A sense of community is at the core of Sydney’s thriving café scene, creating spaces for people to get together outside the home and workplace. It’s a huge part of the city’s lifestyle, with some 7000 independent cafes across Sydney.
An IBISWorld Industry Report found that Australia’s cafe and coffee shops generated about $9.9 billion of revenue in the 2018-19 financial year, across almost 21,000 businesses – one-third of which are in NSW.
And Sydney locals love their coffee even more than their Melbourne mates – studies have shown Sydneysiders drink more cups per day than their southern counterparts.
A 2019 study from Domain showed café and restaurant culture is seen as an important factor for liveability.
The study, by Deloitte Access Economics and Tract Consultants, tracked café density across Sydney’s suburbs, highlighting pockets of greatest diversity and volume when it comes to coffee. While CBD and central suburbs such as the Rocks and Surry Hills topped the list, there were some surprising outliers, with strong density in suburbs including Camden, Windsor and Penrith.
Sydney has also seen some exciting growth in outer suburbs, especially for commuter traffic, although the lower population in these areas need to be considered. Newer suburbs designed to be more car-friendly may also have less easy access for foot traffic than inner-city areas where more people cycle, walk or use public transport – something for the savvy buyer to keep in mind.
Here are some top tips for snapping up your Sydney special:
Do your research:
Know what you are getting, spend some time in the places you are assessing. Do this on a number of different occasions so you have a really strong sense of what a place is like at different times of the week and day. Some buyers may even offer to work a couple of shifts to see how the place runs.
Know the area:
Make sure you understand the broader environment surrounding your proposed purchase – what future developments are planned for the area? Is there a fast food restaurant slated to open or another new café? These are key considerations when buying.
The money stuff:
Know the profit margins – is the place turning a healthy profit, or just covering expenses? Establish how much work will be required of you to earn a wage – are you looking at 40+ hours a week just to survive, of or is there some wiggle room? It also pays to check out the lease agreement – is there a good long-term lease in place, or will you soon need to negotiate a new one? Equipment is another area where buyers can be caught out. Don’t forget to check whether the equipment is owned outright, under lease or being paid off. This can greatly affect the value of a business and the price you should pay.
The people stuff:
Check into the relationships with staff and suppliers. Will staff be willing to stay on under new management? Are relationships with suppliers solid with accounts paid on time? Will they be happy to deal with you once you take over? The right staff is critical – people have high expectations of their coffee these days and will be looking for an excellent brew first and foremost.
Get another opinion:
Even if you’re an experienced business owner, make sure you get professional assistance by having your accountant and solicitor look over the figures and contract. Buying a business is a major investment and you want to be 100% sure you are making the right decision.