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what is the average rent to sales ratio for a coffee/pastry shop?

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Freedom Business Brokers
Orange County, CA

After selling the businesses for 14 years i still couldn't understand why people buy coffee shops smetimes franchises at outrageous prices of 300 to 450k and a rent of 5to 6k a month. it is a matter of commonsense that average ticket per customer ranges under $5.00. Even if the profit margin is high in coffee yet you can serve a definite number of customers. And i have never seen in my tenure a succesfull coffee seller who is satisfied with his project. Almost all coffee franchises are failing day after day to nem some as Starbucks, It is a grind coffee etc. it hurts me when an investor invests his hard earned money into this kind of loosing proposition.
However this was not the question. The question was how much rent is ideal for a coffee shop.
There is not a prescribed formula for that. It depends on the location. If the location is on the seaside piers or airport or closed mall rent ratio will be different whereas in a normal strip center rent will be different. I don't know the percentage you can calculate yourself but to be on the safeside you should
take home 3to 5k net a month minmum after paying rent and payroll and cost of goods and utilities.

Nov 27, 2010
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I am not sure what the average is but I personally would never go over 10%. After that you are working too hard for your money to give to somebody else. Rmember the old saying, "Location, Location, Location"? Well it is really, "Location, Location, Location, as long as I have a great lease!!!!!"
I see way too many restaurants where the rent is 10k a month and the owner is making 25k a year. It just isn't worth it.
Also be wary of property taxes and cam (and cam overun, if applicable.)
right now i run at about 5% and pay a share of property taxes and cam overrun-- about 1200 per year total for both.
Good Luck.

Nov 26, 2010

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