Investment return
Hello everyone,
I keep hearing from current/former restaurant owners various accounts on their experience getting their business up and running and most of all profitable (because rare few people open up a business just for fun). I however am not acquainted or on speaking terms with any coffeshop owners (outside of here) who would share their experience with me. Therefore I am asking here, not for specific numbers, more like how long did it take. I mostly hope to get some answers from people who started their business from scratch by which I mean their own name/brand, new place, new people.
Mostly I am told that putting business into black numbers monthly in first year, initial investment not withstanding, is a small miracle, is that so in your experience?
Also, how long did it take for you to pay the initial investment into your business? I would expect this to be roughly the same for all, because of small business-small profit-small investment and vice versa.
I hope to get some outside answers to these questions since I am having some troubling discussions with our investor and neither of us has actual experience starting business in this industry, so our perspectives on how things should be financially right now differ wildly. I know this kind of questions is sort of intimate, I apologize for that.
Replies to This Discussion
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Permalink Reply by John P on
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First, Our coffee shop is small, it's just my wife and I, and we've been in business for about 9 1/2 years. We are a small volume, high-end coffee shop, so our total numbers are generally smaller, but our percentage of profit is usually higher.
As far as "How long did it take for you to pay the initial investment in your business?" I don't have a clue. A business is in a constant state of change, it's a living, breathing entity, it's not a static thing.
For us, there was continued re-investment, some small, some large and nearly each year after we were open. The separating of "initial investment" from further investments doesn't seem too realistic to me. It just changes the total on the debit column. After our initial investment, we invested another $24K in equipment and $3-5K per year in travel over the next five years, and $2K in paint and wares, and so on and so forth. It's not like you stop making big purchases because you haven't paid for your existing ones. That's what credit lines are for!
If your question is "When did the business make a profit?" It would be 3 months.
If your question is "When were you 100% debt free?" It would be about 8 years. Which is why, 2 years later, we are remodeling our store... but this time, we're paying cash.
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Permalink Reply by Danny Heiss on
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Stay on top of things. And the profits will take care of themselves. If you are farming a business for selling, then a coffee shop isn't the way to go. But if you are looking for a fulfilling commitment of 10-15 years...or longer? Keep your menu pricing up to date. Keep an eye on what's going on in the coffee world through your many sources. Stay on top of your taxes! If you can't, get a trusty CPA. And be transparent. I started my cafe on these principals...without letting one slide or any of them not be at all ready. We made money from day one. But one thing that did catch us off guard was the investment cost. It cost us about twice as much as we thought it would cost us. However, we are close to having it paid off. Hopefully by this time next year, we will be able to cut a salary for the owners. yay!
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