Are you looking to open a cafe? As a cafe owner, your work will most likely involve;

  • serving food and beverages;
  • organising supply and inventory records;
  • managing financial accounts;
  • ensuring high customer service; and
  • training and hiring staff.

But, what are the legal considerations that would be involved? This article will explain what you need to consider before opening a cafe so that you can decrease expenses and maximise revenue for your business.

Planning and Research

About 50-80% of start-up businesses fail within three years of operation. This is due to a lack of planning. Before setting up your cafe, it is important for you to do as much research and planning as possible. The first step is to understand the cafe business industry and undertake specific market research.

Generally, market research involves understanding the economic factors within the community that you wish to set up the cafe. This includes the:

  • socioeconomic and demographic backgrounds of the local residents;
  • direct or indirect competitors (in this case, restaurants and bakeries); and
  • surrounding potential level of demand in the area (for example, office buildings or universities close by).

This vital information will provide significant insight into your projected budget and target market. Understanding the cafe industry increases the chances of success in the future.

Business Structure

The next important step is to set up the best structure for your business. The most common business structures include:

Business Structure Definition Legal Requirements
Sole Trader One person controls the whole business and therefore acquires all the profits. They are also responsible for any debts. It is the simplest and cheapest business structure.
Partnership This involves two or more co-owners setting up the business. Accordingly, the partners share the profits and act on behalf of each other for the business. This is a relatively inexpensive and simple business structure.
  • ABN;
  • business name registration; and
  • trade mark registration.
Company Under Australian law, you must register a company. Companies usually incur higher start-up costs and fees. However, if the business falls into debt, the legal responsibility of the shareholders may be reduced to only their share capital.
  • registration of Australian company;
  • ABN;
  • business name registration; and
  • trade mark registration.
Trust This involves an individual (a trustee) operating the business for the benefit of others (the beneficiaries).
  • ABN; and
  • trade mark registration.

 

Each business structure warrants different legal requirements. Therefore, before making this very important decision, you should carefully consider what legal responsibilities you are able to take on.

Licenses and Qualifications Required

Another important factor is to check the appropriate business licensing authority in your state or territory. You should figure out which permits or licenses you must hold.

Food Service

As a cafe business, you are most likely to serve food to customers. Accordingly, you may be required to attain a Food Business License from the relevant local council.

For example, if your cafe or coffee shop is in New South Wales (NSW), you should visit the local government directory to find the contact details of your local council. Remember, each council involves different licence costs and processing times so it is best you check with your local council when applying.

Food Health and Safety Regulations

Cafe owners are legally required to comply with food health and safety regulations.

A common storage requirement for cafes, for example, is storing dairy products like milk and yogurt in a cold chamber storing unit.

You must ensure that you meet these food health and safety regulations in operating your cafe or coffee shop business. Otherwise, you could face significant fines or other legal consequences.

Outdoor Dining

If you seek to enable customers to dine outside, you must provide appropriate tables and chairs on a footpath. You may also have to obtain an outdoor dining licence from the relevant local council.

Other

Other considerations, although unlikely, may need to be considered depending on your cafe. Such factors include serving alcohol and picking up meat to sell to your customers. You should refer to the relevant Office of Liquor and Gaming Regulation and Safe Food authority in your state.

Key Takeaways

Looking to open a cafe is an exciting venture. However, it is crucial that you do as much research as you can in order to select the best business structure for your cafe. There are also various legal considerations that you may need to establish your cafe. However, all these considerations can be extremely difficult without proper business and legal experience. If you have any questions or need assistance when looking to open a cafe, contact LegalVision’s business lawyers on 1300 544 755 or fill out the form on this page.

Lachlan McKnight
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