Monday, November 3, 2008

First week of trade

 Whilst we fell off the radar for a number of months, running around and trying to get builders, suppliers and council approvals organised for our very first Parlour, at 102 Barkly St, St Kilda - we have actually been busy, especially Parlour Guy. Saturday 1 November marked the end of our first week of trade and in all honesty, the indications are pretty good. Most days we're trading up on the day before and the trend is heading in the right direction, ie upwards. 

So yes, we opened Parlour #1 on 24 October and have been ecstatic with the response from customers. I mean it's always a gut-wrenching risk when you start something new. Firstly people really like the design, which was worked up by our fabulous architect, Suzanne Sharp - and secondly we're getting good feedback about our coffee. After doing much research and hoping to go with a good Melbourne Italian brand with a great history - Genovese - (which didn't work out as they supply the fabulous Inkr7 just around on Inkerman Street and didn't want to create any brand conflict) we ended up choosing Grinders' Giancarlo signature blend. 

Whilst Grinders is now a big company, owned by Coca-Cola Amatil, when we looked deeper we found a really great group of coffee afficianado's running the show. All the new Parlour staff have had a three hour training session out at the Grinders Lab, run by the super knowledgeable and efficient, Tom Beaumont and his trainer, Arch.

Parlour Guy ended up doing most of the build on the St Kilda site himself, after the quote we received from the project architect's builder was about 6 times the amount we'd budgeted. So, at the beginning of August we were pretty down-in-the-dumps, and cast around for a solution. A chance call to the guy who built our house found us the building contractor we needed to put in the heavy yards on the carpentry, plastering, electricity and plumbing works - and then Parlour Guy, aided in small part by myself and my brother - Landscape Guy - did the fitout.

If you're Melbourne-based or heading there anytime soon, do check Parlour out at 102 Barkly St, St Kilda. We're hoping that Parlour is a concept that is more than one-off. With all the doom and gloom going on around us, we see Parlour as the place you go to escape the negativity. Where you can roll up, order a first-rate Giancarlo coffee, pull out a backgammon board and settle in for a game with a mate. Or hide yourself away in a corner of the communal table, plug your laptop into the powerpoints scattered under the tabletop, and write that damn overdue report, or get the inaugural words out on your first novel!

Our hospitality consultant, Anne-Marie Banting, has been a real gem. I mean, the thing that struck us the most with the non-performing cafe venues we researched when we were taking a closer look at the Parlour concept, was that they had really, really big menus. Big menus require big ordering and lots of room for wastage and hence profit loss. We thought that it had to be possible to construct a simple, yet elegant menu, that was all about the quality and freshness of the ingredients used. Simple, delicious, always good was actually my mantra for the menu. And Anne-Marie was tasked with coming up with the original menu and wine list. 

The St Kilda venue hasn't yet had word from Council on whether we'll get our planning permission approved so we can submit for a liquor licence, but getting the licence is really important to the whole concept. Let me explain. Parlour is the sort of small venue you'd find in any big city in Europe, say Paris or Venice, where we're open for breakfast, which consists of Green Family eggs and soldiers or an egg, pancetta and roma tomato piadina, or fruit bread toast from Geelong-based artisan bakers, La Madre (meaning 'the mother'), coffee all day of course, cakes, croissants and the like through the morning, then lunch with simple piadina using the very best meats from Princi in Perth, and very fine Mamma Lucia cheeses from Melbourne. There's also beautiful panini again using La Madre panini rolls. By early afternoon it's time for a cheese platter with the best cheeses available from around Australia and the world, by Calendar cheeses. Or a mediterranean charcuterie platter - Princi salami, pancetta and proscuitto, La Parissienne pates and cornichon. These really need to be enjoyed with a glass of interesting wine. And Anne-Marie has created us a wine list that is small but elegant. A couple of beautiful Spanish wines that are on the rise, Little Creatures beer, some local white wines - mainly drinks you won't ever find at Dan Murphy's. And then by 8pm it should all be over.

Parlour maybe the place you nip into for a cheese platter and a pre-dinner drink, but that's it! There are so many fine dining venues in Melbourne, we didn't want to compete with that. I mean, how does one compete with Circa and The Stokehouse in St Kilda? They are always, always fabulous places to dine. No Parlour is more about simple, daytime gourmet luxury. Great coffee, beautiful panini with exquisite ingredients, a warm ambience and great music. 

So, if any of this appeals to you, go have a squiz and work out whether we hit the mark or not. We're currently doing the planning for a Parlour at Dock 5 at Docklands, so we're really keen that we create the right feel and vibe - this really is about a public, private space where you feel comfortable and relaxed, and personal enjoyment and pleasure really is key. Till the next entry, signing off - Parlour Renovator

Friday, May 16, 2008

Flurry of activity

Now we've got St Kilda happening, bit of a flurry of activity trying to get stuff moving on a number of fronts, so in summary:

- Emailed the architect's report off to Hampton landlord, want to show them what might need to be done. K's indentified potential issues with the roof etc
- Corresponded with T the designer to firm up pricing, she responded, so gave her the go ahead
- Faxed the vendor's signed health inspection form for St Kilda off to City of Port Phillip - so we can get a pre-purchase health inspection
- Spoke to the St Kilda vendor's solicitor to get the lease change moving
- Hampton landlord emailed back to say they'll be in touch when back from Sydney
- Round of emails and phone calls with architects and designer to tee up a meeting on Monday at the St Kilda cafe

Thursday, May 15, 2008

Docklands Inspection

Off to Docklands this afternoon (with a side detour to agent for St Kilda to initial something minor in the sale contract) to meet with the agent we talked to the other day for the Docklands site. Architect K met us down there as well. Agent says it's an expression of interest campaign - and they're looking for offers for purchase and lease. Even if we lease, we should expect a sale to happen anyway.

Now got full documentation, and we were able to spend a good amount of time looking through and discussing issues with K, including airconditioning etc. They did a good job designing the building, there's a bin wash, deliveries point, garbage room, plus a grease trap already installed.

The EOI needs to include some background on us, business plan and so on - landlord wants to ensure they have the right mix of right people down there.

Wednesday, May 14, 2008

Big News - We Own a Cafe!

Big news. Agent for St Kilda called. Our offer has been accepted, vendor has signed the contract that we signed on Sunday. We're in business. Settlement is 6 June.

Handling Hampton

Long meet onsite last night with landlord and our architect K at the Hampton shop. No renovation work happening yet - we're told it's soon. So still a messy dump. We're also worried the landlord's builder's taking advantage slightly, seems to have quoted them a big number for a comparatively minor wall removal. But significant possibilities. Want to try and find a path forward in a way that really helps make life easier for the landlord while still delivering us the right premises at the right economic equation. We've emailed some thoughts to the landlord, see how it goes.

