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 - http://www.babycakesnyc.com/