Business Plan for a Cafeteria

It is difficult to define the concept of a cafeteria. These types of intermediate establishments between bars and restaurants can be more similar to the former, focusing their services on the sale of coffee and drinks. But it is also sometimes more like the latter, with practical food services, almost within the fast-food sector. Even sometimes without table service, with a buffet. Precisely for this example of a cafeteria business plan, we are going to assume the case of a place that sells elaborate but simple food.

We recommend the reader complete the reading of this article with the publications we made about the business plan of a restaurant or the business plan of a bar.

The business idea

We propose a cafeteria based on the buffet concept, but with control of the dishes consumed (it is not an all-you-can-eat buffet). Customers enter with their trays in a closed circuit where they can choose various firsts, seconds, desserts, and drinks, before going through the checkout and paying for their food before heading to the table area to enjoy the food.

It is a concept that can be considered fast food, which allows users not to waste time and is generally inexpensive. It is common in large companies or public places (hospitals, airports, highways).

What need does the business idea respond to?

The different crises (financial, pandemic) that we have experienced in the last few years have substantially reduced the purchasing power of many consumers. Despite the subsequent economic recovery, an important part of the customers got used to looking for cheap alternatives to eat out.

On the other hand, there is a market of workers looking for variety in the dishes and speed of service, while having to pay for their meals every day represents a significant monthly expense.

The magnitude of the sector

Because coffee shops often have a service offering halfway between the bar and the restaurant, it is difficult to find specific statistics on their turnover. However, they belong to the hospitality industry, one of the main creators of jobs and wealth in the US. According to IBISWorld, there are 4,791,005 people employed in the Fast Food Restaurants industry in the US as of 2021.

Project location

When considering a business plan for a cafeteria, the ideal is to look for a location close to a large workplace. For example, in the vicinity of industrial estates, shopping centers, or business centers. It must be taken into account that the main clientele is the employee who does not have time to return home to eat and is looking for a cheap and varied place, so they cannot be located very far from those work centers.

Although there may be small cafeterias, to take advantage of economies of scale it is important to have a certain volume, which increases the importance of locating an area with a sufficient number of workers.

Business plan for a cafeteria: the promoter team

It is highly recommended that people who are going to carry out a project in the restaurant sector have the necessary experience. Although it may seem simple, there are important logistical and health aspects, and organization and know-how are required to guide a group of employees which is usually important.

In the case of a buffet system, the staff is smaller (there are no waiters), but a significant number of people are still needed for the kitchen, cleaning, and checkouts.

Competition study

Competing with the buffet cafeteria concept for hard-working customers who have a small budget and little time are several major players.

• In the polygons, there are usually large restaurants with adjusted menus, which vary their proposal every day and try to combine the speed of service and treatment as at home. In principle, the concept of the cafeteria should offer better prices (you can buy each of the dishes individually) and more variety.
• In shopping centers, free buffets are common, as well as a large number of restaurants. In general, both the all-you-can-eat buffet and the restaurant (chain or not) offer significantly higher prices than the concept of a cafeteria that is proposed.
• You have to count on the competition from the internal cafeterias of the big companies. Normally they receive some type of subsidy from the company so it is practically impossible to compete against them. If a major workplace has its own cafeteria, it is best to exclude your employees from the potential market.
• It is quite common to find hamburgers, sandwich shops, or sandwiches with very competitive prices. In this case, the cafeteria concept provides a greater variety and more balanced dishes for a not much higher price.
• Other coffee shops may be working in the area as well. For example, the English Court in some of its centers has a buffet service. In this case, they would compete for price and some services.

Marketing and communication strategy

It is very important to take into account the marketing and communication strategy within the business plan for a cafeteria. That strategy varies greatly depending on the location of the center. If it is a cafeteria located within a shopping center in a highly visible area, most of the people in the place will notice its opening almost immediately (which does not mean that it is always advisable to advertise).

In the case of a polygon, it is very important to do communication work with all the companies located in the industrial zone, and also in other nearby polygons. Many of the potential customers will still have to take a car to eat, so a distance of 2 or 5 kilometers matters relatively little for this purpose.

For this type of business, the most profitable strategy is to get an agreement with a company so that its employees come to eat. You can lose a bit of margin (you need to negotiate prices), but in return, you secure a significant volume of business. On the contrary, when the market study is carried out, it will be necessary to check that important companies do not already have signed long-term commitments with competitors.

Operation of the company in the plan for a cafeteria

A cafe of this type has some significant differences from a classic restaurant.

• Dishes are prepared in advance, and then the customer chooses from the available offer. Therefore food production is simplified. The number of dishes is also usually considerably less than on the menu of a traditional restaurant, which also contributes to better productivity in the kitchen. The trade-off is that special care must be taken in estimating quantities per dish and a very efficient system to maintain the properties of food, both hot and cold.
• There is no table service. It is only necessary to serve hot dishes, check that the buffet is not missing some dishes, and do a little cleaning in case some customers do not collect their trays.
• It is necessary to have at least one cashier to collect the food, and at rush hour 2 or 3 may be necessary to avoid losing the great advantage of this system: the speed of service.

Necessary investment

The money required for an investment of this type is very similar to that of any restaurant. The material and requirements of the kitchen are identical, tables, chairs, and boxes are needed in the same way. Some elements are even added, such as the entire buffet system with its refrigerators and systems to keep food warm.

The investment required to adapt the premises to both the regulations and the practicalities of the business can be a significant amount.

You also have to invest in buying initial food and drink stocks.

It is difficult to estimate the necessary investment but we could say that at least around € 100,000 would have to be paid out (for a small project).

Sales forecast in a coffee shop business plan

To calculate the number of diners that could be served each day, and since the heart of the clientele for this project is the employees of local companies, the most appropriate thing to do before starting to work on the idea would be to survey these workers. , explaining the concept and the price range. If the survey results show strong interest, a sales forecast based on the number of meals served can be extrapolated.

It is important to remember that surveys are not a guarantee, because many people may say they would come and then not. However, if the survey shows no interest in the concept, then it would be better to rethink the idea in another way.

The sales forecast is a fundamental element of any feasibility analysis, and especially of the business plan of our cafeteria. It is very important to try to have a realistic estimate. One option is to analyze the competitor’s billing. Another is to extrapolate based on occupancy data and average tickets. 

Margin on sales

The idea is to make standard and simple dishes to prepare, so the margin on each of them would be important (as is usually the case in restaurants in general). However, being a project aimed at taking care of the client’s pockets, the margin would be much lower than what usually happens. It would seek to compensate for this lower margin in two ways: by the volume sold and by lower expenses.

Fixed costs

By having a standard food offer, more dishes can be produced with fewer people, so the ratio of cooks to dishes served is lower than in a normal restaurant and the fixed expenses in personnel logically are also lower. In addition, the cooks serve the hot dishes and reposition the cold dishes when necessary, and they can even organize the cleaning of the room if necessary.

The cashiers are also part of fixed costs but can be employed part-time, especially during the busiest times.

The rental of the premises and the depreciation of the material would constitute another very significant part of the expenses.

To all this, we should add the usual expenses (supplies, external services, etc.)