The streets are alive with the smell of coffee, but not necessarily from bakery shops - an omission Chris Brown, director and co-owner of Turpin Smale Foodservice Consultancy thinks is a shame. "It is ludicrous that you can buy a pastry from many retail bakers but not a coffee to go with it," he says. This poses the risk that prospective customers could opt for the likes of Starbucks where they can pick up both muffin and coffee under one roof.

So bakers are potentially missing out on incremental sales that having a café can bring - a pity when quality coffee sells for a premium. "The beauty with bakery is it should be an easy add-on because the products are there. The difficult issues non-bakery cafés have are providing unique bakery products rather than getting them delivered off the back of a Brake’s lorry. Bakers have an inbuilt advantage," says Brown.

Any baker needs to make sure they have the space, the right local demographics and the skills to make a café work. But it does not have to be complicated. Why let the likes of Starbucks, Caffè Nero, Costa and Coffee Republic get away with cornering the market?

Brown says retailers such as Selfridges have been successful in converting little more than corridors into highly successful cafés. So have libraries, hospitals, youth hostels and all manner of public buildings. "It’s such a logical fit to have a café in a retail bakery if there’s space available," he says.

And, subject to a ’pavement licence’, which some local authorities will insist on and might be hard to get in some instances, you could also use space outside.

ready-made product

So what’s involved? Bakers have a ready-made product, so it might be as simple as just adding tea and coffee and investing in a bit of furniture. Brown says a casual lunch format will require espresso machines, panini grills, multi-vend units and smart display cabinets.

The simplest type of operation will just offer cakes and coffee, but hot soup, quiches and jacket potatoes could be added. Orders can be taken at the counter, but anything more sophisticated that involves preparation will probably require table service.

The trick in cafés is to get the customer to do as much as possible, as it keeps labour costs down. Many operations have multi-deck open display units, so that customers can select their own cold drinks or a ready-made sandwich.

Brown says full service is a nightmare because customers expect attention immediately. "It implies a bigger offer and more spend; if you do it for tea and cake, it’s a lot of mucking about for £2.10."

An investment of £10,000 will suffice if you are not altering your building, just adding a bar area, or tables and chairs, and some basic equipment. But any fully or semi-automatic coffee machine should have good capacity for lots of hot milk to cater for the British taste for cappuccino and latte.

What the trade says

If you’ve got the space and there’s not much competition in the neighbourhood, a small café in your shop could be just what the baker ordered. Hazlemere Cafe and Bakery, in Grange-over-Sands, started out as a café before adding the bakery, knocking two premises into one 20 years ago. Cath Burrow, manageress, says both sides are as successful as the other. "Everything we sell in the bakery and the café are prepared on the premises, from jams and chutneys through to bread, cakes and ready meals."

It has a separate bakehouse at the back, where the bread and cakes are made and a large kitchen with four chefs. The operation is more sophisticated than a basic tea and coffee operation, selling a variety of meals, and it is licensed to sell alcohol. The café seats 90 people on two floors, serving 300-400 a day.

Long Crichel Bakery, in Dorset, began as a baker six years ago and introduced a café two years later, using the existing space by moving things around. Everything is organic and made on-site. The menu is kept to the basics: tea, coffee, cakes and a Ploughman’s, although the bakery is considering doing more and is open to the possibility of opening a dedicated premises nearby for lunches and light meals.

The premises cover 200sq ft, so the space is limited to four tables inside, but the business invested £750 in a tent outside on the grass, which is visible from the road and fits up to seven tables. It spent about £1,500-£2,000 in total to set up the café - well below the £10,000 the experts say should be the minimum.

The mark-up is 20% including VAT for eating on the premises.

Jamie Campbell, director, describes it as an "add-on" to the shop that must drive extra sales in the bakery. "People buy things they wouldn’t otherwise buy," he says, adding that it is also a way of getting to know your customers. The service element is important, he adds. "It might mean having to get another person, so you have to make sure the return is enough to support that. You can get rushes of people coming in, which is challenging, and you have to make sure the rest of the business doesn’t suffer."

Evans Café and Bakery, in Newtown, Powys, started off as a cafe and bakery from inception, selling hot drinks, snacks, pastries, paninis, sausage rolls and baked potatoes. The business uses the café as a test for new bakery lines.

The catering side accounts for 40% of profits and turns over about £150,000 annually. It is profitable because of the synergies.

Gian Antoniazzi, owner, says the café, which has room for 45 people, has built up from one or two people a day to 100 a day. The business has 16 staff and tries to keep retail and café employees separate although they will interchange to prevent queues.

Jeffrey Young, managing director of consultancy Allegra Strategies, says a café should ideally be a profit centre, but it could have "a positive halo effect" on retail sales by driving footfall and increasing the premium perception of the products sold. "And there clearly are some synergies that can be used to accentuate the products that bakers make," he adds. n


=== Legislation and planning ===

? Contact your local authority before making any changes. Jenny Morris, policy officer at the Chartered Institute of Environmental Health Officers says: "It’s better to get it right at the start, rather than someone turning up and telling you you are doing it wrong."

? Shops are classified as A1 for planning purposes, restaurants and cafés, A3 and hot food take-aways, A5. Whether you will have to apply for change of use, under the Town and Country Planning (Use Classes) Order 1987, will vary from area to area. Mike Harlow, construction and property solicitor with Winward Fearon, says you could also fall under a mixed category called sui generis, but he says it is more likely a local authority would prefer to decide a single category, based on the principal activity of the business. Let the local council know what you are planning so you do not fall foul of planning law.

? If you are a leaseholder, you will need to check that your lease allows for you to add a café.

? There are also several licences you might have to obtain, such as a Late Night Refreshment Houses licence, Pavement Café Licence and Pavement Display Licence.

? Depending on local council legislation, cafés or restaurants may be required to provide a customer toilet.

? Bakers should already be registered with their local authority as a food premises and will already be aware of Hazard Analysis Critical Control Points (HACCP) procedures required under EU Regulation 852/2004 (Article 5).