New SAVA’s Location: buy a new cafe or build it from scratch?

Hi Friends!

I have been trying to write a post for the last couple of days, but the week was super busy. We were trying to fix some malfunctioning equipment. On Friday it just reached the apogee when the espresso machine started leaking in the morning and the pump in a dishwasher stopped working. And then, right in a middle of all this we noticed water was dripping from the celling, which turned out to be a broken AC tube. Well, day like this do not happen often, but you have to be ready for everything…

Today I want to share our experience of how we started opening a second location of SAVA.

We had two options: to buy an existing business (cafe or coffee shop) or build it from scratch. I should clarify: when we where thinking about buying an existing business, we planned to rebuild it into a crepe cafe. I will explain it in more details.

Buying a business (eating establishment)

Buying an existing restaurant seemed like an easy solution since the previous owners often sell it with all the equipment and, in many cases, with favorable lease terms. If we purchased a business, we would inherit an existing lease contract. For example, If the contract was signed 2 years ago we would keep paying the old, usually lower, rent till the contract ends. Some realtors like to say, "Just change the sign and start serving the customers!" However, first, you have to pay the previous owner a substantial amount ($50-250K). Even if you get the space in excellent condition, there's still work to be done, such as installing new power lines for crepe makers, repainting the walls, buying missing equipment, and removing unnecessary items. In reality, restaurants for sale are often poorly managed, with old and not-properly-maintained equipment, walls that have been repainted numerous times, layouts that require adjustments.

Hereby, we could expect:

1. $50-250K to buy a mid-size restaurant

2. $30-50K to slightly renovate the store and get required equipment

3. We would be limited by the existing store layout and design, although wouldn’t need to deal with heavy construction and building permits

4. Most likely, the existing equipment will be old or won’t fit our needs.
   

Building your cafe from scratch

On the other hand, if we rent an empty space, we only need to pay rent to the landlord. However, we will still need to invest between $70-300K to transform it into a medium-sized cafe. This cost depends on the condition of the building and is only limited by your imagination. Opening a restaurant involves not only developing the menu and hiring staff but also significant renovations to install necessary water, sewage, electrical, and ventilation lines. All of this must be submitted for approval and acceptance by the city, which requires money, managerial skills and a great deal of patience.

Quick Summary:

1. It will cost us around $70-300K for renovation, paper work and equipment. We are talking about 1500 sq feet cafe and 20 seats

2. We get a store with our own design and layout. All the equipment will be brand new.

3. Dealing with the city to get a building permit and other docs may become a real pain. If something delays, we will be paying rent while the store is not operating. I heard stories when cafes could not get their building permit for 6 months.

Eventually, we found a rental space that was previously a restaurant and decided to build it from scratch (the second option above). This eliminated some communications with the city and extensive construction work. At the same time we are building a cafe with an efficient layout, spacious kitchen, lots of storage space, and a cozy seating area. I will talk about our new location in the next post. Stay tuned!

Photos:

1. First SAVA before renovation

2. Same corner after renovation

3. First SAVA. Experiments before opening. Nov 2021