Thursday, March 14, 2013

Set-up costs for small one-man café in Tokyo

In a previous post I detailed the set-up costs involved for 3 small-medium sized cafes, that were listed in Japanese café industry magazine Café Sweets (they sell this magazine at Tsutaya by the way, I got mine from the Roppongi Hills branch.) A recent edition of the magazine had a few more of these examples, and I was particularly interested to read how a few people are managing finances and schedules to run food businesses alone – as this is how I’m imagining I’ll be starting my business.

Here are the details:
  • 10-seater cafe and sweet shop in Osaka. Single owner/staff, open 10am-8pm. Took 4,000,000 JPY in start-up costs (about $49,000/£32,000). 1-milion of which was to secure the property, 2-mil was used for kitchen equipment, 50,000 each for refurbishment and equipment. Estimated monthly sales goal of 600,000 JPY ($7,400/£4,700), with current sales between 250,000-500,000 JPY ($3,000/£1,900 - $6,000/£3,900) per month.
  • 14-seater cafe, Kita Kyushu. Single owner/staff, open 11:30am-5/7pm. 2,500,000 JPY in start-up costs (about $31,000/£20,000). Of which 400,000 JPY was to secure the property, 1.9-mil was used for refurbishment and 200,000 JPY spent on equipment. Estimated monthly sales goal of 380,000 JPY ($4,700/£3,000), with current estimated sales at 230,000 JPY ($2,800/£1,800).
  • 10-seater cafe, Osaka. Single owner/staff, open 11:30am-7pm. 2,500,000 JPY in start-up costs (about $31,000/£20,000). Of which 1-mil JPY was to secure the property, 1-mil was used for refurbishment and 500,000 JPY spent on equipment. Monthly sales goal of 500,000 JPY ($6,000/£4,000), with current estimated sales at 300,000 JPY ($3,700/£2,400).
  • 22-seater cafe, Tokyo. 2 staff, open 11:00am-7pm. 3,500,000 JPY in start-up costs (about $43,000/£28,000). Of which 700,000 JPY was to secure the property, 1.3-mil was used for refurbishment and 1.5 spent on equipment. Monthly sales goal of 800,000 JPY ($9,800/£6,300), with current estimated sales at 750,000 JPY ($9,200/£6,000).

It was interesting to see examples of smaller scale business models, the previous article covered start-up costs that ranged from 8-15 million, which is quite a lot more than I'm looking to use! I note that 3 out of the 4 examples are not in Tokyo, and so rent might be cheaper for them and this would have a dramatic impact on the start-up calculation, since deposits and real estate agent fees and so on are usually in multiples of the monthly rent.

Something else that was interesting about this feature was looking at what part of the setting up took most of the funds for these people - the Kita Kyushu cafe used 1.9-million yen on refurbishment, where the Osaka cafe/sweet shop got by spending just 500,000 JPY on doing up the space. This sweet shop instead invested the bulk of the start-up money in kitchen equipment. It goes to show that there is certainly more than one way to do it! (I'm sure there is a coding/baking joke I can make here with bicarbonate of soda.. nope, it's not coming to me.)

Thinking about running a business alone to start with has given me a lot to consider to feel I'm as informed as I can be before taking the plunge. Aside from needing to work on all parts of the business yourself, quite a commitment is required to be able to deliver a consistent and reliable service. When you are employed by a company you are often working with a team who can cover when you are away, occasional sick-days don't feel as though they will impact your company's finances, and arrangements can be made for things like maternity and paternity leave. What does the sole-proprietor of a café do when their child is off school with a fever, when they want to take a holiday or when they have a fever themselves - in the food industry you're obliged to take time off for certain illnesses and to not handle food for a further incubation period after you recover as hygiene best practice to avoid occurrences like this one at Noma.

If you plan to run your business alone indefinitely then I guess your business model will need to be robust enough to allow for times when illness and unforeseen circumstances leading to a lack of income at some point can be managed overall, and your communications to your clients or customers will need to effectively explain and reassure them of your ability to deliver in order to retain them. I imagine that in order to make that lifestyle sustainable for yourself you also need to plan time in your schedule away from the business.

The article about the Osaka cafe/sweet shop in the example above described how the lady opened the business precisely because she felt that would be an occupation that would fit with her life with a young family. Similarly, at least 3 small business owners I know actually close their businesses for a couple of weeks at a time in the year in order to vacation or do further training/business development etc.

Though I plan to start up alone, I do envisage a time where I will hopefully be lucky enough to work with a small team. But even when it's just you or a very small team to start with, it's worth considering designing your company and all the roles within it as if it were already the ideal size, in order to be able to scale to that size and to have a workable model for when you arrive - I read about this in the well known start-up book The E-Myth Revisited.

The premise of the book is that most people who start small businesses are usually enthusiastic technicians or producers rather than business managers, and that their businesses often fail because they end up concentrating too much on the product or service (the thing they love doing) rather than working on the business as a whole.

The idea of the exercise is that while you're alone you do as many of those jobs as is practical and necessary for that stage of your business - the book even suggests you write out the job descriptions for all those roles and sign them yourself - so it forces you to be aware of their necessity and to plan time in your week to do them, and then as you expand you employ team members to take on those roles - the web designer, customer service staff, production staff, marketing team, etc. as appropriate. 


  1. Wow. It is really helpful. Thank you very much. Do you have any similar article covering the costing for bar?

  2. I'm afraid that I don't, Rohit. This blog is just about my personal journey to open a cake business here, and so I haven't looked into bar pricing. Hope you find the information that you need, best of luck!

  3. hey hello! indeed this is gold value! i'm preparing during this year to open my own small business startup, but it is not in the food making model, rather i will start with imported goods from my homeland, no food making, like an international goods market, sort of. the bar model will come into place eventually but i'm talking that will take a couple of years.

    do you have any advices on this kind of model business??

    thank you in advance!