Thursday, November 15, 2012

Start-up costs for a small bakery/café in Tokyo

I came across an interesting series of articles in Japanese magazine Café Sweets which introduced 3 recently opened cafes in Japan and listed their start-up costs and average sales per customer and so on.

Here is the information from the images above:
  • 8-seater café in Meguro-ku with 2 staff, took 15,000,000 JPY in start-up costs (about $185,000 / £119,000). Monthly sales goal of 2,000,000 JPY ($25,000/£16,000), with current estimated sales at 680,000 JPY ($8,500/£5,300). 
  • Café with 20-seats in Setagaya-ku, 4 staff. 10,000,000 JPY cost at start-up ($125,000/ £79,000). Monthly sales goal 1,800,000 JPY ($22,600/£14,000), current estimated sales of 1,512,000 JPY ($19,000/£12,000). 
  • Café in Ishikawa prefecture with 28-seats and 2 staff took 8,000,000 JPY to get started ($100,000/ £63,000). No monthly goal stated, but current estimated sales of 600,000 JPY ($7,500/£4,700). 

Although it appears quite possible to spend 15 million yen and more to set up a small cafe, I've spoken to business owners in Tokyo who have spent much less than even the lowest start-up cost of 8-million yen listed here, so it is possible to do it more cheaply than these articles suggest. It also occurred to me that it might be in the magazine's best interest to talk up the costs slightly to be responsible and encourage sufficient planning.

The shop rent and real estate fees aren't stated explicitly in the magazine's break-down, but all 3 examples took between 1.3 - 2-million yen to acquire the spaces which we can assume includes rent, deposit, agent's fee etc. The business owners in the article spent 49 - 72% of their start-up funds on reforming the space and fitting the kitchen, and so doing up the space is definitely an area you could focus on to try to reduce initial costs. Perhaps you can break down the old space yourself, keep the new design simple to start with, buy some of the non-critical equipment and furnishings second hand, search hard for space reform contractors who can give you a great deal, and look into recently closed 'going concern' / 居抜 / inuki spaces that still have kitchens and some of the items you might need in place.

The small café based in Meguro-ku in particular looks to have some challenges ahead, just based on the figures - with a stated goal of 2-million a month in sales, and an average sales price of 900 yen per person, they are going to have to make themselves available to and able to serve over 2,200 customers a month instead of their current 755, either that or increase the average sales price, or cut costs to allow for a lower monthly goal. Gosh. It appears to be part of a larger chain of coffee shops however, so perhaps there is financial support from the parent company during the initial stages.

By way of comparison, here is an article from New York magazine a few years ago telling the stories and listing the costs involved in setting up a bakery, restaurant, or wine bar in New York. Even accounting for inflation, the start-up costs for Babycakes in New York were considerably lower than those published in the Tokyo magazine:

Babycakes NYC startup costs (recalculated to 2012, considering US inflation)
  • Total Start-Up Costs= $43,600 (about £27,000/3,490,000 JPY) Rough Monthly Expenses= $13,300 (about £8,300), including rent of $3,200 a month. 
Despite the NYmag article painting the owner Erin as perhaps not best-prepared shortly after the business had opened (not having enough start-up money, paying staff in cash, a tight business model with low margins...) it looks like things worked out great for Babycakes, the business seems to be going strong 6 years later -


  1. I've been reading your posts for quite some time now. I suppose I have a somewhat similar dream. I was wondering about the process for setting up a shop in Japan myself, so your posts have been very helpful regarding the information. I'm interested in baking myself. Though I had something else in mind for a shop.
    Keep Posting!!

  2. What a lovely comment! Thanks so much for the kind words and encouragement. Continue I shall, and I also look forward to you achieving your similar dream. Best of luck!

  3. This article is just what I have been looking for. I have been looking for start up cost of small bar/cafe in Japan for last 2 months but in vain. Thank you very much and also do you have any idea where I can get information on costing of opening a small bar in other small cities of Japan. I searched each and every corners of internet but could not yield any productive information.

  4. Hi Rohit, I did another article on this which includes prices from other cities here:
    That magazine I refer to is probably worth a look (Cafe Sweets) it isn't only about Tokyo. Good luck!

  5. Thank you very much for those info ! very cool ! my wife and i would love to open a café in Tokyo ! but for the moment we r looking for info ! because we are kind of lost. i just found your page, i m gonna look for more of your article.
    thank you !

    1. Hi there! So glad you found the information useful. All the best in going after your dream! Let me know when you're open and I'll drop in!

    2. I live in Asahikawa, Hokkaido and would like to open a small tea room with live piano in my house. I am a professional pianist.The house is not near many other buildings but it is near the main bypass so the noise should be OK. I want to serve toasted sandwiches, tea, coffee etc. Do I need any special qualifications? My wife went to a lecture a couple of years ago and got a hygiene certificate. Many thanks.

    3. Hi Neil, if your wife is employed by the business then she can be the designated hygiene manager, and then your kitchen and customer area will need to pass the health department's check, but otherwise you should be good to go. I wrote a post about requirements of the Minato-ku health dept's requirements, bit they can vary by region so pay a visit to your local hokenjyo and see what they need.
      The only time qualifications and experience in the food industry might come into play of you're setting up the business yourself is if you need to renew your visa as a chef, sponsored by your company, or perhaps people looking to rent properties - some landlords might be picky.
      I guess the main thing to advise you is to check with the hokenjyo to see of they need you to have a kitchen that is completely separate from your domestic one. Good luck!

    4. Here is the link to the hokenjyo post I mentioned:

  6. Great write up Stacey. I just came across your blog and have found it very useful. Hoping to visit your little shop in Tokyo soon!

    Good luck.