Tuesday, May 13, 2008

It's a Weird World

Fiona and I decided to research alternative premises down and around Docklands today, having finished grieving over losing the place we really wanted. We printed off a bunch from realcommercial.com.au and drove over this morning. Nothing really grabbing us, poor locations, wrong size - some are advertised but not even built yet. Which can make finding them difficult, a problem compounded by real estate agents' complete inability to spell. There were at least two places that I tried to find on Google Map without success. Then later discovered the agent had spelt the street name wrong.

One place we thought might be a possibility is just up the road from the shop we originally wanted. Rang the agent on the sign, explained our predicament about losing the one we wanted. She then floored me by sounding surprised and saying that in fact her company was handling that shop - and has been for a couple of months, so all a bit weird that the other agent was still organising onsite inspections as late as last week. So might be some life signs after all.

We've emailed off to her copies of the Heads of Agreement we'd dicussed with the other agent, she's come back to say that she can take an expression of interest to the owner. I think the priority right now is to get our architects through so we can try and get a better grip on costs, before we commit to a formal lease offer.

Monday, May 12, 2008

Local Councils Who Help

Opened the mail today to find the New Business in Bayside kit courtesy of Bayside City Council. Fantastic and practical information package. It’s this sort of assistance that makes life so much easier. And sometimes the simplest things are the biggest help. For example the kit includes a one page checklist outlining the process to follow to open a new food outlet. This is the one pager – the rest of the kit is just as plain and simple to understand.

Read this doc on Scribd: Starting a Food Business

Sunday, May 11, 2008

Signing a Contact for St Kilda

Up nice and early to cart kids off to various sporting and social engagements, then hike over to the St Kilda café agent’s office (turns out the ballroom dancing business broker), signed the contract and handed over a deposit cheque. Now just see if the café owners are prepared to do business. Made sure we gave the broker a copy of the City of Port Phillip inspection authority form for the vendors to sign. This authorises the Council to come and do an inspection for the Food Permit and identify any issues.

We’re organising something similar with City of Bayside for the Hampton shop. It does cost – I think Port Phillip is $150, but if you are buying a food business, or planning to establish a new one, they’ll come out onsite and provide advice and guidance. If there’s already a Food Permit they effectively are doing a formal inspection, and provide written assessments.

I reckon it’s no different to having the RACV inspect a second hand car before you buy. Foolish not to get the vehicle checked before purchase.

Saturday, May 10, 2008

All hail our business banker

All hail our business banker. Working on a Saturday doing emails, promises to resolve the problem with the loan in the wrong name. Could kiss her.

Friday, May 9, 2008

Another Offer

Emailed off latest offer for Hampton Street – it’s pretty much half way between our opening offer, and their published price. See what happens.

Thursday, May 8, 2008

What a Day...

Wow, what a day. Started off with a meeting with T, who we are hoping will handle the graphic/visual design for Parlour. A huge bonus is that she and her partner have a long background in the hospitality industry, so can bring a broad experience to bear. I worked up a simple little outline brief just to clarify the key points.

Read this doc on Scribd: 080508 Graphic Design Brief


After T we headed off to the other side of town to see a small café (well, more a sushi/burger bar) up for sale on Brunswick Street in Fitzroy. It’s dirt cheap with a listed sale price of $18,000. It’s not on the busiest part of Brunswick Street – which is already heavily over-populated with food outlets. Not for us, but interesting to see what’s out there.

Got home to find the loan documents from the bank have arrived. But big problem, the borrower’s name is wrong. It needs to be in our personal name, part of the structuring necessary to help with a CGT liability from previous business venture. They’ve got the name of the company. Talked through on the phone with our accountant who confirmed it was a problem so fired an email off to the business banker asking if it can be changed.

Then F gets an email from the agent for the Docklands premises that we really want. It’s been sold!!! “The client has informed me that the property has sold and does not know as yet if the new owner wishes to occupy or lease the shop.”

F bats a message back to say that we’re still interested if the new owner wants to lease. This is a big blow. And we’ve lost out because of the incredibly long time it’s taken to get progress, particularly the bank. I’m pretty sore about all this. We first approached the bank in February, and at the time were told it would be a 48 hour turnaround. It’s now THREE months later – and we’ve now lost the ‘jewel in the crown’ premises.

On top of all this the phone started to ring.

First up the St Kilda cafe agent rings to say our new offer (which was basically the same as February’s) is too low. Will be go another $5,000 or so? Answer = no. Another phone call. Will we split the difference? Answer = no. Another call. Agent suggests we sign a contract, write a deposit cheque, that’s a clear sign to the vendor we’re serious, and not just tyre kicking. And by going to chattels contract route we save the vendor having to cough $600+ to prepare the necessary documents. After a discussion with F call the agent back to say ok, we agree to meet on Sunday (?) to do the necessary paperwork. We’ll do it in between running around from children at cheerleading and soccer.

Next sequence of phone calls is with the owner of the premises in Hampton – the old laundry. Our opening offer not so well received. Which I guess we anticipated although we backed it up with a copy of our rental rate survey for the area. Bit of tooing and froing, but by the end of the day there’s a number floating around that might work for both parties.

All of these negotiations made all the more fun by the fact F is up at hospital with our youngest for an ophthalmology appointment, so I’m having to text and phone her every 5 minutes with the latest progress on both the Hampton and St Kilda premises, and plot the next moves.

Needed a couple of glasses of nice red wine this evening.

Wednesday, May 7, 2008

Useful Info

Excellent folder of information arrived today from Restaurant and Catering Victoria – our industry association. Plenty of excellent industrial and staffing information which is particularly useful, I’ve tucked it away in the file along with the pay rate information the Association emailed me yesterday.

Tuesday, May 6, 2008

Getting Busier - But first the Architects

Once we heard from the bank about the finance, one of our first calls was to our architects, S and K to book a meeting and they came over this morning for a couple of hours to chat through the whole Parlour concept. It’s instructive talking through the vision with someone else, it highlights how important it is to find the write ways to succinctly describe the concept, and how we envisage it being manifested through the fitout and décor – and all within a pretty small budget. We don’t have millions of dollars to spend, indeed, we don’t have hundreds of thousands, so the décor won’t include $20,000 couches or gold leaf finishes. But that’s part of the fun – finding cost effective, simple ways to reflect our vision for Parlour – a comfortable local meeting place.

S and K are going to send us the standard RAIA Client and Architect Agreement. It’s a nice simple document clearly setting out what the architects will do – with checkboxes to indicate the specific services that will be included.

