Opening a coffee shop for my thai friend

[Destiny1990]

12 hours ago, stephen mills said:

Hello Thomas,

not sure if you are stuck on the Bangkok location or not so I'll let you know what I did. Very similar situation what you have and what I ended up doing, although I ended up marrying my friend.

i put up the money, 850,000, for a bar / restaurant on the beach. It has living accommodations for up to 5 people. We use three rooms for staff and rent out 2 rooms to tourists.

we are on the island of koh  Lanta in lanta old town.

we have a 9 year lease. We pay 16,000 per month rent. Additional costs are about 15,000 per year for licences, city dues, garbage pick up, signage costs etc. , our biggest bill is electric. It ranges from 2000 - 5000 per month depending on how many fridges are used and how offen the aircon is on.

Daily sales vary from 4000-12000 for the peak season. We have family look after things when we go back to Canada. i work 6 months in Canada and then come here for 6. I will be retiring in 3 years and then live here full time. My wife comes with me to Canada each year.

we have been here 3 years. Mango House has been established 10 years.

 My wife's family is from east issan and her family looks after her 2 children. She wants to sell the business and move back on a plot of land her family will supply.

to learn more about our place you can go to www.mangohouses.com

the villas are sold but the 2 buildings that house the pub/restaurant and the kitchen are for sale. The rooms are upstairs. Our room has aircon. Everything is here and set up so no need for additional expense on anything. The restaurant has 6 tables, with 2 more for backup and stools at the bar. The kitchen is very large for Thai standards and is well equipped including fridges,freezer,BBQ, oven , microwave etc.

we currently have mango house for sale for 1 million baht.

if this idea suits you we can talk more. We would be prepared to stay on for awhile until she gets the jist of things and feels comfortable with her new surroundings and how it all works.

we have a fresh food market every Sunday and the Chinese lady across the street gets fresh produce in every wed and fri. Most condiments, beer, ice, fruits, eggs, whole and breast chicken and propane etc is right next door. Anything I can't get here I go to Saladan to the grocery store once a week on my scooter. My point here is that it's not difficult with no hassle to get anything you need to sustain the business.

as for the lease, it can be sold at any time and refreshed to a 9 year period if she finds she's not cut out for it.

we have a western and Thai menu and service mostly tourists so it's very busy for 7 months of the year. Lanta old town is a very friendly village where everyone gets along...and there's no fleecing. 

You can reach me at [email protected] or by phone: 0617027642 if you require additional information 

my name is Stephen mills and my wife's name is Ngam. She will be answering the phone, in case your friend wants to chat with her.

 

Gosh what a lively joint and so filled up with customers and i see you really love your establishment painted in fresh colors.just maybe hang up another flag so its more original and perfect.

Edited May 26, 2017 by Destiny1990

[stephen mills]

Lanta Old Town is well over 100 years old. All the buildings on Main Street ( walking street) are made of teak wood. I'm sure the locals would just love it if I painted it gaudy colours . I did however add a Canadian flag ( left side of photo ) to let the tourists know that English is spoken. I built a funky rotisserie ( in front left ) for BBQing whole chickens and pork butt roasts. We also do whole goat and pig for highlight days held in town.

[fordguy61mi]

You say you're not banging her and I believe you, but there is a connection. Why her? There are a million girls in her situation. There is something there you aren't telling us. It doesn't add up. Sorry.

[jeab1980]

It doesnt matter wether hes in a relationship with her now or in the past does it. The main point is hes trying to help her for reasons of his own. But as most (well nearly all) have said coffee shop will not be helpfull. If someone is selling up got to ask the question why? Look at the book for the last few years up to date books including the last 6 months as well. Have know where sellerpacks out his shop with relatives on the day of the viewing. Go a few days before and a few days after. But i would still advise against a purley one product shop.

Edited May 27, 2017 by jeab1980

[tonray]

2 hours ago, stephen mills said:

Lanta Old Town is well over 100 years old. All the buildings on Main Street ( walking street) are made of teak wood. I'm sure the locals would just love it if I painted it gaudy colours . I did however add a Canadian flag ( left side of photo ) to let the tourists know that English is spoken. I built a funky rotisserie ( in front left ) for BBQing whole chickens and pork butt roasts. We also do whole goat and pig for highlight days held in town.

 

How much for a fruit shake ? 100 baht ?

[tpkhk]

Thomas99 - If you are looking for leads on businesses for sale - 

 

- Try Asia Business Brokers (website).  All sorts of businesses.  Matter of fact, the due diligence should yield a good picture as to the issues etc.  Many will be dressed up, but as you keep talking to various sellers, a picture will emerge.

 

- Craigslist Thailand - Under "Business/Commercial - By owner"  

(Lots of bars/hotels, but for instance advertising a Kebab stand).  Here are some sample details;

"Rental fee 25.000 baht/month
1 months deposit. 
Monthly income 150-180000 baht 
Shop still running and open all days And also get orders via foodpanda.

Asking 400K, and negotiable".

They have a Thai contact as well as an English speaking contact.

 

- Sunbelt Asia. (they have a business broking section too).

