Coffee franchises are springing up in almost every town and city worldwide. It is a tough business to be in when you consider the long hours, health and safety regulations and numbers of staff required.
When potential franchisees first look at this business they are blown away by the profit margins. Surely any business that has such high margins built in must be profitable?
In reality it is not as simple as that. For a coffee shop to be truly successful it needs to generate a huge number of sales to cover the fixed costs. The fixed costs are very high primarily due to the fact that business premises are required in shopping malls and busy high streets. This means that over half the turnover goes towards covering the rates and rents.
A coffee franchise needs a higher number of employees then most franchises due to the number of hours the business has to be open. The majority of turnover is done either before work starts, at lunchtimes, after working hours and during the weekends. Unlike some other franchises this is definitely not a nine to five business!
Staff costs are very high and then there is the problem with keeping them. Most employees in a...
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