I am new to this industry and am considering purchasing an existing coffee house in my area. Any advice? Has anyone purchased a pre-existing coffee house before and if so, what was your experience like?
Well-run and profitable coffee shops are generally not made available for sale (at least not a a reasonble price) unless there are unusual circumstances: owner dies, divorce, etc.
I suggest that you be very familiar with the operation of a coffee shop before evaluating an existing location for purchase -- it is more difficult to turn around a bad shop than it is to start a good one from scratch.
Thanks for the input. I am in the beginning stages of looking into this company. I live in the Northeast and this particular shop has been rated # 6 in the city's best coffee houses and was #1 in another city magazine in 2004. It is located next to a very nice park and it's niche in the market is that it's "dog friendly" meaning you can bring your dog inside - there are water bowls available, treats for both dogs and their owners, etc. and is in the heart of the city so everyone is out walking thier dogs. They also serve wraps, panninis, etc. The partners have had a dispute and are going their seperate ways -- they live on the West Coast so commuting to the East is not feasible for either due to other committments.
Sounds like a promising situation. (for you, not them!)
I suggest that continue to immerse yourself into the coffee industry by reading discussion boards this this one, the Specialty Coffee Forum by Specialty Coffee Retailer Magazine and the Specialty Coffee Association Forum from the Specialty Coffee Association of America - these are good places to get free general information from retailers and other industry professionals.
Considering the serious nature of your investment, you may also wish to contract with an attorney, business consultant and accountant to advise you on these matters specific to you and your situation.
I have to agree with cafemakers get your support group on the ready. however, I would have a sit down first with the selling party and ask some questions. I would be concerned with why they split up in the first place, and do both of them agree to selling the business with no strings attached. One of the biggest problems you may encounter is if they don't agree it may be difficult to strike a deal in your favor.
I've purchased two coffee shops, and evaluated another 20-30 that have been for sale over the past 3 years. After pouring over each of their book keeping systems, tax records, sales figures etc., I'd say that the single most important place to start is the business checking account because those numbers don't lie. All others, including tax returns, are subject to all kinds of manipulation, but a business bank account showing daily deposits and monthly expenditures is a solid place to start.
And remember, it's just that - a start. All of the other fundamentals need to be there (great location, reasonable lease, any reason they did something that you can't duplicate, like having their children/elderly parents work for next to nothing in the afternoons etc.)
Hope that helps,
PS - I disagree with the comment that "turning around a bad shop is more difficult that building a new shop from scratch". It all depends on what made the existing business "bad."
I will agree with your disagreement and amend my comment as follows:
Many failing coffee shops were founded with fundamental flaws that cannot be recovered with a change of paint, new brand name or even management; in these cases, you would be best advised to start a new shop on your own terms.
It will be difficult for the novice to differentiate between what can and cannot be "fixed," so extreme caution should be exercised in these situations. Much like buying a used car: don't buy it unless you are certain that you a) know what it is; b) what is wrong with it; and c) how to fix it; lest you end up with a used car that has cost twice as much in repairs and lost time than if you had purchased new.