the hidden cost of running a cafe in ireland

The hidden costs of running a cafe in Ireland!

April 7, 2010


Happy April everyone!!

I have been putting off writing this blog…due to me trying to work out the hidden costs of a cafe…ie: going through my bills, looking at a budget for this year..so for those of you who are interested in opening a cafe in Ireland, here is a little advice..that i wish someone had given to me.
1) make sure you have a very good accountant who understands the food service industry.
I went into my accountant before opening my business, and he never informed me about the 3 different VAT brackets for a cafe…so, now that i have a great woman doing my books for me, she is going through everything with a fine tooth comb, my VAT bill is going down! YAY…now i have had to pay her 4,000 euro to do that, so we will see how the savings work out..
2)with each employee you hire set aside at least 20 euro a week per person to pay into PRSI, you can take it out of their pay, but since i am small and have many staff coming and going i pay it for them…again i wish my accountant would have set up a better payroll system before i started my business..
3)insurance, we all need it and it is not really a hidden cost but an extra cost(which all of the above are really not hidden either, i just didn’t know about them)…my insurance runs about 1,400 per year, that is also including my market insurance…
4)servicing your equipment! just paid 275 before i even opened the cafe to service my espresso machine…money well spent, it is extracting beautiful shots of espresso! however, sometimes you buy new equipment and it breaks after a year…ie: our pastry case in the old shop, 500 euro for a new motor…150 euro to have a guy come and look at a brand new ice machine that when plugged in did not produce ice, 500 euro spent in 2 years on our oven, due to a wire coming loose, so the temperature would not go up…..leaky plumbing or backed up plumbing, can average about 100-200 euro per year
5)money or goods given to charities.. we give out about 200 a year in goods and cash for local projects…
6)up-grading your kitchen…1000-3000 a year depending on the equipment you want to get…i would like to get a second oven with a 6 burner gas cooktop, even second hand they are 1,200.
we could also do with a small sheeter, now that we are baking croissants and making more puff pastry…but so far it has been manageable hand rolling…
7)paint, flowers, and general interior up keep, adding shelves, improving seating etc.,..1,000-1,500 per year depending on how much work you are doing..
8)staff outings, these have been curbed during the past few years…maybe 200 last year, but in the past could be 500 plus(that includes gifts etc.,)
9)opening parties or “thank you” parties for your customers…these little shin digs are two fold…last year in november we had an art exhibition that included our christmas catering menu…we had mini bites of all that was on the catering menu, so that our customers might like to use us for any extra catering for christmas..that took a bit of time and food, i reckon we spent including labour, 350-400 euro, not including booze..but we did get a good few christmas catering jobs out of it…but on average i would say you could budget about 200 extra a year…
10)rubbish collection…1000 a year
11)electricity…2,000-3,000 per year….gas bottles roughly 750 per year
12)advertising…500 plus a year
ok, this is depresing!!!!
There are more costs…but i won’t go into these now…rent, labour, food costs…it all is out there..so the bottom line is…you had better be doing this job as a labour of love cos’ you have got ALOT of bills to pay before you see the money hit your hand!!
Whew, with all of that talk about money I think in need a break…
I am going to have a glass of wine(maybe several) a hot shower and to bed with my hot boyfriend!
by for now….
Shannen

Don't be shellfish...
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23 thoughts on “The hidden costs of running a cafe in Ireland!

  1. Anonymous

    Thank you for your insight to what is involved in running a business. I am thinking of opening my own business, although a hair salon not a bakery! But this was very helpful, alot of hidden costs and so much to think about. Good luck, it sounds as though it has all been worth it for you!

