Food, Retail & Hospitality · Buyer guide

Buying a Coffee Shop & Cafe business

Published · Reviewed by The Diligence Standard Team · Updated

Coffee shops can have strong brand loyalty but weak true earnings after market-rate management labor, rent and equipment replacement are considered.

How the business works

Traffic, average ticket, labor scheduling, rent and daypart economics determine whether a cafe is a scalable business or simply an owner-operated job.

Risks to test

  • Owner labor not normalized
  • Short lease or high rent
  • Espresso/refrigeration equipment replacement
  • Traffic concentrated in one daypart
  • Food waste
  • Local competition

Evidence to request and reconcile

  • POS transaction reports
  • Payroll/schedules
  • Vendor and food/coffee purchases
  • Lease
  • Equipment list and maintenance
  • Sales by hour/daypart

Decision questions

  • What is profit after replacing the owner’s working hours?
  • Are sales growing from more customers or higher prices?
  • What rent increases are coming?
  • What equipment needs replacement?
  • Can the concept run with a manager?