We talked through issues such as planning permits, dealing with council, finding a builder (indeed, whether we actually need a builder), tradies and the like.

Faxed off offer for Barkly Street – same price as we offered back in January. It just isn’t worth us spending more, we don’t want the business per se, but the location and lease, and maybe some of the equipment. Agent’s already faxed me a sale contract with blanks for the price.

Emailed off an offer letter to the owner of the old laundry in Hampton. It’s less than they are asking, but we offering a longer lease, no free months etc. I did a survey of rental rates on commercial properties in the area, and feel our offer is justified.

Restaurant and Catering Victoria emailed me some great staff and payrate information following up on my email enquiry yesterday. One of the most useful items is a simple spreadsheet outlining hourly payrates for staff at the various award levels, broken into weekdays, weekends, evenings etc. Just what we needed to help figure out staffing budgets.

Read this doc on Scribd: AP787213CRV Rest Aw Table 251007

Monday, May 5, 2008

Time for ABN

Talking about staff with F, realised we had better get an ABN and Workcover insurance rolling so asked accountant to set up.

Fantastic call with R at the bank, re merchant services, online banking and the like. He’s ex-café industry, loads of insight. What a pleasure to deal with banking staff who have a direct connection to your industry. We could even talk the pros and cons of the various coffee suppliers. He reminded me that there are special credit card merchant rates for members of the hospitality industry associations. I’ve already got an application into Restaurant and Catering Victoria.

Friday, May 2, 2008

We're Approved - Yay

Outstanding, the bank has emailed an approval for the loan, so we’re rocking and rolling. It’s difficult talking to landlords and business brokers when at the end of the day we’re unable to take any real action. We could be spending our own money in anticipation of the bank coming through, but if there’s any problem with the loan we’d be left hanging in the breeze without enough capital to finish the job, but all our money tied up, and probably lost or significantly devalued.

Off to the inspection of the St Kilda café this afternoon. We arrived a little early (we’d come straight from a consulting job out of town) so stopped at Mr Wolf, around the corner on Inkerman Street for lunch pizza. Mr Wolf good and busy with funky people doing business and catching up. Inker7 next door also busy. The crowd is clearly there, providing you have an offering they like.

Trooped off to inspect the café in question. Pretty much as I remember from February, although F’s first time through. Equipment is ok – there’s a sandwich bar/under bench fridge we could use, and some smaller equipment. But we’d need to essentially pull everything out while we redecorate, which leads to some interesting logistics issues. It’s not a big space, but the size should be ok.

Desperately need to do something about the façade and the way the café presents to the street. It’s almost anonymous, and just not a good funnel drawing people in – indeed, it’s almost the reverse – it’s a narrow entrance and a big room. Few down at heel characters munching their all day breakfast highlight how in its current state it doesn’t have a hope to capture the affluent market downing gourmet pizza up the road at Mr Wolf.

The agent suggests we go for a chattels contract – so instead of buying the business and goodwill, we buy the assets – which includes permits etc. Have to pay GST (albeit we just get that back as a credit on the first BAS), and it saves the vendor coughing accountant/solicitor fees.

After a couple of phone calls, received fax from owner of the laundry building in Hampton that we like the look of, with barebones run down of potential lease arrangements. Rent’s a bit on the high side – I’ll do a survey of rentals in the area to try and peg a reasonable per square metre rate.

Thursday, May 1, 2008

Blast from the Past

Interesting. Had a call from the broker for a St Kilda café we looked at back in January/February. We made an offer, it was rejected as being way too low. Current owners paid twice the price a few months prior. Broker says are we interested in revisiting, and after a chat with F I said ‘sure’. Have agreed to go and inspect again tomorrow afternoon.

Sunday, April 27, 2008

Coffee Critic

Oh, the Coffee Academy has much to answer for. Now I’m an instant expert and judge. I was bumming around Albert Park yesterday with the baby, waiting while the eldest child was at cheerleading practice. Ordered a takeaway flat white at Laurent café in Albert Park Village. Woman a) didn’t flush the heads before making my coffee (a no no, it means there’s dud bits of coffee etc still in the head from the last coffee; and b) she barely tamped the coffee in. She used the preset buttons, so there would have been the right amount of water going through, but there’s no way with the coffee that loose it would have extracted correctly. Which explains why my coffee tasted weak. And this is supposedly an upmarket (well the prices are upmarket) café in an extremely upmarket part of town.

Friday, April 25, 2008

Possible premises

Interesting development today. Walking up the street, noticed a sign for lease on the window of the old coin laundry. The laundry closed a couple of months ago, there was a sign thanking customers for their business over the past 25 years, and explaining the building had been sold.

Now there’s a sign with a phone number to call about leasing – so I rang. We could get excited about this space. It’s reasonably large, but most importantly it’s immediately adjacent to the school crossing over to the local state primary school (where our son attends). Plus round the corner from the local Catholic primary school.

All those mothers dropping children off in the morning… and we have a ready made audience of a couple of dozen – the mother’s from our son’s class. It reignites the ideas we had about school lunch bags that we first talked about when we looked at the shop on Fitzroy Street a couple of months ago, opposite St Kilda Park Primary.

Finally there’s no immediate competition. There are other cafes around, but they’re further away up and down the street. We’d own the strip in front of school (albeit shared with the next door pizza/pasta restaurant, but they’re a different proposition and only open at night).

Wednesday, April 23, 2008

Coffee Culture

Off to town on the train again this morning, again to William Angliss, but this time something a bit more fun – ABC of Espresso at the Coffee Academy. Yup, Melbourne’s clearly the home of coffee culture – because there’s a training institute (well, a part of a building at William Angliss).

Our trainer Melissa clearly has plenty of years making coffee. And it shows, starting from when we walked in and she offered us a cup of coffee. Problem is, it was perfectly made, which meant our, I suspect desultory efforts later paled into insignificance. But it set the tone – it showed she really CAN make a seriously good coffee, and gave us a benchmark we need to try and match. Melissa’s also a judge for the Australian Barista Championships.

Just a morning’s course, but full one, racing through how to prepare the machine, make a coffee, texture the milk – then clean up your machine and equipment afterwards.

Believe it or not William Angliss runs an entire full on coffee course – Prepare and Serve Espresso Coffee is a nationally accredited unit of competency, with theory and practical. There’s even a course on Milk Texturing and Coffee Art – all those pretty squiggles on the top of your latte!

It was my first time working an espresso machine in anger. And now I understand why so many people call coffee an art. It ain’t as easy as it looks. The other problem is, thanks to Melissa, I know a bunch of things many coffee makers do wrong.

