. I'd not be surprised when it doesn't happen.

    • ModBot on 09/03/2023 - 07:18

      Well , we did some calculation mistakes but even considering the same amount of sales, with an increased wages should have been about 2 years(worst case scenario)

      • fantombloo on 09/03/2023 - 07:20
        +11

        < 2 years still sounds too good to be true.

        Reality usually starts at 3.

      • MrMarket on 09/03/2023 - 11:03
        +2

        too good to be true, most small business 3-5 years but with a lot of risk
        ASX listed business 14-15 years

        with this number I think your traffic has not dropped 30%, it the number that doesn't add up
        therefore there is nothing you can do because it was never there in the first place.

        you see this on ASX list business a lot because it is public information, some take over management think it a bargain, but once they took over it turned out to be a dud and dog with fleas and they have to written it off as a bad investment.

    • brendanm on 09/03/2023 - 08:23
      +13

      This, who would sell a going concern with profits like that.

    • sacah on 09/03/2023 - 20:13

      Yeah, this was my first thought, something isn't right.

    • SolitaryMan on 12/03/2023 - 15:50

      Exactly, nobody sells a profitable business on a PE <1.

  • admira on 09/03/2023 - 07:19
    +3

    Are the staff happy? I went to a cafe where service was awesome, always enjoyed the interactions with staff - until new management came in and they were clearly unhappy and felt like they couldn't spend time talking to the regulars, and we had a few negative experiences so went elsewhere and never went back.

    • ModBot on 09/03/2023 - 07:26
      +22

      Oh my staff are really happy and are also worried about the low sales. They are trying to help with every part of the business, trying new recipes when possible, doing stuff that no one would expect.

      For example, one of my staff recently bought chocolates for all customers for Christmas, we had also bought a few but the staff did not accept our reimbursement. Sometimes when kitchen closes late, they don't ask for overtime and say that they understand that the business is not running good.

      Considering we are immigrants, we have always believed in keeping our staff happy - they are our assets and we are proud of them!

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