Is $250,000 Enough to Open a Small Cafe?

Opening a small, unassuming cafe seems idyllic for its simplicity; however, do you have a realistic idea of the expenses involved?

Recently, Business Debut interviewed Sam Beng of Sammy's Boba and Coffee, in Stockbridge, GA. Beng is a few weeks away from opening, and in addition to sharing the details on his menu, he gave us a good look at the realities of opening a cafe.

Beng shared that he had a stock portfolio of around $250,000 and planned to liquidate $150,000 to open his business.

He had what seemed to be an ideal situation: a second generation space (meaning that his location was a former restaurant), making it easier to open another foodservice business there.

Double Your Budget

Beng told us during the interview, however, “Whatever you think the cost of something is, you probably want to double it.”

He described the second generation space as having essentially been “vandalized” by the previous tenant.

Additionally, local laws had changed in the past year, requiring him to install an underground grease trap. This meant digging a massive hole in the parking lot for the installation. There went an unplanned $40,000.

With about 4 weeks to go before opening, Beng shared that his entire $250,000 portfolio has been liquidated and invested into Sammy’s Boba and Coffee.

Spending Breakdown

The primary expense, Beng said, has been the build out, claiming roughly $125,000. Then, he purchased equipment for another $100,000. The remaining $25,000 has gone to miscellaneous costs.

Something to note about Sammy's Boba and Coffee: while they are a cafe, they will also be doing some actual cooking, serving popcorn chicken, wings, Hong Kong-style bubble waffles and Japanese taiyaki. Thus, they needed more equipment, like a hood system, fryers, and so forth, adding to the cost.

Testing Before Investing

Before being comfortable investing a quarter-million dollars, Beng shared that he had done pop-ups to validate the demand for his brand in the local market. The investment was part of a steady validation and less of a Wall Street Bets-proportion YOLO.

“I didn’t just jump into this. I did pop-ups for years before building a shop," Beng said.

Opening in January

As of now, Sammy's Boba and Coffee is planning to open in January. Beng said that they have some inspections and final touches to complete before the debut. All told, even in a 2nd generation space, they're looking at a $250,000 opening.