There’s a whole world of coffee out there. Check out coffeesnobs.com.au for example. That’s where I discovered you can download software to your computer to monitor your coffee roasting process (you DO roast your own beans at home don’t you). You hook a thermometer to your PC, and stick it into the coffee roaster. It then monitors and reports the roasting process. Cool. Coffee Geeks, my type of people.

Wednesday, April 16, 2008

Learning how not to serve the drunks

Off on the train this morning to town for a day’s training – Responsible Serving of Alcohol, plus Licencees First Step. RSA is the basic course that bar staff do so as to know how not to serve someone who is pissed. Well, that’s kinda the crux. It’s only a mandatory requirement for people who serve alcohol in a couple of specific circumstances – late night opening being one of them.

I guess it’s a way of trying to ensure that bar staff at the all night places know when to stop pouring drinks down the throat of some suburban blow in to the CBD, who’s likely to kick up trouble once he’s had a few too many. I’m not sure the plan’s working given the highly visible problems in town in recent months.

But the RSA is in general pretty useful, and seems to me everyone serving alcohol should do it. Our trainer Rob is an ex-copper who used to run the police licencing unit in town – which means he was at the pointy end when they cleaned up King Street in the 90s. It was a good session, Rob’s a good, practical to the point sort of trainer, who uses a fount of anecdotes and knowledge to powerfully illustrate how serving alcohol irresponsibly is potentially significantly detrimentral to your business.

The afternoon session, First Step, is designed (and a requirement) for people applying for a Liquor License. It’s a quick skim over the legislation, understanding how licensing works, common offences, signage and so on. Again Rob led the group, covering plenty of ground, but still leaving time for discussions and questions.

Oh, and now I know there’s a difference between ‘intoxicated’ and ‘drunk’. Apart from three Bacardi breezers…

A long day, but well worthwhile.

Friday, March 28, 2008

Yes been quiet, no haven't abandoned ship

Haven't been posting much recently. But no we haven't dropped the idea or jumped ship. Rather been very distracted by personal stuff with a child in hospital three times since early Feb, last admission was for a week after an infection sprang up needing to be operated on - the infection a result of heart surgery in mid-February.

Plus been waiting on the bank - despite being told we'd get a decision on our finance in 48 hours it turned into more like 3 weeks, and still counting. Although we've now had a verbal 'yes', and yesterday I dropped a big packet of documents to them - tax returns, insurance policies and the like. So it does all look very promising, and hopefully we're about to rock and roll.

Been working on building up action list so we can push the button just as soon as money confirmation comes through.

Unlike the movies, it's all a reminder that real life moves much more slowly that you sometimes would like. And that's business all over, so often you are at the mercy of forces outside your control. If you think it'll take a week, in reality budget a month. On CSI DNA tests come back in 15 minutes. In the real world it's more like a week.

Best lunch in ages

Have to mention we had lunch yesterday at Eurodore on Bay Street in Port Melbourne. We were in the area, and remembered a review in the newspaper recently. Great decor, friendly staff and simple and tasty food. Plus they're a 'provedore' - I suppose a slightly funky word for deli - they sell cheeses (local and imported) plus lots of other gourmet treats. Lovely buzz, plenty of other people eating, always a good sign.

Eurodore also has regular events like wine and cheese tastings. We've booked for the next one in a couple of weeks.

Saturday, March 1, 2008

Takeaway Coffee Cups

I really like these brown paper cups with the knobbly sides - makes it easy to grip when hot.

Friday, February 29, 2008

Certificate of Completion

My certificate of completion arrived from Holmesglen Institute of TAFE for the Food Safety Supervisor program I completed last weekend. It's only a 'Completion', in order to properly qualify and 'attain' my certificate I have to be assessed in the workplace - basically the lecturer comes out and checks you in the real world setting. Obviously a bit hard if you don't have a cafe yet, but apparently it's fine to open the cafe, then call them to come and do the assessment after a few weeks. There's another fee for the assessment - $225.

Tuesday, February 26, 2008

Chasing agents

Chased the agent this morning for the Albert Park premises. Says he'll chase up the key and get back to me.

Monday, February 25, 2008

Neat tea strainer

Saw this in the weekend papers. Bit pricey maybe ($18) but is individual - and might make a nice way of presenting a cup of tea for a customer.

Saturday, February 23, 2008

Off to training

Off to training today, for my Food Safety Supervisor course. It's a one-dayer at Holmesglen Institute of TAFE. Today is the classroom component, finish that and I receive a certificate of attainment, but to officially complete and pass, I have to be assessed in the workplace. But that can happen once we are open. The FSS is essential - you can't open a cafe without a Food Safety Program, and a nominated FSS who takes responsibility for implementing and monitoring the FSS.

My Statement of Attainment arrived the other day for the 'Apply Basic Food Safety' course I did a few weeks ago!


Friday, February 22, 2008

Positive meeting at the bank

Had a great hour with the bank manager this morning. He told us again that the power point and financials we'd emailed over earlier this week were exactly what the doctor ordered. To his credit, he also mentioned at least one example of a client wanting to open a cafe and being knocked back by the bank's credit department. So our banker is quite correctly endeavouring to manage our expectations, by ensuring we understand there is no such thing as a 'given' when it comes to banks and credit.

However, he re-iterated his intent of personally handing our application to the credit manager - if necessary he'll book a 30 minute appointment and sit down and run through the proposal in person. This is obviously significantly good - instead of our application just coming up on the credit boss' computer screen, along with dozens of others, we'll have an advocate staring him (her?) in the eye. Can't ask for more.

We're hoping for a decision next week. That would be brilliant.

Tuesday, February 19, 2008

The bank likes the idea

Great email rolled in just now from our business banker, to whom we sent the Power Point this morning:

"I love the Powerpoint. Well Done!! This is exactly what I meant when I described it to you and the cash flows are spot on. Looks great!!"

Plus some other nice comments. We're going to tee up a meeting, hopefully for Friday.

All Hail PowerPoint

J came over yesterday afternoon with the various visual ideas he's been working on, it's a mix of mood boards and simple water colours. All in all the results provide a useful visual prompt card for our ideas. There are magazine cutouts of furniture, lighting and other fitout thoughts, along with a couple of watercolour paintings giving the general palette and feel.

The task now is to meld these into the Power Point presentation and get it off to the bank, which we'll do today.

We've also tidied up the financials, including full fitout budgets for the two cafes, and cash flows for the first two years, showing capital requirements, operating income/expense, cash etc. I think the structure works fine - eg the relationship between the numbers, the ratios and so on. Even if the actual numbers fluctuate, the budget should retain its shape fine. The numbers show that with a couple of cafes up and running, we should be doing ok. The 4 cafes gives us the scaling benefits, and an aggregate EBIT that's pretty acceptable, providing we can hit the targets.

