Internet Cafe

[Dakhar]

I am thinking about starting an internet cafe venture.

I realize location is always key. So here goes a description of the location.

It would be along Clong 6 about 5 min. moped ride from the college. There is a new (estimated) 30 dorm room type facility being built that I could place a Internet cafe within or very near to the dorms. Secondly, the bus stop is very near by. Also there is a small grocery/snack shop and restaraunt near the dorms. There is also a new 7 town house facility being completed about 2 blocks from the dorms. I know the owner of the dorms, and there are plans to continue building such facilities within the area.

So location seems pretty prime. So lets assume location is fine for the venture. The question at hand would be the, is the margin to expense ratio good enough to make one want to invest in an internet cafe?

[johnnyk]

I don't think its a business I would want to be in.

There is no upside to your pricing for service, its a race to the bottom between you and your competitors.

You're on a treadmill having to constantly invest in new hardware, software, games etc etc.

A local guy moves in next door doing the same thing (and they will if it looks like there is even 10 baht to be made) and if you're falang your business is toast.

And, what can you do to make your place different?

Internet & games are a commodity.

Edited January 14, 2005 by johnnyk

[Indo-Siam]

You start with an Internet cafe. How successful you will be will depend on how many added services you can sell st a profitable rate to customers of that Internet cafe:

Photocopies

Translations

Travel arrangements

Floppy disks, CD's, and flash memory sticksBevergaesand snacks

School supplies

Overseas telephone calls

Courier/packaging/shipping services

Etc. etc.

Cheers!

Indo-Siam

[PeaceBlondie]

Great point, Indo-Siam. I only go to Buddy's Internet now, and CMai is full of internet places, most of which would make a profit only if they're laundering money. I noticed this week that Buddy's has opened up at least one more outlet, also in farang-intensive location next to a 7-11, easy access, and all those services you list above. More than that: bright lights, knowledgable staff who don't go to other shops, long hours (8 AM to 3 AM now!), good connections, clean toilet, etc. They have a fair number of Thai customers, lots of farang. They know their customers, make you comfortable, and rent more motorbikes than most of the motorbike rental places.

[Sunbelt Asia]

So location seems pretty prime. So lets assume location is fine for the venture. The question at hand would be the, is the margin to expense ratio good enough to make one want to invest in an internet cafe?

The odds of success are much higher if you are in a high traffic location with lots of tourist. Then if you can work a deal with an existing business where you will pay 35% of the gross sales for rent, electricity, ISP and labor. You provide the computers and only are called when you need to recharge the smart card reader cards or if a computer breaks down. On average, you'll work 4 hours a week and make a 50% ROI in a year. Impressive but only around 20,000 in your pocket per month. You need to have 5 shops to be making around 100K net per month. A good return for 20 hours a week.

Risk: If the existing business closes in the middle of the night and steals your computers!

www.sunbeltasia.com

[Dakhar]

So location seems pretty prime. So lets assume location is fine for the venture. The question at hand would be the, is the margin to expense ratio good enough to make one want to invest in an internet cafe?

The odds of success are much higher if you are in a high traffic location with lots of tourist. Then if you can work a deal with an existing business where you will pay 35% of the gross sales for rent, electricity, ISP and labor. You provide the computers and only are called when you need to recharge the smart card reader cards or if a computer breaks down. On average, you'll work 4 hours a week and make a 50% ROI in a year. Impressive but only around 20,000 in your pocket per month. You need to have 5 shops to be making around 100K net per month. A good return for 20 hours a week.

Risk: If the existing business closes in the middle of the night and steals your computers!

www.sunbeltasia.com

<{POST_SNAPBACK}>

Thanks Sunbelt. I will need to look into the start up costs... but I think I can keep that fairly low. I have an in-law in Thailand that owns his own computer company, and from what I understand, owns his own computer mfg. facility. He produces his own brand, much like ACER or E-Machine idea. So the computer costs could be low. The Dorms being built are owned by my mother in-law, and the neighboring town houses are owned by my wife... so this is how I have the inside info on future development in that area. Secondly, because they are family, and basically control that area, I do not need to worry about competition... we can manopolize that area. (albiet a small area)

Also, 20K Baht a month, sounds pretty tempting, when compared to 75K USD to build 7 town houses that should produce roughly the same amount of money as the internet cafe. So I would say the costs to margin Ratio is pretty good.

Thanks for the info.... (oh I also like the 4 hours a week work part)

[Sunbelt Asia]

The biggest expense is if you get flat screen LCD's.

If you will be employing the employees, then you are looking at 10,000 Baht per month in salaries.

Be sure to have smart card readers. If your employees though are devious they still can beat the system. Pm me and I'll tell you what to look out for.

Also, be sure you have an Internet License. We can help you with that.

www.sunbeltasia.com

[Darknight]

The biggest expense is if you get flat screen LCD's.

If you will be employing the employees, then you are looking at 10,000 Baht per month in salaries.

Be sure to have smart card readers. If your employees though are devious they still can beat the system. Pm me and I'll tell you what to look out for.

Also, be sure you have an Internet License. We can help you with that.

www.sunbeltasia.com

<{POST_SNAPBACK}>

the smartcard system that many thai internet shops use can be easely circumvented. find assistance from a farang company to setup your network if you want to do it good. + you will need reporting on smartcard usage on each pc to compare to time registered on the cards. this way you can see if somebody steels anything.

a goof firewall might also be an option.