 

- MLM (Multi Level Marketing) has a bad connotation, but maybe worth exploring some of the better established ones.  If one can succeed in that field, everything else becomes easy.

 

- Meetup (the forum) has several Business Idea/Startup groups.  Maybe a good idea to join/view it as a support group.  If this is absolutely her first time looking at a business, maybe beneficial for her to work with a friend/relative.

 

Good luck with this - you seem very committed and aware of the risks.  If you guide/steer your friend and let her do all of the data gathering work, vet it thoroughly, that process itself will be a great learning experience for her.  

[oldcarguy]

1 hour ago, jeab1980 said:

It doesnt matter wether hes in a relationship with her now or in the past does it. The main point is hes trying to help her for reasons of his own. But as most (well nearly all) have said coffee shop will not be helpfull. If someone is selling up got to ask the question why? Look at the book for the last few years up to date books including the last 6 months as well. Have know where sellerpacks out his shop with relatives on the day of the viewing. Go a few days before and a few days after. But i would still advise against a purley one product shop.

 

if you can figure out the suppliers you might be able to play them a little and get some real numbers of how many supplies they buy a week ........if the Coca Cola guy says they are buying 5 cases a week and they tell you they sell 15 cases , then you have a probem

But get the Coke guy to tell you as he is bragging what a good salesman he is.....and ask if others nearby are buying more.......

 

But really buying a "people business"  whatever the numbers say , you will lose 1/3 = 1/2 of the customers as they are coming for the local chit chat and the new owner is not part of that "crowd"

This is the same as buying a shop with 100,000  of inventory ,  most of it is stuff that will never sell, because if it will sell its already gone and most people will not restock again  if they plan on selling out......

 

I still think a good job is a female Taxi driver who only takes women and kids ,  Clean car , cold water , baby wipes etc

Pick up and deliver to school , shopping etc

[vivasamui]

22 hours ago, JOC said:

Have a friend (Thai) who recently opened a tea-shop.....Nothing to do with real tea, but the Thai version....fancy colors and most importantly the plastic cup with a lid and a straw.....Price for all drinks are 25 Baht.     She is in an average location in Hua Hin (rent 10.000) and is selling about 100 cups/day....little more than half is profit (rent not included). Investment cost very low...see link

So OP this might actually work for your friend....she will get some help from the franchise owner.....cheap is good (customer)   low investment (sponsor)

 

Have a look here.....https://chobcha.com/?page_id=21

Is not "profit " if you haven't deducted rent!

Does franchisor decide on selling price? The rule of thumb for f&b is that your price should be 3x or 4x cost. So your tea should sell for 35-40 baht?

[Destiny1990]

Just give her the money and so she decides all her self seems is the most fair Solution.

[steven100]

14 minutes ago, Destiny1990 said:

Just give her the money and so she decides all her self seems is the most fair Solution.

correct .... it's her doing it ....  she didn't ask for his money to do it so just give her the funds and step back and let her do it  .... if it fails ,  so what ...  if it's a winner  ..great  !!

[Thomas99]

On 5/26/2017 at 3:08 AM, lkn said:

Probably if they think that you are serious, but for you to prove that, may require an initial payment.

 

Though for starters, you can go to the place and stay a few hours to see if what they claim seems believable, i.e. number of customers, orders, how much staff is working (salary expenses), and you can probably get a good guestimate of rent and electricity.

 

I don't expect to see anything resembling the truth, but still think that out of many lies one can build a picture of what is going on. After all, if a business is for sale it'll be not a good one. The trick is to add value isn't it.

Yes, the idea of sitting there a few hours a few days is already in the list, and so are the cakes :)

 

On 5/26/2017 at 6:21 AM, kenk24 said:

Thomas - I don't know that you can introduce an entrepreneurial spirit or desire into a person. Without that inner spark, it is not destined to go well and even with the inner spark, there are many hurdles to success... If you look at the general population, most people are worker bees and they would not be happy with the weight of a business to run... you might be just setting her up for failure and that might ultimately be a more unhappy experience... go for happiness instead. 

 

You probably see a discontented worker and [isn't that most people] and want to do something to help her out and are kindly willing to use your funds to do this... but, maybe there are other ways to use your funds to accomplish this to a limited extent... if the idea is to make her life better and happier, find something that she enjoys, it does not have to be connected to productivity and advancement as we see it in Western terms. It could be a vacation or a trip home to visit her kid, or even a nice television set... since the idea in a larger sense is to use your funds to make her life just a bit more pleasant... if you are not sure - ask her... if you had $xxx - what would you do? 

Good thoughts, which I am understanding. Have done the holiday thing, and have done the motorbike gift and the visit home. Now it's time to take it to another level and check out if she can make a leap forward in terms of how to make a living.

I see some potential, limited to a small shop enterprise, but I want to see her at work.

 

In fact - and I have explained this to her - the whole enterprises rests on 4 pillars:

1 - Work on her first, make her able to deal with people, customers, suppliers, law enforcements etc. She is getting it and within her limits she is showing signs of improvements. I am steering her, pushing her to organise her lists, ask the questions, process the data she collects and explain strategy.

She has now got the concept of shortlisting places etc.

Once the basics are in place, then she can focus on the art of coffee, tea and other stuff. This will include training, apprenticeship.