Here's the Power Point, albeit with the financial summaries removed. I won't post the full financials either. Perhaps there is some mystery we should maintain.

Sunday, February 17, 2008

Notes to self

- Re-work the theme/mood boards, pull some stuff together and get it into the powerpoint, and over to the bank manager, need feedback on how we are looking
- Chase agent for greenfields cafe #1 - still have not heard back from him about the key he was trying to get so we can do an inspection
- Talk to agent for existing cafe #2 - think we better put him out of his misery that we're not going to review our offer.

Key issue now is to get the bank to approve finance this coming week, so we can get on with lease negotiations. Plus hopefully get a proposal from the architects and thus continue to firm up the budget.

Thursday, February 14, 2008

Agents work all hours

Had a call at 8.30pm last night. Let it go to voicemail, we'd only got back 5 minutes before from seeing our daughter in ICU after her heart surgery. It was the agent for one of the cafes we've made an offer to buy. He faxed me a basic P&L statement for the three months to end December the other day after I made it clear a while back that we would not consider reviewing our offer without more financial documentation.

I told him we weren't in a position to do anything while our daughter was in hospital.

The P&L is only of limited use. I don't know for sure, but it feels just a fraction contrived. The revenue is almost exactly the sum of three months of the admitted weekly takings. I can't quite get the rent to line up with the previously advised amount. And there's an expense line called 'tax office expense', which is pretty odd, given tax payments are balance sheet not P&L issues. Either someone doesn't understand the most basic accounting and they really are paying tax; or someone doesn't understand the most basic accounting and they've whacked an amount in to make it look like they're paying tax.

Even more curious, the 'tax office payment' doesn't make sense in context of the revenue. If it's supposed to be their GST payments then it should be approximately 10% of their GST applicable revenue. Which they've kindly documented by splitting revenue into 'sales' and 'sales non GST'. The 'tax expense' is 1/5th of the GST that would be liable based on their professed revenue. The P&L normally wouldn't of course have GST included at all, I'm only playing the numbers this way because of the 'tax office expense' line.

It's also a very small P&L - only a dozen expense lines or so. Which I always worry about. Real expense statements tend to have a bunch of lines to cover all the weird and wonderfuls that turn up in a business. Where's the good old 'miscellaneous'!

Of course there's also no staff expenses at all in the P&L. Which begs the question - how do they pay themselves? Or are they working for free? I suppose they could be waiting for end of the year to collect dividends but something tells me that we're back to the good old cash system.

Wednesday, February 13, 2008

Meeting the architects

We met with our friendly architect S and her colleague K this morning. Spent an hour talking through our ideas for the project. We're asking them to provide us with a fee proposal by early next week, and a scope of the services they would provide.

I think they might have been a little bemused when, in response to their query about design theme, I suggested a mix of coastal, contemporary, Gaudi, plus more!

They later emailed to ask about toilet availability - always amuses me, whenever I've worked on a building project invariably the most amount of time is devoted to debating toilets. A fundamental human need remains a constant anchor around many other decisions.

S and K also quite appropriately sought to clarify the roles everyone was playing. I made it clear they would be engaged for the design and documentation. J and us would be the clients, and provide substantial input.

The rest of this week will be devoted to life other than cafes - our daughter is having open heart surgery today and will be hospital for the next week. We'll just try and do the minimum on the cafes to keep things moving along.

Postscript: Our timing was immaculate. Within 2 hours of my meeting with the architects our daughter was being prepped for surgery.

Tuesday, February 12, 2008

Software frustration

Lord, hours of frustration, reminding me why computers, software and the people who sell them are the cause of the statistics about the number of workers who wish grievious bodily harm on their PCs.

I had a copy of Home Designer tucked away (I bought it a while back to model up our lounge room during some interior renovations). I thought I might give it a try and model up the floor plan of green fields cafe #2, the one the agent sent a scale plan through for yesterday. I re-installed the software, and successfully imported the floor plan image and started to draw in the walls. Within 1 minute I was reaching for the help file. The cafe has several walls that are not nice clean right angles - the whole main room is not square. The software felt like it was 'snapping' to a grid, because I could not fine tune the wall angles, they 'clicked' from one position to the next, nothing like the fine control I needed.

Finally I found the reason in the Help - the walls only would snap around on a 7 or so degree grid. I jumped on Google, and found some others with the same problem, and a suggestion that we needed Home Designer 7.0 - which has an option to turn off the snapping. I had v6.0. So I bought and paid online for 7.0. Which took several hours to download for a 500Meg file (slow server their end presumably).

Finally 7.0 was installed, I fired up.... and hey presto, no option to turn off snapping. $US60 down the drain.

Back to Google, and finally I found some forum posts, including items from staff at the software company. Turning off snapping is only available in the Pro version ($US495 no thanks) or the Home Designer Suite 7.0 - for $US99. The 'Suite' of course is the same damn software but with a few extras thrown in.

I decided I wasn't the slight bit interested in giving this firm more money so took myself off to Harvey Norman and bought a copy of their main competition - Punch! Interior Design Suite. Three CDs and a 3Gb+ chunk of my hard drive later I was up and running.

It DOES let me fine tune walls. So I dived in and pretty soon had the basic floor plan organised. But as with my previous experience with this type of software I'm realising it ain't as easy as they like to make it look. I can see how I could spend literally days working up the design - the walls, floors etc are easy enough to position. But of course the actual textures I want aren't set up as standard. And non of the furniture is available because this is a domestic product intended for house design, not fitting out a cafe. At the end of the day almost certainly it will be easier and quicker if more expensive to simply ask the architects to work up interior visualisations.

Monday, February 11, 2008

Visuals in progress

'J' came over this morning and we worked on the visuals, patching together ideas onto what I guess you might call mood boards. Plus he sat up late last night working up early watercolours for a couple of visualisations. The mood boards are essentially collages of ideas, using pictures from online, magazines and so on. For example:



I'm still trying to get the imagery squared off in my head. But that's possibly because we have significant distractions this week with our youngest child in hospital for heart surgery.

While on the design path, we've teed up a coffee with our friendly architect for this Wednesday. We're hoping she'll come on board - we're going to need scale technical plans for submission to the Council.

I've also excavated a neat home design program from the closet - allows you to draw scale plans, model rooms in 3D etc. It's designed basically an interior design CAD program for home use, but I'm keen to see if we can use it to create digital visualisations. One of the software's cool features is the ability to created animated 'fly throughs' - just perfect for convincing the bank manager. I have vague memories of de-installing the program in frustration after a short try at modelling our lounge room last year. I'll try and be more patient this time.

