February 12, 2015

Have you over capitalised?

Are you a cafe owner that is seeking that opportunity of a cheap site with a view to fitting out, renovating or just a face lift?

If this is your option over buying an existing site with proven figures and fit out ready then take note. One of the biggest issues we see today from business owners in the hospitality industry (but not limited to) is:



Before spending on that illustrious fit out here is something to think about this:

• In simple terms hospitality businesses are valued by EBITDA x multiple of an average of 2 times (no greater than 4 times).


• For every $1,000 in turnover per week x $10,000 to $40,000 value on the goodwill of that $1,000 turnover.

So take an average cafe fit out with kitchen as an example. Based on empty store take over (new lease) – $200,000 fit out (at least for something decent).

As a minimum without adding in cost of financing, marketing, opportunity cost of income loss during fit out, operating costs upon opening whilst sales not covering expenses,  the minimum required sales per week to justify the above $200,000 fit out is: $12,000 per week for break even only.

Most operators don’t think carefully enough about the exit strategy. When the ‘need’ to sell comes along, owners who have over capitalised are unable to recoup what they have spent. A cafe business like any business should be about net profit but also about the value added on exit. As the old saying goes, “buy low & sell high”, not the other way around. So, before going ahead with that fit-out, face lift or renovation get some advice from a business strategist.

Think smart, numbers don’t lie.

Emil Parthenides
Specialist – Food Service Division
Tel: 1300 366 521

MPM Advertisment


Tavalon Tea – An International premium lifestyle tea company

Tavalon Tea is an international premium lifestyle tea company based in New York City. Since 2005, Tavalon has operated global offices in Dubai, Cairo, Hong Kong, Phnom Pehn, Tokyo, Seoul and Shanghai. Tavalon offer the finest, ...
by Cafe Culture Mag


Progress for smallholder coffees at 2018 PNG competition

PORT MORESBY, PAPUA NEW GUINEA (October 16, 2018) – Smallholder coffees excelled at the 2018 Papua New Guinea Coffee Cupping Competition, with top lots achieving over 85 points on Specialty Coffee Association (SCA) scoresheet...
by Cafe Culture Mag


Roastville – Cafe Review

157 Victoria Rd, Marrickville NSW Roast ‘Ville’ inspired by the word village was to become a place where both owners George and Destiny would create a space which is a true reflection of their craft and passion for the hosp...
by Cafe Culture Mag



Fun Fact: Benefits of Parsley

Did you know? Parsley is great for use as a digestive aid. It is a natural breath freshener, anti-carcinogen, contains three times the amount of vitamin C as oranges, and twice the amount of iron as in spinach. Parsley is usefu...
by Cafe Culture Mag


Almond Breeze Barista Blend

Almond Breeze Barista Blend is Australia’s first almond milk developed in partnership with baristas, specifically for baristas. Available to the food service market, this industry-first milk alternative has been designed to d...
by Cafe Culture Mag



Seven steps to boost business profits and help the environment

Love food – Hate waste – a NSW Governement inititaive: These practical steps will not only help you reduce food waste in your business, but also save you time and money in the long run. If you’re looking to cut co...
by Cafe Culture Mag


Top four food trends you’ll soon see on supermarket shelves

CSIRO News: Food trends come and go. Think matcha, salted caramel and quinoa. But some hang around for longer and are actually based on science. We’ve worked with KPMG to develop a report using our latest science in heath, fo...
by Cafe Culture Mag



Introductory Espresso Machine Technician Course – Oct 30th-31st 2018

Do you have a handy team member in your coffee business that is repairing your espresso equipment but needs some assistance in understanding the technical side of being a coffee technician? This two-day course is designed for n...
by Cafe Culture Mag


Breaking News – Federal Government pushes to stop plant-based products labelled as ‘meat’ or ‘milk’

Plant-based products labelled “meat” or “milk” will have to be rebranded if the Federal Government is successful in lobbying for a change of food standards. Regional Services Minister Bridget McKenzie wi...
by Cafe Culture Mag


Taste is key in promoting insect-based food

New study finds promoting enjoyable aspects of insect-based food is more effective than highlighting health or environmental benefits A new study finds that promoting insect-based food as pleasurable, rather than healthy or env...
by Cafe Culture Mag