If she passes all this then step 2 can ensue.

2 - Find a place. This will be fun. Looking for low rent (I'll be paying the rent for a long time I fear) and location location location. No cooking involved, and no factory line coffee making.

3 - Kick-off the whole thing, and allow a few months to adapt and change as required, and see how the skills emerge and settle in.

4 - Run it and never stop adapting.

 

So, what ultimately matters is happiness but this is time to think about getting a job. I think that working in a mall or serving in a restaurant is not as good as running a non-profitable business that I'll be supporting in the background by starting it, steering it and paying rent for.

 

On 5/26/2017 at 6:31 AM, steven100 said:

If you don't open it in a populous area such as Sukhumvit you will not succeed.

At the end of the day there are only 2 outcomes .....   success or failure ...  now if she is as smart as you say then that's a great start.

Just get it going in the upper Sukhumvit area .. say soi 23-39 ... somewhere in that region and go for it .....  don't pick into all those questions too much ..... just do it .

I think the sois you mention are still too expensive rent-wise. More likely soi 71++, but yes start off with something and adapt as needed.

On 5/26/2017 at 7:45 AM, DoctorG said:

If you are dead keen on the coffee idea then she must have some experience going in. Might I suggest a short barista course in BKK coupled with a few months coffee shop employee experience?

 

Anyway; it's your money. If you want to throw it away to make yourself feel good, then that is all good. Best of luck to both of you.

Agreed with all, thanks.

 

On 5/26/2017 at 7:56 AM, yellowboat said:

Invest in her education.  Get her to learn a trade or skill.  That builds confidence and puts her in contact with like minded, and hopefully, successful people.  As many have already said, you are taking a huge gamble in a saturated sector with no experience. 

In some way this is what I am doing, get her to learn a trade. Academic education is not a suitable option in this case I am afraid. As for the huge gamble, I can afford it and the expectations are low, so risk is, technically speaking: 'medium-high probability, medium-low impact'.

On 5/26/2017 at 8:02 AM, williamgeorgeallen said:

so the general consensus is that it is a bad idea and i would agree but if you have money to throw away on a social experiment then why not? have come across this topic a few times and the best advice i have seen is to get her to go work in another coffee shop for a while. there are so many reasons to do this. learning the ropes is alone good enough reason and seeing if the lifestyle suited her is another. if she does it for a year then reassess the situation. see if she is happy and move on from there.

Point taken, see my four step approach above.

On 5/26/2017 at 9:15 AM, Kwasaki said:

OK you know not how get a business up and running and neither does your friend you want to help l take it.

If she is Thai it would easy for finding out with you at your local gov province office.

Then get a experienced business consultant.

Goodluck.

 

Thanks!

If just talking about it gives her a headache , she is not going to last long ,

if she cannot do numbers in her head ,  she is going to have problems ,

 

You will see another side of her when she has to make decisions ,  and if she just skims over things like it does not matter because its YOUR money she is playing with......

 

and one last thing , you understand that you are never going to see her again ,  maybe not that bad but if it works she will be doing 10-12 hour days and have no energy left for you :)

 

Have fun shopping .....

First two paragraphs, yes I am doing this and watching, and she knows it.

Third paragraph: ha ha, that's good. I need my freedom, and I like to have a pet project like this on the side. I'd be at the shop more often than you think and she'd end up kicking me out. Make no mistake, I am doing this for her too, I want her to make a living through her own work in a dignified and autonomous manner. Autonomous from me too, I'd step out of things if I see I am not needed that'd be the most rewarding outcome for me.

On 5/26/2017 at 9:52 AM, Rimbuman said:

Running a coffee shop is not that difficult at all, anyone with a bit of motivation can learn to do that.

Motivation would be the motor of the whole idea, reasons and excitement, etc what this motivation is build on eventually determine the end result. If you want to stand out as a business you'll have to be better and more appealing than others.

Theme of the interior design can be a major contributing factor for a successful coffee shop, Chiang mai has quite a few examples like that. Also selling quality bakery goods to go with the coffee is generally a good think to do.

The one thing that I consider as being most important is the purchase of a good quality coffee machine and the know how of the art of making excellent coffee.

Serve your customers with genuine vibrant Thai hospitality and you'll have winner ;-)

 

Wish you good luck and success Thomas

 

Agree wholeheartedly with all your points, especially with the wishes at the end :)

 

 

 

 

 

 

 

 

 

 

 

[Thomas99]

On 5/26/2017 at 10:55 AM, NiwPix said:

I dont think you'll need to invest 1 million to get it started and operating. half of that should do it. Then covering the losses for the first few months...which shouldnt be too much. As your customer base grows, losses should shrink and eventually turn into profit.

Your biggest investment will be a coffee machine. You'll spend about 100k on it. I wouldnt go for the 40-50k ones for various reasons, but thats a different topic ;). Also, it is the one thing I would recommend to buy new, unless you know the history of the used coffee machine....was clean filtered water run through it at all times or was it tap water? HAs it been serviced regularly?

Cake fridge, used but fairly new in great condition should cost about 30-40k.