The agent for new site cafe #2 ('M') rang this morning while we were having a lunch break in the hospital garden. I told him we'd try and wrap up a decision this week, and it would be a big help if we could have scale floor plans. He kindly sent a PDF scale floor plan through. Only had a quick look, but should kick us off. I want to see if I can import the plan to the home design program and use it as a tracing template to then lay up the walls in the CAD system.

Nice cafe

Had an email alert from one of the online business for sale sites, noticed this ad:

http://www.wollermann.com.au/list.php?id=2063&list%5Bcat%5D=162

Like the fitout, some nice ideas, and not dissimilar to us.

SOUTH YARRA: 10 kgs coffee per week, as new equipment, seats 12, courtyard 20. Well presented, cosy, nothing to spend. Good size kitchen, cafe complimented by a "walk through" car park to offices and retail stores. Room for further improvement.

Friday, February 8, 2008

Chasing the brokers

Last task today before the end of the week was to chase the two brokers for the two existing cafes we made offers on a week or so ago. Just to re-cap:

- We have made offers to purchase two existing cafes

- We are considering leasing two new shops (brand new concrete boxes)

Each of the above presents different challenges, and advantages/disadvantages. But we decided it was important to maintain concurrent strategies and investigate the possibilities of each pathway.

We faxed offers to the two brokers on Tuesday 29 Jan. Both rang that evening to say the offers would be too low (which we knew), and we responded that unless they came through with some realistic financials, we would not be reviewing our offers.

Didn't hear a thing since then. So I rang around late today. Broker #1 says owners want an amount around 2.5 times what we offered, but they won't supply any financials. Even the broker says he's told them this is a dumb position. I guess some mug might come along and buy the business, but it ain't going to be us. Pity, the location is great.

Broker #2 says the owner promised to drop P&Ls off today or tomorrow. He'll fax 'em over to us if and when they arrive.

Not very promising. Still maintain our amazement at the businesses practices prevalent in the small end of the cafe sector. When we sold our online company in 2006 we spent several months prepping the business for sale, including restructuring the corporate entities to create a 'clean' and tidy business. Much work went on documentation and so forth. We 'packaged' the business for sale as our advisors termed it. True, there was an investment required, and yes the deal size was many times larger than we're talking with these small cafes. But surely the same principles apply?

A well managed, well documented business is going to sell for a higher price, and quicker, than a poorly managed one with incomplete or unavailable documentation. These cafe owners cripple their wealth creation opportunity by taking a short term view about cash, record keeping and their attitude to potential buyers.

I've been pondering the motives. And unkind or uncharitable it might seem, for me it's all about expertise and experience. Some people make the effort to learn how to be competent in business. Some of them have a particular propensity or talent for business - and they'll fly even higher. But basic business practice is not hard. Or at least that's what I thought. I'm possibly having to change my mind. Maybe the harsh reality is there are a big bunch of people out there running businesses who you wouldn't put in charge of a race between two flies, let alone a retail outlet turning over several hundred thousand dollars a year.

If that's the truth, then there's an even scarier notion - if they're rubbish at business, just how good are their health and safety standards? Bear in mind, these people are directly responsible for your health. They sell you food, you eat the food. History is littered with an abundance of examples of poor food safety resulting in widespread illness - and death. The same people who can't manage their way out of a paperbag; who seem hell bent on avoiding selling their business (despite professing a desire to do so); who deliberately under-report their cash takings to avoid paying tax ---- are the ones making your lunch tomorrow. How's your stomach feeling now?

Prepping for the bank

Today's mostly been about prepping for the bank. We've been re-writing the power point, and tidying the financials. The fitout budget is looking reasonably solid, and the cash flows are hanging together nicely - ratios seem right in terms of cost of goods, wages etc. Still battling the great unknowns - eg

  • just how quickly will revenue ramp up?
  • what's the theoretical maximum income we can show for each cafe whilst still legitimately supportable?
  • what balance between casual and permanent staff (been hedging the bets both ways, each has advantages, casual staff much more expensive because of the 25% loading, but permanent staff need holidays, sick leave etc)
We went out to lunch today to our favourite local hangout - the Brown Cow. As always good service and food. Full of tables of 'ladies who lunch' of course, being a weekday. But a lovely bubbling atmosphere. Couldn't help myself, spent half my time jotting notes into the Blackberry - mostly shopping lists of small bits and pieces we need to add to our budget (baby high chairs for example).

F was about ready to head hunt one of the waitresses - young, funky, terrific manner and friendly.

Visual concepts

'J' came over yesterday and we spent a couple of hours talking through the interior design. He's put together a kind of mood board, with pictures clipped from magazines, samples, fabrics and so on. His initial assemblage is terrific, a good mix of colour and texture. We did mess with some blue - strong cobalt, Mediterranean. But it became quickly obvious it doesn't work. Especially in winter the blue will be too cold.

But what was really kicking arse was black/brown timber, lime greens, some purple. Cool, contemporary, with elements of coastal. I'm also quite partial to the odd wicker lampshade.

Looking at the magazine clippings it struck me how important the idea of a large timber communal eating table is. Cafe #1 won't have the space, but #2 should have the acreage. Mix that up with a small couch/coffee table area, and half a dozen small tables and chairs, and maybe a wall bench with bar stools.

'J' as always full of innovative ideas - for example, he's heard me banging on about storage (eg, you can never have enough storage), and his suggestion is the couch area can be built as wall couches, lift the couch to up and reveal storage below. Just like on boats and in caravans. Perfect for long term bulk hiding of non-perishables.

He's now working on some simple visual concept drawings, not particularly specific to either of the two premises we're hot on, but rather an amalgam. This will give us something to add into the power point presentation for the bank. Should be able to get that off to the bank manager on Monday. It's difficult to commence any serious negotiations on the premises until we know the money's lined up.

Talking to 'J' and I had something of a mind flash about how to deal with the ceiling space at cafe #2. It's a high bare concrete ceiling. I reckon we should do a lighting grid - 2inch pipe grid, just like we used to use back in my theatre days. Our favourite Melbourne restaurant Circa uses something similar. It's incredibly flexible, you just get a bunch of powerpoints at each corner, then hang all your lighting gear from the grid, using extension leads wrapped along the pipe. If you want to move a light, it's easy. Spray paint the whole thing the same colour as the ceiling paint and it'll meld in visually.

Managed to find a sort of an image that shows a lighting grid. See the black 2inch pipe grid fastened to the ceiling? Then the lights and cables hang from the grid.