    Reply
    1. Diva Boutique Bakery

      Hi there! I have only just spotted this…I am happy that you found this useful..I am thinking of doing a “Hidden Costs Part2” there are a good few things that I have forgot to mention. It looks like this post is one of the most view, so maybe it might be useful to people..! 🙂

      Reply
  2. Anonymous

    Hi there,
    Thanks for this, it is really usefull. We are looking into setting up a coffee shop and currently preparing our Business Plan. We don’t want to talk to local owners of similar outlets due to conflict in interests etc. Don’t worry we are looking at North Ireland for our proposed coffee shop. Any further advice would be greatly received.

    Reply
    1. Diva Boutique Bakery

      hi there!! i am so sorry…i only just saw this…i will be posting a Hidden Costs Part 2 soon…This post is one of the most viewed posts!! Crazy! i have learned a lot in the last few years since i wrote this… Good Luck with your new venture…It really is a fun business to work in 🙂

      Reply
  3. Anonymous

    Wow, I am looking at setting up a cafe in my village, but had no idea of the hidden costs, this is very useful. I start my SYOB course tonight and look forward to seeing your part 2 also.

    Reply
  4. Anonymous

    This is really benneficial. There is nothing out there telling potential start-up’s what the actual costs are in setting up a business. Bring on Part 2!

    Reply
  5. Anonymous

    Hi Diva,
    I am really glad that you wrote that. I`ve always dreamt to open my own café and I really would appreciate if we could talk more about it. I have no idea how to start a business, all what I know is cooking and I am really passionate about food. Cant wait for part 2.
    If you are interested in help me more my email is tatyrosa3@hotmail.com

    thanks again
    Taty

    Reply
  6. GERALDINE

    Hello there,
    Thank you so much for your very informative and interesting posts. I’m about to launch into the café business in my local town.
    My problem is not so much calculating the hidden costs (I have run a business – not in catering – before so I have kinda learned from mistakes).
    The question I would have is how do you calculate your potential clientele i.e. how many customers do you think you can get in a day/week etc.
    How many customers do you get into your café on average per week?*
    tks again for all the helpful tips.
    Geraldine

    Reply
  7. Anne Cawley

    Hi Diva,
    Congratulations on your business and for your bravery on writing an honest blog.
    I was in this business for years and had a good accountant on side, saved me a lot of money on start up and end of year accounting.
    Although I have been in other fields of work since , I am hoping to get my teeth stuck into a cafe/restaurant again. Any advice would be welcome.
    Regards,
    Anne.

    Reply
  8. Kyramurray

    would be interested to know what accountant you are now using? We are spending a fortune and getting no consultative support in terms of what we could do better. Would be great if you could share.

    Thanks

    Reply
  9. Mags

    Hi
    Fair play to you, most punters do not have a clue of the costs involved in running a business, so hopefully this will open some of their eyes to the fact that we are not millionaires. The truth is most people running their own small business are totally devoted to it and spend long hours, often into the night, on accounts etc. and work hours way way in excess of people who are employed, not to mention sleepless nights when business is bad and the Bank Manager is persistent. The County Councils are responsible for putting huge running costs on business in Ireland, which has resulted in many going out of business. Some of the costs you did not mention are as follows:-

    There is one really big bugbear cost that most businesses have to pay and hate with a passion and that is rates. Rates on your property have to be paid every year to the local County Council, usually over 2 terms or moietys as it is called. The rates bill is determined by the size of the property and the rateable valuation and can be several thousand a year and very little (if anything depending on where it is located) is gotten in return.

    The next big one is Water Rates. Businesses have been paying water rates collected by Veolia for the Council for years. The rates are exhorbitant so I can well understand why there is so much uproar over the current water charges debacle for private households.

    Another cost is signs. If you put a sign up on the road, the council, if they decide it is ok and you are allowed to advertise your business, they will want to be paid for it every year. If you put up illegal signs you get a ‘littering’ fine from the Council Litter Warden or have your signs confiscated by them.

    The Fire Officer is another one, usually more at the start, and having special Fire Extinguishers (which are not cheap) to keep your insurance company happy is another hidden cost.

