Should I buy an already existing Coffee Shop or Cafe?

Starting a coffee shop or cafe from scratch can be an exciting venture, but it’s not without its challenges. The process of setting up a new business requires significant time, money, and effort to create a brand, find a location, build a customer base, and establish a steady stream of revenue.

We’ve sold 100’s of coffee shops and cafes over the years, and know that buying an already existing venture can be a wise and strategic option for aspiring business owners.

10 key advantages of buying a coffee shop or cafe that’s already up and running:

1. Instant Cash Flow
One of the biggest advantages of buying an existing coffee shop or cafe is the established customer base and steady cash flow. Starting a new shop can take months or years to become profitable as you build loyalty. Purchasing an existing business allows you to skip this stage and step into a functioning operation with a proven demand, providing immediate revenue and financial stability while you improve the business.

2. Proven Business Model
Buying an existing coffee shop or cafe means inheriting a proven business with established operations, supplier relationships, menu, and brand. This reduces the risks of launching a new concept, allowing you to review past performance and make informed adjustments instead of testing unproven ideas.

3. Established Brand Recognition
An existing coffee shop or cafe is likely has brand recognition, making it easier to attract customers compared to starting from scratch. If the shop has a strong local following, you can leverage its reputation to expand and attract new business without heavy investment in brand awareness.

4. Trained Staff
Hiring and training staff can be one of the most time-consuming aspects of opening a new coffee shop or cafe. When you buy an established business, many of the employees may already be in place and trained, familiar with the shop’s systems and routines, saving you a considerable amount of time and energy in the early stages of ownership.

5. Existing Supplier Relationships
Building relationships with suppliers from scratch can be a long process, as it involves negotiating prices, securing inventory, and ensuring product quality. An existing coffee shop or cafe already has established relationships with suppliers, which can save you time and effort. These partnerships might even come with discounted rates based on the business’s volume, which can improve your profit margins right from the start.

6. Location, Location, Location
The location of a coffee shop or cafe plays a critical role in its success, and finding the right spot can be one of the most challenging aspects of starting a new business. By buying an existing coffee shop or cafe, you’re securing a location that has already been tested. You’ll know the foot traffic patterns, parking availability, nearby competitors, and the overall appeal of the area.

7. Access to Existing Systems and Tools
An established business will likely have an array of systems and tools in place to run the business efficiently. This includes accounting systems, POS systems, inventory management, scheduling software, and marketing tools. These systems may already be optimised for the business, saving you the time and effort of setting up your own.

8. Lower Risk
Starting a new business is risky, with many coffee shops failing due to location, marketing, or financial issues. Buying an existing coffee shop reduces risk by offering a track record, financial transparency, and insights into cash flow and growth potential. While risks remain, the chances of sudden challenges are lower compared to starting from scratch.

9. Potential for Immediate Growth
An existing coffee shop may have untapped growth potential, such as expanding the menu, improving marketing, offering catering, or upgrading the interior. You can leverage the shop’s strengths while making improvements, uncovering opportunities to boost revenue and customer satisfaction that the previous owner may have missed.

10. Easier Financing
Securing funding for a brand new coffee shop or cafe can be difficult, especially if you don’t have a proven track record or experience in the industry. Lenders are more likely to offer loans for an existing business with a stable cash flow and established reputation. This makes buying an existing coffee shop or cafe a potentially easier funding option compared to starting one from scratch. Through Sovereign’s trusted finance partners, you may even be able to secure better loan terms based on the financial history of the business.