And it's cheap - the pipe is low cost, you stick it together with scaffolding clamps. Major item is ensuring the pipe grid is securely fastened to the ceiling and the walls. Although in reality it won't have much weight load compared to a professional theatre environment.

Just checked the Circa web site, they have a private function room with a great limey green wall couch. Must show J.

Thursday, February 7, 2008

Punching in the dark

Just thought I would illustrate what we mean when we say we're being forced to make offers to buy businesses based in zero information. Here's a case in point. It's the print out from the online real estate web site, listing a small cafe for sale in St Kilda. Now we have signed an NDA on this cafe, but I've removed all identifying stuff so I can't see the issue with showing you. The scrawled information is me writing down notes when talking to the broker. On the basis of this information it was intended that we would make an offer to purchase the business. As I told the broker, we'd be punching in the dark. So we made a very low offer, because without documentation and evidence to justify a value, my business bone freezes and doesn't want to play. Bizarre.

Notes to self for today

- Chase agent for cafe #1 premises - we asked for an inspection, he said he was waiting on the key, that was 3 days ago
- Chase agent for cafe #2 premises - he's sent us a heads of agreement for the lease, and I emailed straight back querying a couple of things. One is a % of the council value of the property to go to a precinct marketing fund. Trouble is, it doesn't mention the value, so we could need to find several thousand dollars more a year in the budget
- Also want to check with him if he has any contractors for particularly the aiconditioning system install
- Chase the agents for the two existing cafe businesses we've made offers on - they've gone quiet for a week now since we faxed offers (and I told both a wouldn't consider changing the offer until I got some more detailed numbers).

Rallying the troops

OK, have sent notes off to 'R', our friendly builder (he built our house); and 'S', our friendly architect. Suspect they're both going to think us quite mad, hence not using their names right now. But if we can sell them on the idea and vision, they'll be welcome additions to the team for the Parlour Cafe project.

How expensive is a fridge!

We're obviously preparing some pretty detailed budgets for the cafes, and especially this week the fit outs. If it's going to cost too much to fitout the spaces we've chosen, then there's no point progressing the leasing conversations with the real estate agents.

As with many new businesses establishments, it's scary how much things cost. And the food business is no different. Items such as display fridges, coffee machines and so on cost significant amounts of money. We'll easily drop $30,000 on the basic equipment plus some tables and chairs for the smaller of the two cafes, let alone the larger one.

You only have to look through the Trading Post, or one of the online second dealers to see that even pre-used equipment is expensive.

Which of course has a huge impact on cash flow - we have to find these enormous slabs of cash before we even open the door. We might be able to stick some of it on the credit card, and thus delay the pain for a couple of months (always have your 55 day interest free credit card in your wallet in this game), but watching a good proportion of your free cash walk out the door before you've served one customer has to hurt.

We've leased equipment lots of times before in our previous businesses - particularly computers, web servers and so on. It's a pretty established concept in the IT industry. But I was curious to see what's available in the food end of town.

Hey presto, I find Silver Chef Hospitality Equipment Funding. Very similar to the FlexiRent financial company we've used for office equipment, but these guys deal in the hospitality sector. They'll even finance a full kitchen fitout. Their pitch is good - they'll finance the equipment for 12 months, after which you can buy it (at reduced rate), return it, or finance again.

I'm liking this concept. I reckon we should budget to lease the equipment for 12 months, then make a capital expenditure allowance to buy after 12 months. Like all leasing, it'll get expensive in the longer term - hence get it off the expense sheet and onto the balance sheet once free cash allows.

Wednesday, February 6, 2008

Do we need this?

The other side to the Parlour concept here. I guess I'm the one who'll do the yakka with my brother JKB when it comes to fitout, painting, install etc for the cafes, which is a titch daunting but is also a chance to create a series of cafes that are more than that, that are also venues as well. Places to hang out, take your laptop and write your first novel, sip latte and do that darn business plan you've been putting off, write up that sales report - all in a happy, cheerful, relaxed environment. 

I guess I keep asking myself, does Melbourne really need more cafes? But then I see nothing that's remotely like Parlour (well the idea we're envisioning and talking about anyway) anywhere here. It's a concept that's about more than good food, coffee and treats, though it will have those, but it's really about a great place to hang around, relax and create. I reckon most of us have become too busy again. I complained about this when I left corporate in the 1990s - too much busy work, not enough quality thinking done, therefore rushed decisions and poor quality outputs. And no-one does great things rushing around like a buzzy bee - though I know many people who believe behaving like this makes them more important, I just reckon it makes them more noticeable.

So, let's strike a blow for busy work and super long to do lists. Parlour is all about doing things supremely well and elegantly - and having fun while you're doing them too. And maybe doing a bit less, but doing it a whole lot better.

Back to the planning board. Hope you're starting to get what Parlour might be about!

Getting head around the requirements

Today's primary task is to pull together a broad requirements list - eg everything we need/want in our cafes in terms of fitout and major equipment. This is so we can start doing some rough drawings visualising the concept.

We're dealing with a sequence of activities that all interlock together, and which have to occur in the right order:

- In order to operate a cafe we need a Food Permit. In order to obtain a Food Permit we need to apply to the local council. For example, the City of Melbourne. Here's the pages on the City's site about Food Safety.

- In order to apply for a permit we need to have scale drawings detailing where everything will go and what it will look like.

- But first we need to convince the bank to lend us some money. We're part financing ourselves, and borrowing the rest. To win the bank over we need 'pretty' concept drawings, so their credit department can get all excited and agree to give us a big pile of dosh - preferably unsecured. Oh, and of course, capital budgets and cash flows.

- In order to do the visualisations, we need to determine which premises we want. And to do that, we need to assess that the premises will be appropriate. And to do that we need to work out in detail our..... requirements! And cost them with at least ballpark figures.

- In order to assess the appropriateness of the premises, we need to work out in detail that we comply with the requirements of the Council and the Food legislation. And only reliable way to do that is to submit preliminary plans to the Council and have them assessed.

- In order to get plans drawn we need concepts and vision. So we've got a friendly brother-in-law 'J' who's going to throw some creative juice around; then we can pass to our architect 'S' who can turn them into something the Council inspectors can interpret. But to do the concepts we need .... requirements.

Hence today's quest being trying to compile a list of requirements, which will evolve over time into a more formal specification document.

Tuesday, February 5, 2008

Inspection Cafe # 2

We took overselves off to Docklands today for an inspection on a new shop space, which we are considering for cafe #2. It's brand new, one of half a dozen in the bottom of a new apartment block, but located right next door to national headquarters of companies including Ericsson (2,000 worker bees), National Australia Bank (4,000) plus ANZ bank, Lend Lease and others. Magic spot, right next to the water at Victoria Dock.

