Finance

[georgie1]

Hi

I was wondering if it was difficult to get finance for a 27sqm (has a 50m2 out door area under cover) commercial shop that would suit a cafe or wine bar.

I know banks get funny around sub 50sqm residential units, will I experience the same problem with commercial? If there is no issue with the size what would the max leverage be if a bank wanted to lend.

Also, does anyone have a rough rule of thumb of what a small cafe in a 30sqm shop could turn over?

Property is in Brisbane's West End not in the main hub (if that helps)

 

[Rolf Latham]

Hiya

65 % to70 % lend should be achievable depending on what the valuer says about the security quality

ta

rolf

 

[tobe]

the 50sqm residential policy wont apply for commercial, so the size isnt going to be the same sort of issue.

Some of the factors commercial lenders will look into are whether there is a current lease in place, the zoning, your commercial experience, whether you have any other security etc etc. Approximately 70/80% LVR is about the limit.

In terms of your question about turnover, I suggest you go back and do some major research. The floor size of the cafe wont have anything to do with the turnover, unless they (only) are siting at the tables. Many small cafes cater to passing trade, who get takeaway coffee and muffins etc. the profit margin for that style is quite good, less staff etc, but it has to be in a high traffic area.

Most sit down cafes will do food and boose too, so depending on the markup, which depends on the likely clientelle, the 'turnover' could be anything.

How many covers can the place seat? The outdoor area? You could get a very rough idea of turnover by having lunch nearby and timesing the cost by the number of covers times perhaps two or three (seats turned over twice during lunch and again during morning or afternoon tea?).

 

[Aaron_C]

Shouldn't be an issue. Commercial is very, very different to residential. No one lives in a shop so the floor area isn't a problem. You only need space to have a coffee machine, a few tables and space for fridges. 30 sqm is sufficient for this. As the others have said, the only question is about the quality of the security, where it is etc.

 

[georgie1]

Thanks for that guys, my concern is that there isn’t much foot traffic as it is in a residential area hence why the only profit would be in sit down, I wouldn’t think you could do much with 27m2 in terms of kitchen and seating and so the only place to serve would be via the external area which is roughly 50m2.


For a cafe to serve a standard menu such as breakfast and brunch would 27m2 be enough to put a kitchen in?

Thanks

 

[Aaron_C]

For a cafe to serve a standard menu such as breakfast and brunch would 27m2 be enough to put a kitchen in?

Thanks

Usually these shops don't have a kitchen as all the food is pre-ordered elsewhere. They only need space for some chopping/toasting and a coffee machine and fridge.

 

[tobe]

Are you planning on running this cafe yourself, or having it tenated?

Being a residential area doenst preclude having a cafe, but it makes it harder. Is the area changing? More young proffessionals? More renovations etc?

 

[georgie1]

Are you planning on running this cafe yourself, or having it tenated?

Being a residential area doenst preclude having a cafe, but it makes it harder. Is the area changing? More young proffessionals? More renovations etc?

It would be tenanted. The area has a lot of new medium rise apartments and lots of small light commercial in the area. The area has a large proportion of professionals due to its proximity to the Brisbane CBD (2km).

Apartments facing the river in the area go for $1,000,000+

Running around google street view there are no other cafe’s or restaurants in the area unless you head to the main area of the suburb. (not walking distance)

 

[tobe]

Id do some research on likely tenants. Can you list with a commercial estate agent for lease? See what sort of response you might get, or at least get the estate agents opinion on what sort of tenants you would attract and likely rental etc.

 

[John M]

Commercial is very, very different to residential. No one lives in a shop so the floor area isn't a problem.

Lies! I've conducted numerous inspections of shops and factories which have beds and clothes lines in them! Haha

But more on topic, Aaron is correct in that commercial properties are leased/sold based on their size (and location, access etc of course). I would definitely recommend talking to a couple of local agents to ascertain what sort of price you could ask if you were to lease it out, and how long you should expect it to take to find a tenant.

 

[Scott No Mates]

Hi Georgie

It sounds like you've never worked in a cafe/kiosk/coffee bar etc.

27 m2 is generally big enough for a fully fledged kitchen in a kiosk in a shopping centre but layout in a shop is totally different - food court shops are more often around the 50 m2+ as a minimum with a 6 m counter, 100 litres/second exhaust, 415 V x 100 amp 3 phase power, gas supply, grease trap etc....

What base services exist in the premises? Or how much are you prepared to contribute towards the deal to lease the premises? you will need to factor these costs to determine what your holding costs are going to be.