It is no secret that Indians love a cup of freshly brewed tea or coffee any time of the day! In fact, most Indians cannot start their day without a hot cup of tea/coffee! So, with the recent surge in the eating out culture, thanks to western influence, the café business has seen a massive growth in the past decade or so. Amongst the many eating out joints, youngsters specifically gravitate towards cafes as a place for hanging out with friends over some delicious drinks and pocket friendly snacks, some quiet ‘me time’or quality work time. It would be apt to say that cafes have become the go to place for today’s young generation.
From a business point of view, according to recent surveys, the coffee shop business in India is expected to grow at a CAGR of over 11% by 2021. Hence, considering the current boom, opening a coffee shop can prove to be a viable business venture, if done right!
Like with every business, before commencing operations, you need to have a systematic business plan in place to start with.
Let us draw out a step by step business strategy:
Step 1: Decide the type of business:
You will first need to zero in on the kind of café business you want to start:
- Purchase a franchise of an existing brand
- Buying out an already existing venture and making amendments to it
- Starting a café from scratch
Step 2: Find location:
after finalising the type of business, you will need to lock in an apt location for your café. The location can potentially be the deciding factor between success and failure. So, you will need to consider the following factors while doing your research on a place and its demographics:
- Visibility – ensure the location is in a busy market/shopping area and experiences high footfall throughout the day.
- Accessibility – along with being visible, the location should also be easily accessible to the public, like an area with ample parking space.
- Target customers – you will also need to decide which demography are you looking to target and accordingly choose a location that is apt for them.
- Affordability – you will need to consider the rent as well before finalising the location. Check the lease fluctuation patterns of the past few years.
Step 3: Hire employees:
Hiring a skilled set of people is half the battle won! It is of prime importance to employee the right people for the right position as this ensures excellent customer service, which helps foster customer loyalty. You will need to hire:
- Head chefs and assistant chefs
Step 4: Equipment & technology:
in today’s times, you can seldom function without efficient technology. So, you will need to invest in a good coffee shop POS system that offers fast billing, stock and inventory management, real-time reporting as well as integrates customised offers like meal combos etc.
Along with technology, investing in fine quality equipment like coffee machines, ovens and ranges, microwave, refrigerator, freezer, mixer etc is equally important.
Step 5: Designing:
one aspect of the café business that cannot be denied is that in the beginning, arguably, the only way to attract customers to your coffee shop is through its outlook before the other aspects like food quality and customer service step in. So, it is a must to invest in fancy, yet comfortable furniture, attractive crockery and other aspects of the café’s interior design.
Step 6: Marketing:
with new cafes opening almost every other day, especially in urban areas, the café business is currently experiencing cut throat competition. Therefore, the only way to make a mark in this business right away is an aggressive marketing strategy! From digital marketing platforms like building an attractive website and advertising across various social media platforms to physical marketing tricks like circulating pamphlets, print media advertising and offering unbeatable launch discounts, you will need to make sure you fire from all cylinders as far as marketing is concerned.
Step 7: Financing:
the most vital step in your business strategy will be obtaining the required funds for investment from external sources. Food business being one of the most common entrepreneurial ventures undertaken in India, it is relatively easy to acquire funds for the same. You may need financial aid for various short term and long term business requirements like:
- Purchase of property
- Building or renovation of the café
- Purchase of equipment’s, furniture, and fixtures
- Working capital needs
Some of the sources for borrowing funds for your coffee shops would be banks, secured loans, SBA loans, credit loans, equipment financing or NBFCs, that includes digital NBFCs like Lendingkart that have been steadily picking pace in recent times due to the many benefits they offer like:
- Quick turnaround and disbursal time
- Fast loan processing
- Low rate of interest
- Zero hidden charges
- Free from bureaucratic red tape
- Effective digital interface ensures minimum human interference, thus speeding up the whole process.
- Use of analytical technology and tools that evaluate a huge database from multiple data sources to assess the creditworthiness of businesses fast and accurately.
- Straightforward application process
Summary of the loan charges at Lendingkart:
Customised rate of interest
1% to 2% p.m
Charges for pre-closure of loan
Monthly or fort nightly
Loan Tenure offered
Up to three years
Amount of loan offered
Rs 50000 to Rs 2 crore
- The business should not come under the blacklist of SBA finance
- Café location should not fall under negative location zone
- NGOs, trusts and charitable institutions are not eligible for business loans
- Business registration proof in the form of any one of the below:
- Trade License
- VAT Registration
- Business Registration Certificate
- GST Filing
- Aadhar card
- PAN card
- Bank statements of last 12 months
- Company PAN card copy
- Copy of Partnership deed, if applicable
At Lendingkart, we have a hassle free three step application process:
- Submit your application by filling up the application form with accurate personal, professional and required loan details on our official website.
- Upload all the required documents for verification purpose.
- After due verification, your loan will be sanctioned and disbursed to your bank account in three working days.