It's a from scratch fitout - at present just a concrete shell with fireservices hanging down from the ceiling. But all the right proportions and facilities including grease trap and vents.

Outside we'd be able to have a pretty good size seating area. The agent spoke enthusiastically about the developer's plans for the area.



Agent's sending a heads of agreement, so we'll see what the offer is. We need to be cautious - whilst there is no questioning the potential of the area, our concern is how long we'll need to wait as the foot traffic, office workers and general activity builds in the area. Suspect it'll be 12 months at least, but this would get us in on a magic spot from day one, ready to take advantage of the projected growth in the vicinity (they are still building some of the big office buildings).

Added bonus is 150 apartments above us - and we'd be right next door to the front entry. Hard to miss us.

Saturday, February 2, 2008

The nature of the cafe business

The first thing you learn about buying an existing small cafe is how there is a disconnect between the information on paper and the true performance of the business. And that's because owner operators of small cafes are invariably operating a part cash, part official business. That is, they only are reporting a percentage of their true revenue. The rest is disappearing out of the till as cash.

We know this for a fact - it's such an ingrained and accepted practice the business brokers representing the cafe owners even speak openly about the 'cash ratio'. One broker we're negotiating with spoke about how it would be our decision to choose a cash ratio - 50%, 60% - eg what percentage of the takings would be officially reported.

They even cover off the situation where, because the books don't reflect the true takings, a potential buyer might be nervous about paying the asking price. So they offer 'trial periods', whereby the sales contract will include a get out clause if takings don't hit a certain level.

It's not hard to pick a cafe that's under-reporting takings, the signs:

- The paperwork from the broker is minimal or non-existant (they don't want to have to provide a signed off Vendor's Statement certifying the revenue)

- If you are provided with some financials, the ratios will be off. Here's how you tell:

A cafe is advertised for sale. The ad says the takings are $4,500 a week, with 10kg of coffee being sold. The you receive the financials and they show a gross revenue for a year of $150,000 - and a cost of goods vs revenue ratio of 40%.

Start doing the maths. For a start $4,500 a week = $234,000 a year. 10kg of coffee makes around 1,200 cups of coffee, say at an average of $2.50 retail. That's $156,000 just in coffee sales alone for a year.

And cost of goods at 40%! Should be around 22-25% maximum.

When I first realised this was the situation my ethical business bones started to ache. How come the tax office doesn't start in on these people - we've run businesses for 15 years, and we've always run our accounts above board. So while we've been paying taxes, these guys have been evading taxes.

Then I considered the cash chain. Whilst the cafes can't pay cash for some products - for example, buying in drinks from major suppliers like Coca Cola, they do buy a lot of fresh food - fruit and vegetables for example. These are often distributed by small businesses - basically a bloke with a van who looks after a small group of cafes. He goes to the markets early in the morning, purchases the orders, the delivers them out to his customers, the cafes.

The cafes often pay cash to the distributor. Who in turn is quite likely paying cash to the market stall holder. And there's no tax disadvantage. Because there's no Goods and Services Tax on fresh food. So no input credits to claim for the cafe owner. Or the distributor, or the market stall owner.

Thus you get a cash driven supply chain. Some sales are reported on the books - enough to keep filing Business Activity Statements. And a decent percentage are not.

If the tax office got involved their first point of investigation would be requiring the cafe owners to hand over their cash register till rolls, and reconciling these with the BAS filings. If the cafe owners have not been careful to not ring up all their sales whilst sticky fingering cash out of the till, there will be a discrepency.

The tax office seriously does not like you mis-reporting, and evading tax. And they come down hard. They are the one creditor your NEVER piss off in business, because they'll close you without compunction. And that's what'll happen to the small cafes if they get caught. And the distributors. And the market stall holders. Only problem - big bunch of businesses will close, and people out of work.

It reminds me of the big debate during the introduction of the GST back in 1999-2000. Originally the GST was to apply to everything. But after much public outrage, the government backed off and did not impose GST on fresh food. Their argument in support of taxing fresh food was that the GST could be a powerful tool to counter the cash black market. But creating exceptions - eg fresh food - would severly compromise the effectiveness. Now I see they were right.

Friday, February 1, 2008

So here's the plan

So here's what we're thinking of. We want to aggregate 4 small, under performing street cafes in the Bayside area, re-brand and refit cheaply. Inject good quality small business practice where not present already under a good concept brand to create a viable group of small, locally focussed, coastal theme cafes in the Bayside area with much improved turnover to present a viable equity exit opportunity after 12 months, or ongoing dividend stream.

As a variation, we may decide to lease vacant shop space instead of buying existing businesses. This has the advantage of not having to pay for an existing business, but the fitout will be pricier, and we have to build trade from zero instead of tapping into existing customers.

We reckon there are a number of opportunities we're exploring that can help us to success:

1. The vast majority of small street cafes in the Bayside area have zero brand or style. There is no individuality, theme or concept. We will create a strong branded theme and style.

2. Very poor business practices appear to be prevalent. We have now looked at nearly a dozen small café operations for sale, and all have been characterised by low quality management, reporting and systems. We will employ sophisticated small business management practices built over 15 years of successful business management.

3. The small street cafes do no marketing that we can discern. Yet they are located in high population centres, usually with major businesses and residential clusters in immediate proximity. We have long experience in creating below line highly targeted low cost marketing campaigns, and we will use this background to encourage locals to give us a try.

4. Same old same old food and beverage and/or too large or too inconsistent menu. We’ve seen cafes selling hot chips along side freshly squeezed juices; vast menus for a 10 seater café; or just a lack of imagination. We will present a consistent menu of food and drinks, with something different to capture peoples’ interest. For example, platters of high quality French and local cheeses, with good breads and biscuits with a matched glass of wine. (we plan to apply for a liquor licence for all our cafes).

5. Aggregation benefits. With poor management, zero marketing and lack of brand, small street cafes are often breakeven, with a high owner turnover as a consequence. Our plan is to have four cafes within 12 months, with superior management, strong concept and brand, and good marketing. We will achieve efficiencies and savings in back office, accounts and purchasing, yielding an improved return on investment and inevitably a better experience for the customer.

Diving in

And so we dive in. We've founded, run and sold a number of businesses, including several online companies. Amongst our new ventures is investing in launching a new group of cafes in our home town of Melbourne, Australia. This blog is a diary of our adventures as we take on this new challenge.

We'll have to get up to date - we've been on the case since the new year, so we'll post a few updates to review progress to date, and some of the lessons already learnt.

As of today, we have two offers in on existing cafe businesses (which we would refit and re-brand), and are pursuing two brand new spaces (which would require complete fitouts starting from scratch).