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Things Every Buyer Has to Consider While Buying a Coffee Shop

Owing to the pandemic, many entrepreneurs had put their coffee shops for sale; If you are interested in buying coffee shops, here are a couple of things that you need to ensure
BY Jaspreet Kaur
Feature Writer, BusinessEx
Nov 19,2020

Buyer Has to Consider While Buying a Coffee Shop

In today's westernised India, various hot beverages have emerged besides the traditional beverage tea. One of the much liked beverages is coffee. Earlier on, coffee was majorly exported to foreign nations. However, with the adoption of globalisation, trends changed and people's lifestyle have modernised, thereby developing their taste for coffee. 

According to a report by Grandview Research, India's retail coffee chains market was valued at $128.6 million in 2016 and is expected to grow further over the forecast period. Increasing global exposure, western culture, and penetration of established coffee brands are anticipated to be the key trend driving the growth of the India retail coffee chain market. This thriving industry abruptly came to a standstill as pandemic hit the nation. During the pandemic-led lockdown, all coffee shops along with other MSMEs and large organisations were shut. 

While giant coffee chains survived the lockdown period, small coffee shops were permanently closed down. Small and medium-sized coffee shops could not sustain challenges posed by the pandemic. As a result, many entrepreneurs put their coffee shops for sale. If you are interested in buying coffee shops, there are a couple of things that you need to ensure. 

Backdrop of Business 

While Buying a Coffee Shop, you have to inquire why the owner is selling the shop. You have to ascertain if the shop was running well before the pandemic. Talking to locals will help know the footfall of the cafe and also help decide if your need to buy this business.  

Besides this, you have to find out the market price of the business. It will help you comprehend its true value. 

Market Price

Learning about the market where a coffee shop is situated is vital for you. Consumer demand and footfall in the market will facilitate in governing profitability of the coffee shop. Also, it will give you a clear picture as to what the future holds if you buy the coffee shop. 

While taking a decision, you have to ask it's financial reports. Financial report will inform the monetary condition of the business. It will know how much profit you can expect and how much investment you would have to make into the business. 

Equipment 

While coffee shop is examined from all sides, there is an aspect that requires immense scrutiny, that is, equipment and product. You have to check types of equipment used in the shop whether equipment is up to the mark or poor. Checking the inventory will also comprehend functionality of the business. You can keep a record on the amount of stock needed for monthly operations.

You need to converse with the coffee shop's vendors so they can remain associated with you if you become the new owner. 

Repairs 

While checking equipment and taking notice of the coffee shop, you can estimate expenses that would be needed for repairs. If the repair cost is higher than your estimation, then it can help you negotiate with the coffee shop owner for a low price. Otherwise, it is a call for you to not invest money in purchasing this business. 

A business' condition is paramount while acquisition. This factor should not be overlooked by buyers. Proper examination, consultation with an accountant and market research are important steps that every buyer has to follow while purchasing a business.

Customer Review 

A coffee shop is primarily contingent on its customers; they are king in the business! With constant footfall, in turn, revenue is engendered, followed by profits. Therefore, you need to approach existing customers and ask about the coffee shop. Besides vendors, existing customers will give the right feedback that will be valuable in decision-making as well. 

On the basis of it, you can estimate the current status of the coffee shop business. Why the entrepreneur has put the coffee shop for sale and whether you want to bet on it or not.

Follow these steps while you are buying a coffee shop. These factors are immensely important; besides them, there are other factors that have to be marginally considered. If readers want to share their thoughts on this, then please write in the comment section.

 














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