These are the one time high ticket items I can think of. Then you'll get tons of small ticket items that will add up + remodeling / furnishing the new place. So my guess is about 500k investment. By the way, the business license for sole proprietorship doesnt cost much...I think 200 baht if I'm not mistaken. No need to hire a lawyer for that nor an accountant. Just ask the department(s) whats needed and how to fill out.

 

Finding the business: Obviously there are many outlets for people to post their business for sale. Being in Thailand, most business will be thai owned and advertised in Thai, so searching in Thai language would be best. Of course it wouldn't hurt to search in English. Just google "Business for sale Thailand"...that should get you started.

 

If you take over an existing business, you have the right to find out all the numbers...income, expenses, profit, recipes, salaries, customer base, suppliers, contracts / commitments ( Nestle loans a freezer chest if you buy their ice cream, coca cola gives a fridge if you buy a certain minumum of their products etc ). If the place come with a coca cola fridge and nestle freezer, you certainly dont want to count that as inventory. Just keep in mind you most likely will get not so accurate numbers. IE: The owner orders 10kg of coffee beans and pays 5000 baht. He pays the supplier and the bill gets thrown in the trash and not entered as an expense. You would never know that expense occurred. Or he claims 300k sales every month, but the cafe often seems dead or just very few customers....does he really make 10k a day?

Basically, you have the right to know as much about the business as the current owner. With some negotiation the current owner may stay a week or more to help the transition.

 

Good that you're keeping it small and dont need / want to hire staff. The high turnover in the restaurant industry is ( I think ) due to it being a low status employment. Quitting after a few weeks or months maybe saves face? "Oh, they werent paying me enough" or "There was no opportunity to grow, so I quit"....if their statements are true or not is a different story. Also, I myself am not 100% sure that that is the reason...just a hunch :)

 

As for apprenticeship in Ubon...not a good idea for two reasons:

1) Ubon is different from Bangkok. People are different, tastes are a little different, salaries are different. Stick with a place in BKK

2) While I like helping when asked, I do not knowingly hire short term staff anymore. I noticed I get quite a few comments from customers that "oh, you have a high turn over rate" etc. While it shouldnt be any of their business how I run my business or what happens behind the scenes, people always will judge by what they see. So I keep my "turnover" as low as possible.

Thanks for all this. It's all very valuable info, I'll save it. No problem for the apprenticeship. I will private message you so maybe if this project moves forward I'll ask you some more specific questions. Nothing overly demanding, don't worry.

 

 

 

On 5/26/2017 at 11:23 AM, ianf said:

The coffee shops that work are the ones that are well-located or have low overheads. Consider this: In Chiang Mai there are 100s of coffee shops. The ones that seem to be effective serve a limited menu of food as well as a wide range of drinks. The ones with customers also have some 'extras':

1. Kids' play area, safe and fun with perhaps sand, bouncy thing, swings and so on.

2. A theme to attract people with a particular interest: cycling for example so cycling groups are offered small discounts, cycling videos etc (many ideas here)

3. Good quality and unusual ice cream (not nestle/walls!). Or other nice cakes that are home made and not the standard fare you find in every coffee shop!

4. Starbucks in Chiang Mai Central Plaza is packed to the gills: but their coffee is hugely expensive and not tasty. Why do peeps go there? Do a survey and find out?

5. A meeting evening for singles (we're not talking sex here)

Anyway: Good luck

Remember that a successful business always has some charisma that the opposition lacks!

Thanks. I am aware of the charisma. To not make it a waste of time some value needs to be added. Some good ideas there.

 

On 5/26/2017 at 11:33 AM, theguyfromanotherforum said:

All these women started dirt poor and didn't have any help whatsoever. The point is if the lacks passion the business will be a failure. Personally I think a coffee shop is a really dumb idea. Like others have said if she was smart she wouldn't be working at the mall. Maybe you just feel sorry for her and want to help. I think a degree would be a better idea than a coffee shop. My wife certainly makes decent money from it.

 

Good luck.

Agree, passion needs to be there and I am looking for it, not only for a week but a persevering willingness to succeed, the thing is that for girls like these there is a substantial waking up to life that needs to be done, it seems there is some kind of apathy. However I see something hidden under there which may be brought to light or maybe not. 

If I wanted a middle class life with car, house and job I would not be here. I rejoice trying to make a difference and once this is done' I'll try again.

As for the degree, this was tried but didn't take off.

 

On 5/26/2017 at 0:29 PM, stephen mills said:

Hello Thomas,

You can reach me at [email protected] or by phone: 0617027642 if you require additional information 

my name is Stephen mills and my wife's name is Ngam. She will be answering the phone, in case your friend wants to chat with her.

 

 

Hi Stephen, thanks for this. It's a longer step that I am prepared to take for a number of reasons unfortunately, but it does sound like a very good thing for someone in the right circumstances.

 

On 5/26/2017 at 0:39 PM, dundas said:

I have some practical experience (risks, pitfalls, etc, and likely outcomes) I'd be happy to share with you if you PM me, as I have spent some years helping a Thai person set up a retail business.

 

Done, thanks!