    Also every time the Health Inspector (EHO) (usually employed by the HSE) calls it costs you money, as one EHO might decide you need a fan here and the next one says there is no need!! very frustrating, they will inevitably find something ‘necessary’ for you to spend your hard earned money on just to keep themselves in a job, and ignore them at your peril!!

    Telephone and internet costs together with the rental costs AND fees for every transaction involved in keeping a card machine for customers VISA/Laser cards. Not to mention Bank costs and overdraft interest. (if you can get one!!)

    Also cleaning costs, chemicals and equipment, pest control, toilet paper, hand soap, sanitary bin collection, hand towels etc., together with professional cleaners needed occasionally for fryer extractor hoods etc. all together can be substantial.

    Chefs and staff uniforms (cleaning costs if they don’t do it themselves) Chefs knives which have a habit of walking etc. etc.

    Licence fees, for TVs, for playing music Licence with HSE etc. etc.

    This has turned into a bit of a rant. We are great people to stay in business, providing valuable income to the different state bodies, keeping people in employment and coping with all this stress and still managing to smile at customers. Well done to us all 🙂

    Reply
    1. Shannen Keane

      Thank you for your reply to this old post! I have been getting a lot of feedback on this and will be writing a ‘Hidden costs of running a cafe- Volume 2’ very soon!

      Reply
  10. Dianne

    I have just been sitting here analysing what it would cost me to open my very own tea room. I was on the button with most stuff there but did miss a few. Now I really need to consider, ‘ can I really be bothered with all the added stress’ surely on the long run its worthwhile?

    Reply
    1. Shannen Keane

      Hi Dianne,

      Thank you for your comment! I will be posting an updated blog post about the costs of running your own cafe…. The first thing to ask yourself, is do you have the time to commit fully to your business? Do you have a cushion of money, for when things are slow? If yes to those questions, then go for it!! having your own cafe is great and it really ios a labour of love…love of great food, and love of working with the public…I hope this helps make your decision a bit better…and Good Luck!

      Reply
  11. Caroline Murphy

    Dear Shannen

    What I would like to thank you for, is not just your initial post, but the thread which it has created with all these fascinating insights from other people and contributors! Sounds like there are a lot of similar experiences!

    Would I would like to know, and indeed hear about if others post too, is how many of you worked as a sous chef, baker, chef, etc in someone elses café or tea rooms before you set up your own? Like you all, I am considering doing this – but it would involve a MAJOR career change so I am currently trying to put aside funds. I bake and cook for fun, and am told I am great and should do it as a business – but other than a business course (I have run my own previously), I have no experience working in a kitchen, dealing with HACCP and all those daily operational issues like cleaning the expresso machine etc. you talk about.

    Would you (or anyone else?) think about sharing insights about doing this with no prior café experience?

    Thanks everyone – and good luck to you Shannen and to all of you with your culinary ventures!

    Caroline

    Reply
  12. Sandra

    This is all very interesting!! I bake cakes for a cafe .. they employ me and am constantly under pressure to answer for my hours ,now they want me to cost my cakes individually and am finding it very difficult where to start !! I have more passion then business sense thats my problem ! any advice …yikes

    Reply
    1. Shannen Keane

      Hey Sandra!

      I can understand where both sides are coming from…You of course, because you are feeling under pressure to do a great job and them because they are keeping a tight reign on their margins..
      I always allow new bakers a bit more time to get it right…and this takes practice and patience… Some of the girls that worked with me could ice a beautiful cake in 7 minuets! I try to aim for a 15-20 min completion of frosting and decorating cakes… As in many kitchens time is money…and it’s not uncommon, to have timer set for each tasks that you are completing…Sit down with your employer and have a chat with them…sometimes what I do if I feel that whoever is working would rather work at their own pace is set a flat rate…but they have a list that they need to work through( a very do-able list)and then that allows them to work at their own pace and it keeps me happy as I am meeting my margins! I hope this helps!!

      Reply

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