Key points
- The opening budget covers the entry fee, premises, works, equipment, stock and set-up costs.
- Plan starting cash covering several months of fixed costs: it is the most often forgotten expense.
- Franchise royalties are most often a percentage of revenue.
- Amounts depend on the city, surface and format: only the franchisor can give the figures for its concept.
"How much does it cost to open a café?" The honest answer fits in three words: it depends. On the city, the surface, the format and the condition of the premises. The list of expenses, however, is always the same. Knowing it lets you ask the right questions and forget nothing in your financing plan.
Expenses before opening
The entry fee
This is the sum paid to the franchisor when the contract is signed. It gives access to the brand, the know-how and the initial training. Its amount varies from one brand to another, and sometimes from one format to another within the same brand.
The premises
- The deposit and first months of rent, paid before you sell your first coffee.
- Possible key money in very sought-after locations.
- Lease-related fees.
Works and fit-out
This is often the heaviest item, and the hardest to predict. It covers refurbishing the premises, electricity, plumbing, ventilation, the counter, furniture, lighting, decoration and the sign. Premises that were already a café usually cost less to fit out than bare premises.
In a franchise, the fit-out follows the brand's specifications. Ask the franchisor for a cost-per-square-metre estimate from its latest openings.
Equipment
- The espresso machine and grinders.
- Refrigeration: display cases, fridges, ice machine.
- Kitchen equipment if you serve food.
- The till and ordering system.
- Crockery, packaging and small utensils.
Opening stock
Coffee, milk, syrups, fresh products, packaging. Enough to last the first weeks.
Set-up and launch costs
- Setting up the company: articles of association, formalities, fees.
- Insurance.
- Hiring and training the team before opening, wages included.
- Launch marketing.
The forgotten expense: starting cash
A café doesn't reach cruising speed in its first month. During that period, rent, wages and suppliers still have to be paid. Plan a reserve covering several months of fixed costs. Many solid projects fail not because the café isn't liked, but because the cash runs out before it is.
Running costs once open
| Item | What it includes |
|---|---|
| Raw materials | Coffee, milk, food products, packaging |
| Staff | Wages and social contributions |
| Rent | Rent and charges for the premises |
| Royalties | Sums owed to the franchisor under the contract |
| Energy | Electricity, water |
| Other | Insurance, maintenance, accounting, bank fees |
Franchise royalties most often take the form of a percentage of revenue, sometimes with a contribution to network marketing. Their calculation is written in the contract: see what to check before signing.
How to finance the project
Personal contribution. This is the share you finance without borrowing. Brands ask for it at the application stage, because everything else depends on it. The higher it is, the easier the project is to finance.
Bank loan. Banks finance part of the investment on the basis of a costed file. A project backed by a brand that already runs outlets is easier to defend.
Support schemes. Public guarantee and support mechanisms exist for business creators. Ask your bank and your region's Regional Investment Centre which ones apply to your situation.
Partners. Taking on partners increases the contribution, provided each person's role is set in writing.
Build your forecast with four questions
- How many customers a day can I reasonably serve at this location?
- How much does a customer spend on average?
- What are my fixed costs each month?
- How many months does my cash last if sales start more slowly than planned?
Make three versions: cautious, average, optimistic. If the project only works in the optimistic version, it isn't ready.
The figures to ask the franchisor for
- The amount of the entry fee and what it includes.
- The average fit-out and equipment budget for the target format.
- How royalties are calculated.
- The minimum personal contribution expected.
- The recommended surfaces.
Most brands share these figures after a first application, which usually asks for your contribution excluding loans and your preferred area. See the franchises recruiting right now.
Frequently asked questions
How much personal contribution do you need to open a franchise café?
Each brand sets its own minimum, depending on the total investment its concept requires. The only reliable answer is the franchisor's.
Does a small format cost less?
Generally yes. A compact outlet focused on coffee and takeaway needs less surface, fewer works and fewer staff than a café-restaurant with seating.
Is the entry fee refundable?
It depends on the contract. Read the clauses covering this case before signing, and have them reviewed by an adviser.