On 5/26/2017 at 1:08 PM, JOC said:

Have a friend (Thai) who recently opened a tea-shop.....Nothing to do with real tea, but the Thai version....fancy colors and most importantly the plastic cup with a lid and a straw.....Price for all drinks are 25 Baht.     She is in an average location in Hua Hin (rent 10.000) and is selling about 100 cups/day....little more than half is profit (rent not included). Investment cost very low...see link

So OP this might actually work for your friend....she will get some help from the franchise owner.....cheap is good (customer)   low investment (sponsor)

 

Have a look here.....https://chobcha.com/?page_id=21

Thanks a lot, encouraging. It's earmarked.

23 hours ago, Kinnock said:

Ah, the classic 'Thailand Challenge" - how to help someone to set up and run a sustainable, profitable business?

 

Unfortunately in this country only the rich get richer, so it's tough to find a niche where a normal person can make a viable living, but there are some business that can provide a livelihood - and here's my personal thoughts on how to make it work ......

 

Coffee shops can be viable - the margin on coffee is decent for an F&B operation, the capital outlay is reasonably small.  Obviously it will be iced coffee, and the local ice suppliers are low cost and they deliver - so your primary ingredient by volume is low.  There's a very well developed food industry in Thailand, so consumables are easily available at low cost too.  So your biggest cost will be rent (assuming it's not a franchise operation - and unless you're going to invest in a string of quick service restaurants, I'd avoid franchises, as most only make the franchise owners rich). 

 

Location is everything - so you need the right balance of paying for a good location, without the sky high rents of a mall location.  Most shop houses are in the wrong place for a viable coffee shop - which is why most of the small shop-house coffee shops fail.  Look for a small unit in a large condo development.  The customers will be local .... very local ..... so you need a high traffic area in the base of a large condo development.  Rents are often reasonable, and as your catchment is highly focused, competition is not a big risk.  Try to negotiate an exclusive agreement - "I'll take your unit for a12 months, if you guarantee in the contract that you will not rent to another coffee shop business in the condo".  Some condo units include living space - which will save on rent for housing.

 

If you can't find a suitable condo unit, look for a house in a popular moo-ban development, get a unit on the corner of the main drag, and open the coffee shop there.  A bank loan for a house for a Thai can be had for low interest, and paying to own a house is better than rent - and if it fails, just hand the house back to the bank.  Just make sure you are not the guarantor!

 

Add extra services - sell food, noodles, daily essentials etc - the local 7-11 may only be 25 meters away, but many people will prefer to go to the local 'in-condo' shop as that means you don't need to venture out in the heat.

 

Thanks a lot for the well thought advice, which I agree with.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Thomas99]

6 hours ago, fordguy61mi said:

You say you're not banging her and I believe you, but there is a connection. Why her? There are a million girls in her situation. There is something there you aren't telling us. It doesn't add up. Sorry.

Ha ha, I'll leave you with the doubt :)

5 hours ago, jeab1980 said:

It doesnt matter wether hes in a relationship with her now or in the past does it. The main point is hes trying to help her for reasons of his own. 

Yep, just feeling good about it, don't wanna die rich and have plenty of banging to do anyway.

 

 

4 hours ago, tpkhk said:

Thomas99 - If you are looking for leads on businesses for sale - 

 

- Try Asia Business Brokers (website).  All sorts of businesses.  Matter of fact, the due diligence should yield a good picture as to the issues etc.  Many will be dressed up, but as you keep talking to various sellers, a picture will emerge.

 

- Craigslist Thailand - Under "Business/Commercial - By owner"  

(Lots of bars/hotels, but for instance advertising a Kebab stand).  Here are some sample details;

"Rental fee 25.000 baht/month
1 months deposit. 
Monthly income 150-180000 baht 
Shop still running and open all days And also get orders via foodpanda.

Asking 400K, and negotiable".

They have a Thai contact as well as an English speaking contact.

 

- Sunbelt Asia. (they have a business broking section too).

 

- MLM (Multi Level Marketing) has a bad connotation, but maybe worth exploring some of the better established ones.  If one can succeed in that field, everything else becomes easy.

 

- Meetup (the forum) has several Business Idea/Startup groups.  Maybe a good idea to join/view it as a support group.  If this is absolutely her first time looking at a business, maybe beneficial for her to work with a friend/relative.

 

Good luck with this - you seem very committed and aware of the risks.  If you guide/steer your friend and let her do all of the data gathering work, vet it thoroughly, that process itself will be a great learning experience for her.  

Thanks all very useful. Yes, she is doing all the data gathering, in thai and it does seem to be a very good confidence building and learning experience indeed.

1 hour ago, Destiny1990 said:

Just give her the money and so she decides all her self seems is the most fair Solution.

I don't agree with this one. Try giving a child 500k and see what you get. She is not a child but in terms of fitness for doing business in the big world she is a bit like that, she needs grooming, building, steering, material support and I need to assess whether she deserves all that.

Whilst I am prepared to lose all, I am not throwing money away like that (someone else may benefit from this if not her).

And - I did not pick her at random - I know her for a while already, I know her family and so on.

 

Thanks to all for the advice and thoughts, this is very useful and entertaining indeed :)

 

 

 

[johnnysunshine]

Be a specialist and only offer Organic Coffee and Sugar and Milk and offer additions to coffee that others do not,  like stevia as a sweeter or monk fruit sugar or pure unpasteurized honey.  

