So you want to open a cafe? Read this first
by Daniel Goh
15 January 2015 11:06 AM
Sometime last year, I gave a talk to aspiring food-and-beverage (F&B) entrepreneurs at an event hosted by The Thought Collective, an initiative started by Food For Thought co-founder and now Nominated Member of Parliament Kuik Shiao Yin.
I asked the audience how many of them wanted to open cafes, and half the room had their hands up.
I asked those with their hands up if they had any F&B experience – whether working in the kitchen or manning front-of-house as customer-facing servers – and many hands fell.
Finally, I asked the remaining if they knew exactly why they wanted to open a cafe and many looked thoughtful, pensive and uncertain.
In the end, only two or three hands remained in the air.
That’s why it was little surprise (to me) when The Straits Times ran an article titled ‘Running Cafes No Piece of Cake’ on 28 December 2014.
The article revealed that almost half of all cafes registered in 2011 have closed down, with many citing – among other reasons – the lack of experience and poor planning as reasons why they failed. About a quarter of the 391 that registered in 2013 have already shuttered.
With at least 350 new names registered each year since 2011 – that’s almost one cafe a day, mind you – you would be forgiven to think that everybody in Singapore and their mother wants to open one.
And why not? Working in a cafe sounds like a lifestyle dream come true.
A hidden, tucked-away space in an old neighbourhood estate with minimalist industrial decor. A high-end La Marzocco espresso machine sits in one corner, baristas in leather aprons, and a retro single-speed bicycle hanging precariously on the wall. After all, these are what every respectable hipster cafe needs as a staple.
The number of raised hands in my little experiment during the talk more or less reflect the realities of the F&B space in Singapore – many of us want to open a cafe, but most of those who finally do are destined to fail because they either lack planning, experience or the right motivation.
THREE FACTORS DETERMINE SUCCESS
When the talk ended, Bjorn Shen – the chef-owner of Artichoke – and I spoke to the aspiring cafe owners and we came to the conclusion that three factors determine if they will succeed or fail.
1. Motivation – “passion” is 90-per-cent hard work
I’ve had quite a few people tell me the reason they want to open a cafe is because they love their coffee. I love my coffee too, but how much do you really love coffee? Do you love coffee enough that when you travel abroad, you visit coffee plantations to speak to the growers?
I run The Good Beer Company – a specialist craft beer stall in Chinatown Complex – and I visited more than 20 breweries and spoke to many brewers around the world before I decided I loved beers enough to open a shop selling it.
One of the reasons why the folk over at Chye Seng Huat Hardware have been rip-roaringly successful is because they really, really know their coffee. I still remember my first experience at Papa Palheta’s (in their original location), when founder Leon Foo poured my cuppa and explained exactly why it had to be brewed in a certain way, served in a particular cup type and at a specific temperature.
I was dumbfounded. You don’t come by such knowledge without first learning where your ingredient comes from, and certainly without putting in the hours to make thousands of cups of coffee.
So ask yourself again, how much do you really love coffee?
2. Experience matters – learn from others
Visiting a cafe and running one are two different things.
I once advised a couple of recent school graduates – who wanted to open a cafe – to go work in one for a few months and get some F&B experience first.
Their reply: “Where got time?”
If you don’t work in a cafe first, how would you even know if you would enjoy the experience and handle the challenges?
There is a lot of kitchen preparation work involved, dishes and cups don’t wash themselves, and the toilets certainly don’t automatically clean themselves either.
But more importantly, you pick up skills and knowledge by working the ground first. You may be putting out good coffee, but what happens when your barista decides not to turn up for work one day?
You have to understand the workings of running a food-related business: Engaging and negotiating suppliers, working with the relevant regulatory bodies for food safety inspections (food safety and handling is a big responsibility), and building up the right industry contacts.
There is a reason why the most successful chefs in the world have all worked for other famous chefs – it’s a recipe for success.
If you don’t have time to learn, you better have the time (and money) to fail.
3. Plan for the worst-case scenarios, and then some
Without the right motivations and the appropriate experience, it’s really difficult to plan for your own business. You’re really just a “Paper General” at this point.
To give you an idea, it takes around 12 to 18 months, and often more, for an F&B business to get into the black. You’re usually running with big losses until then, and by the time you get there, it’s time to renegotiate that rental lease.
This is purely conjectural on my part, but I also suspect that many young, inexperienced aspiring owners have the wrong priorities when it comes to planning – they probably have a plan for their cafe’s decor even before they’ve worked out their menu offerings, for example.
They have no idea about grease traps, cooker hoods or even food preparation methods, which determine what kind of equipment they would need (and where to place them) and which, in turn, dictates the size of their kitchen space.
The larger your kitchen, the less seating you can provide, which limits the number of covers (and revenue) you get a day, leading to a longer time to reach profitability. You get the idea.
And it’s not just initial planning. You’ll need a backup plan for the nastiest surprises – I know of a restaurant owner who was forced to close down her Spanish-themed restaurant because her Spanish chef left. She couldn’t find a suitable replacement quick enough, and she certainly didn’t have an idea how to run a kitchen, so closure was inevitable.
The truth of the matter is that if you dig deep enough, the real reason why most people want to open a cafe is often because they love the idea of a cafe lifestyle.
They enjoy chilling out in a nice space with their friends over good coffee and cake.
If this is the case, it is a better idea to renovate your living room to accommodate that espresso machine – it is cheaper and less of a heartache in the long run, and less tiring, too.
Goh is a former public relations manager who switched to become a hawker. He opened up The Good Beer Company in Chinatown Complex in 2011. He also runs 99 Bottles at East Coast Road, and co-owns another hawker stall, Smith Street Taps in Chinatown Complex.