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 tiring businesses to run and 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 percent on sales.
However the labour costs of cafes are 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 that is important 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 cappuccino strips in major cities, and some never close at all such as outlets at major airports.
When valuing a cafe one must take into account all of these factors.
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