Also, offer coconut milk and almond milk as alternatives to pasteurized (dead) cows' milk.    

This is where you can truly distinguish yourself from the others...otherwise...ho hum!

[jeab1980]

35 minutes ago, johnnysunshine said:

Be a specialist and only offer Organic Coffee and Sugar and Milk and offer additions to coffee that others do not,  like stevia as a sweeter or monk fruit sugar or pure unpasteurized honey.  

Also, offer coconut milk and almond milk as alternatives to pasteurized (dead) cows' milk.    

This is where you can truly distinguish yourself from the others...otherwise...ho hum!

Thais wint buy normal coffee your additions would for sure nose dive.

[Destiny1990]

1 hour ago, Thomas99 said:

Ha ha, I'll leave you with the doubt :)

Yep, just feeling good about it, don't wanna die rich and have plenty of banging to do anyway.

 

 

Thanks all very useful. Yes, she is doing all the data gathering, in thai and it does seem to be a very good confidence building and learning experience indeed.

I don't agree with this one. Try giving a child 500k and see what you get. She is not a child but in terms of fitness for doing business in the big world she is a bit like that, she needs grooming, building, steering, material support and I need to assess whether she deserves all that.

Whilst I am prepared to lose all, I am not throwing money away like that (someone else may benefit from this if not her).

And - I did not pick her at random - I know her for a while already, I know her family and so on.

 

Thanks to all for the advice and thoughts, this is very useful and entertaining indeed :)

 

 

 

Keep us posted about your ROI...

[maprao]

I agree with your statement she is clever.

 

Goid luck with your venture

 

 

[TravelerEastWest]

On 5/25/2017 at 1:26 PM, ChristianBlessing said:

Perhaps it would be worthwhile for her to take employment in an established coffee shop, both to learn the trade and to discover whether this is something she really wishes to do.

Sent from my Redmi Note 3 using Tapatalk
 

Perfect answer - polite and practical.

[Thomas99]

OK, have seen a couple of places and would like to submit the following budget projection for general revision:

Aside from the start up costs, which I would cover, this is how I picture the rest.

 

Context:

- 2 owners (thai) + 1 staff working in the cafe = 3 salaries to pay

- small medium sized place

- Serving standard coffee shop fare, basic bakery, soft drinks, maybe ready made salads purchased elsewhere.

 

Monthly expenditure:

 

Premises

17,000 rent

3,000 bills

3,000 miscellaneous costs

2,000 buffer

 

Staff

15,000 each (3 staff), including taxes etc.

5,000 buffer

 

Fixed cost

25,000 Premises

50,000 staff

TOTAL FIXED COST 75,000

 

Opening days 25 per month

Projected turnover 5,000 per day

TOTAL MONTHLY TURNOVER 125,000

 

MONTHLY TURNOVER (125k) minus SALARY AND PREMISES (50k) leaves 50,000 to play with.

Now subtract consumables (food, coffee, pastries) and VAT (on 125k) for a total of 20,000.

 

Remainder: 30k/monthly to be reinvested or to be redistributed to owners as dividends.

If daily turnover is 4,000 per day it's break even.

 

This means that the shop would need to have a daily turnover of 4000-5000k to survive.

I can cover start up costs and initial losses.

Is the above making sense? And how do you make 4000-5000 every day? Is it feasible for a small medium sized cafe?

It's above 50 cups of coffee give or take.

 

Thanks in advance.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[NiwPix]

I'll reply in more detail later in the evening, but what do you think your opening hours will be and the locations you looked at: current business or empty? Foot traffic or on the street side ( parking?)


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[varun]

I would revise your average projected daily turnover to 3,000 THB

Assuming an average selling price of 50 THB per cup is reasonable.

 

Initially, the staff will have a learning curve, and their efficiency will be low i.e. no. of drinks they can make per hour

 

There is one major flaw in your estimates.

You haven't calculated your Cost of Goods / Materials that will determine your take-home i.e. profit

 

 

 

[Thomas99]

5 hours ago, NiwPix said:

I'll reply in more detail later in the evening, but what do you think your opening hours will be and the locations you looked at: current business or empty? Foot traffic or on the street side ( parking?)


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Thanks.

Opening hours (flexible, as needed, say 7:30 am to 6 pm?). Am thinking of 6 days per week, but if staff is on rotation maybe 7 days is possible.

Location and 'current business or not' also flexible. Currently am looking at existing businesses, aware that if something is up for sale value needs to be added to it to make it worthwhile, starting new is also a possibility.

I'd like something below a condo, or anywhere. Surely if location doesn't look suitable I wouldn't bite, as I don't want to support the thing for ever.

I think given the lack of experience of everyone involved it should be trafficked enough to generate revenue, but not madly busy otherwise thinks would go tits up in minutes.

I realise my question is very vague, but just want to know if a adequately positioned, smallish shop which keeps three people busy being open 11 hours a day would be able to produce a daily income of 5,000 and if the costs I mentioned are correct (I have some doubts about the 20,000 for consumables + VAT, maybe too low?

