Here’s how much it costs to open a Vida, Mugg & Bean or Bootlegger coffee shop

Source: Business Insider SA, 16/06/2019

If you dream of operating your own coffee shop, and you have a spare
million lying around, you’re in luck - three of South Africa’s leading
coffee brands are on the hunt for new franchisees.

Depending on which brand you choose, and where you locate it, you’ll
be in for a minimum spend of R1 million up front in franchise fees.

If you’re going big with a full-service turnkey coffee shop that
includes restaurant services, you could easily find yourself laying
down several times that amount - long before you even get a whiff of a
freshly brewed cup.

Vida e Caffè started out as a trendy café on Cape Town’s Kloof Street,
and have since expanded to open 100 stores in seven countries.

Given Vida e Caffè’s ubiquity, it’d be easy to assume that there
aren’t many locations left for interested franchisees, but the company
is still accepting applications for new stores.

According to their franchisee documentation, they have a list of sites
they are working towards, and will actively work with new franchisees
to identify viable locations.

This hands-on assistance, and strong brand, comes at a cost, though.
Quite how much depends on the size of the store, its design and
layout, inventory, selection of equipment, signage, and décor.

The company estimates that the initial costs will be somewhere between
R950,000 and R1.4 million. Applicants must have at least 80% of this
purchase price in cash.

Franchisees must also pay a once-off franchise fee of R150,000. This
goes towards the right to use the Vida e Caffè name, training,
assistance with site selection and evaluation, and initial pre-opening
assistance.

The store also requires ongoing monthly fees of approximately R2,000.
This covers items like point of sales equipment, music licenses, and
payment app fees.

Franchisees must also pay 10% of the monthly net sales to the holding
company.

Mugg & Bean

Mugg & Bean
Coffee-themed restaurant Mugg & Bean is a brand owned by South African
franchising giant Famous Brands.

Like Vida e Caffè, the store has its humble roots in Cape Town, but
has since grown into a vast and popular network. There are currently
220 franchised stores located across Africa.

The cost of opening a new Mugg & Bean varies according to landlord
contributions, store design, and size, but is estimated at R10,000 per
square metre (m2). This means a 250m2 store will attract a setup cost
of R2.5 million.

You’ll need about 50% of the total setup cost available in cash.

After the initial setup costs there are likely to be several other
expenses. For example, if your Mugg & Bean is the kind that sells
liquor, you’ll need to foot the bill for those fees, and staff
training can also cost up to R35,000.

Franchisees also need to pay a joining fee of approximately R250,000,
and ongoing marketing and management royalties of revenue totalling 10%.

Bootleggers

Bootleggers is a relatively new coffee shop that’s launched a
successful network of franchises. They’re undergoing rapid expansion,
and since 2012 they’ve opened 18 stores in Cape Town and Johannesburg.

According to their website, they are still looking for new
franchisees. They’re doing so via a similar franchise model used by
other brands.

Being the new kid on the block doesn’t mean Bootlegger stores are any
cheaper. The stores range in size and layout, but to purchase a new
Bootlegger franchise you’ll need to fork up around R3.5 million in
setup fees.

50% of the setup cost must also be in unencumbered cash. If this isn’t
possible, Bootleggers will play matchmaker between franchisees who
find themselves in similar financial situations.