Cafes are one of the most popular business categories in Australia.There are thousands of cafes sold every year. They are sold in such numbers because there are so many, but also because they are demanding and tireing business to run and to operate and many owners of cafes tend to be burnt out after a few years.
Many cafes are part of franchise chains or managed chains such as Gloria Jeans, Coffee Club, Jamaica Blue or Dome, but there are also thousands of stand alone cafes which are excellent businesses.
The gross profit margins on coffee are very high and it is quite common for cafes to operate on gross profit margins of sixty to seventy per cent on sales.
However the labour costs of cafes is also high and owners need to be very professional with pay rates, rostering and staff to turnover ratios to remain profitable.
Food wastage is another expense area which is impotrtant to cafes and of course the annual rental for the premises lease is a critical factor.
Some cafes operate just five days and for short hours such as in city office blocks, some operate seven days such as in the capuccino strips in major cities ...and some never close at all...such as the Hudson outlets at major airports.
When valuing a cafe one must take into account all of these factors.