 

 

 

[Thomas99]

5 hours ago, varun said:

I would revise your average projected daily turnover to 3,000 THB

Assuming an average selling price of 50 THB per cup is reasonable.

 

Initially, the staff will have a learning curve, and their efficiency will be low i.e. no. of drinks they can make per hour

 

There is one major flaw in your estimates.

You haven't calculated your Cost of Goods / Materials that will determine your take-home i.e. profit

 

 

 

Thanks, point taken about the 3000 daily turnover. Actually I have included that cost of goods (20000 for consumables + VAT), to be deducted from the 50,000.

I'll wait for NiwPix to reply and make another projection. Your further feedback on the line above will help me inform my other projection.

 

If turnover is only 3000 then staff may need to be 2 people (the two sisters owners). No external addition, is it reasonable?

Edited June 1, 2017 by Thomas99

[NiwPix]

Reason I asked about how many hours, was mostly because I was a bit surprised you calculated 15,000 for an employee / worker ( not your friend / sister ). Paying an 'outsider' 15k doesnt really get you any loyalty. Keep in mind that the salaried employees also get paid for their days off and get paid overtime if working more than 8 hours. So, besides paying the employee 500 Baht per day, you'll also be paying overtime ( x1.5 ). We'll talk about this when you're at that step :).

Lets go over your calculations ( By the way, forget about  paying / collecting VAT. You only need to register VAT if your YEARLY SALES are over 1.8 million ).

 

Premises

17,000 rent <--- Clear and straight forward

3,000 bills <----Your water and Electric alone probably will be this high or higher. Depends a lot if you pay your electric to the electricity department directly or to your landlord ( increase unit charge ). You'll also have an Internet Bill ~700 Baht and a business phone bill ~300 Baht.

3,000 miscellaneous costs <---Call this one repairs and maintenance ;). Blender broke. Need a new one or replacement parts ( happens quite frequently ), Coffee Machine maintenance and wear and tear parts need replacing. Water filter needs to be changed. Cash register paper, pen and paper to write down orders. Silverware disappears / gets lost, needs replacement. Coffee cups chip / break. Staff decides not to come to work anymore after payday and doesnt answer the phone anymore...need new uniform again. 3000 a month is cutting it close.

2,000 buffer <--- This can probably safely be added to "miscellaneous costs".

-Advertising/Promotions? ~1000 baht / month?

 

Staff

15,000 each (3 staff), including taxes etc. <--- Friend and sister 15k salary ok. outsider staff its too much and prooobably not even needed.

5,000 buffer <--- you can save this buffer. Salary is usually pretty straight forward and with 45k for 3 people you are already on the safe side.

 

Fixed cost

25,000 Premises <---- go with at least 30k here

50,000 staff <---- 45k is good enough

TOTAL FIXED COST 75,000 <---- still the same number :)

 

Opening days 25 per month

Projected turnover 5,000 per day

TOTAL MONTHLY TURNOVER 125,000 <---ok, lets work with 5k a day and see how much a day you need to sell to reach this number

 

At an average price of 50 Baht per coffee, it would mean you'd have to sell a hundred coffees in an 11 Hour period ( or 9 coffees every hour ). In a perfect world, 1 staff should be able to handle 9 coffees in an hour ( 7 minutes time for each coffee ), however, you'll have times you wont sell any coffee and times you'll get 3 or 4 orders at once. People are ok to wait a little bit for their coffee IF the coffee is worth waiting for ( quality and staff are important here ). Otherwise they can go to the next coffee shop around the corner and get a coffee. 2 staff are plenty to handle 100 coffees a day. Especially with time, it'll flow like clock work. You wont sell a hundred coffees a day at the beginning, so friend and sister have time to work things out.

 

Now, the important thing.....consumables. You'll be surprised how quicky this adds up. Based on 100 cups a day and 1kg of coffee beans costing ~350 Baht

Just the shot of coffee / Espresso will cost you about 7 Baht. If it is a hot coffee ( Latte / Cappuccino ) add maybe another 10 Baht. The customer may add sugar. and the cup/lid/spoon will cost about 3 Baht. The hot coffee you're selling will cost you about 20 Baht. You're selling it for 45/50 Baht.

Iced coffees are a tad more expensive to make ( Again, depending on your ingredients and recipe ), but say about 25 Baht. You're selling it for 50/55 Baht. As a rough guide, you're selling it double of cost ( You'll have spillage and mistakes ).

Selling 100 Coffees will bring you 5000, but cost you 2500

 

Daily cost:

2,500 + ~60 Baht for daily Ice delivery.

2,500 x 25 days = 62,500 + Ice 1,500 = 64,000 consumables.

 

Your cake margin wont be much better either. Buy for 20-30 Baht, Resell 40-60 Baht. Sodas / Softdrink margins are even worse. Try minimize the sale of Sodas....You can still make an ok margin on Water though.

 

64,000 Consumables + 75,000 Fixed = 139,000. Your income is 125,000  = -9,000

Cut down the third employee and you may make a bit of profit.

 

[Thomas99]

1 hour ago, NiwPix said:

Reason I asked about how many hours, was mostly because I was a bit surprised you calculated 15,000 for an employee / worker ( not your friend / sister ). Paying an 'outsider' 15k doesnt really get you any loyalty. Keep in mind that the salaried employees also get paid for their days off and get paid overtime if working more than 8 hours. So, besides paying the employee 500 Baht per day, you'll also be paying overtime ( x1.5 ). We'll talk about this when you're at that step :).

Lets go over your calculations ( By the way, forget about  paying / collecting VAT. You only need to register VAT if your YEARLY SALES are over 1.8 million ).

 

Premises

17,000 rent <--- Clear and straight forward

3,000 bills <----Your water and Electric alone probably will be this high or higher. Depends a lot if you pay your electric to the electricity department directly or to your landlord ( increase unit charge ). You'll also have an Internet Bill ~700 Baht and a business phone bill ~300 Baht.

3,000 miscellaneous costs <---Call this one repairs and maintenance ;). Blender broke. Need a new one or replacement parts ( happens quite frequently ), Coffee Machine maintenance and wear and tear parts need replacing. Water filter needs to be changed. Cash register paper, pen and paper to write down orders. Silverware disappears / gets lost, needs replacement. Coffee cups chip / break. Staff decides not to come to work anymore after payday and doesnt answer the phone anymore...need new uniform again. 3000 a month is cutting it close.

2,000 buffer <--- This can probably safely be added to "miscellaneous costs".

-Advertising/Promotions? ~1000 baht / month?

 

Staff

15,000 each (3 staff), including taxes etc. <--- Friend and sister 15k salary ok. outsider staff its too much and prooobably not even needed.

5,000 buffer <--- you can save this buffer. Salary is usually pretty straight forward and with 45k for 3 people you are already on the safe side.

 

Fixed cost

25,000 Premises <---- go with at least 30k here

50,000 staff <---- 45k is good enough

TOTAL FIXED COST 75,000 <---- still the same number :)

 

Opening days 25 per month

Projected turnover 5,000 per day

TOTAL MONTHLY TURNOVER 125,000 <---ok, lets work with 5k a day and see how much a day you need to sell to reach this number

 

At an average price of 50 Baht per coffee, it would mean you'd have to sell a hundred coffees in an 11 Hour period ( or 9 coffees every hour ). In a perfect world, 1 staff should be able to handle 9 coffees in an hour ( 7 minutes time for each coffee ), however, you'll have times you wont sell any coffee and times you'll get 3 or 4 orders at once. People are ok to wait a little bit for their coffee IF the coffee is worth waiting for ( quality and staff are important here ). Otherwise they can go to the next coffee shop around the corner and get a coffee. 2 staff are plenty to handle 100 coffees a day. Especially with time, it'll flow like clock work. You wont sell a hundred coffees a day at the beginning, so friend and sister have time to work things out.

 

Now, the important thing.....consumables. You'll be surprised how quicky this adds up. Based on 100 cups a day and 1kg of coffee beans costing ~350 Baht

Just the shot of coffee / Espresso will cost you about 7 Baht. If it is a hot coffee ( Latte / Cappuccino ) add maybe another 10 Baht. The customer may add sugar. and the cup/lid/spoon will cost about 3 Baht. The hot coffee you're selling will cost you about 20 Baht. You're selling it for 45/50 Baht.

Iced coffees are a tad more expensive to make ( Again, depending on your ingredients and recipe ), but say about 25 Baht. You're selling it for 50/55 Baht. As a rough guide, you're selling it double of cost ( You'll have spillage and mistakes ).

Selling 100 Coffees will bring you 5000, but cost you 2500

 

Daily cost:

2,500 + ~60 Baht for daily Ice delivery.

2,500 x 25 days = 62,500 + Ice 1,500 = 64,000 consumables.

 

Your cake margin wont be much better either. Buy for 20-30 Baht, Resell 40-60 Baht. Sodas / Softdrink margins are even worse. Try minimize the sale of Sodas....You can still make an ok margin on Water though.

 

64,000 Consumables + 75,000 Fixed = 139,000. Your income is 125,000  = -9,000

Cut down the third employee and you may make a bit of profit.

 

Thanks. I read it all and will go over it tomorrow again.

[onthesoi]

Put the the whole shebang in an interactive Excel doc, so you know exactly how many coffees you have to sell each day/month/ year to stay in the black.

 

....so that when you change one field/cell, for eg the price of 1 coffee then all the other fields automatically update.

[oldcarguy]

Also  are you baking your own cakes 0r buying ?

 

I think the extras are where you make money,

  think of items to sell at the shop and consume there and also take home for later

 

You are not going to make much money selling only coffee ,

 

 

 

[ableguy]

Seems to me a pretty stupid question, why can you not figure out the pit falls your self, if indeed you as bright as you claim, opening a coffee shop and hoping to make money would be akin to opening a Sam tom shop in Los Angeles.

[Thomas99]

12 hours ago, ableguy said:

Seems to me a pretty stupid question, why can you not figure out the pit falls your self, if indeed you as bright as you claim, opening a coffee shop and hoping to make money would be akin to opening a Sam tom shop in Los Angeles.

Go and bring your useless comments elsewhere, you are not welcome in this thread. Thanks.