MBA1655 Q&A Wednesday: Is a Cat Cafe a good business?

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If you have a question you want to ask, I can answer right here on Q and A Wednesday. So go ahead and email me@omar mba.net so I can answer your question right here on the show. Today's question is from Jacob and Jacob asks, hey, I'm looking to start a new business, a cafe. Actually a cat cafe. Is a cat cafe a good business idea? This is my first physical business. I love cats and I love people. Should I go for it? Would love your advice. Thanks. Love the show Jacob. Thanks for the awesome question Jacob. For those who are listening and don't know what a cat cafe is or has never been to one, it's basically a cafe that also has a lot of cute cats Running around that you can play with, you can pet. Sometimes you can even feed them if they allow you. They're specialized food, of course, and it's a way to kind of relax with a hot beverage or even some food in a different type of environment to enjoy some cats. And there are cat cafes, there's dog cafes, there's even groundhog cafes. And today, one of our listeners, Jacob, wants to open a cat cafe. So I want to give my advice because I love the fact that he's passionate about it. He loves cats. I love cats as well, by the way. Grew up with cats all my life. But I want to make sure that we have a successful business, a profitable one, one that will really allow you to grow and flourish and really allow you to enjoy the business. It's hard to enjoy a business if it's not successful. It's not making money if it's stressing you out. Okay, so I'm going to give you my take on this business in today's episode. So let's get into it. Let's get down to business. So Jacob asks, hey, I want to start a cat cafe. Is this a good business idea? So, first of all, I've been to a cat cafe. I was actually in Japan when I went to one. I love this idea. As a patron, I enjoyed it. But being an entrepreneur, of course, while I'm there, I'm thinking about this as a business. I'm thinking, is this a profitable business? How are they making money? How are they charging me? What are the amenities? What's going on here? How's this all working out? Cat cafes can definitely be a good business and a good business model. But a few things need to be in place to make sure that the business actually works. The business actually is profitable. The first thing is that you have to ask yourself, why would somebody go to a cat cafe? And why would enough people go to a cat cafe for it to be profitable? You need traffic. The number one reason why somebody would go to cat cafe is because they love cats and they want to enjoy some time with cats. They're really going for the cats. They're not really going for the coffee. And if the coffee or the food is good, then it's just a plus, It's a bonus. It's something that will keep them coming and keep them ordering. But if I'm looking for the best coffee or the best food, I'm not going to be looking for a cat cafe. I'm looking for just a regular cafe. So I got to be going there. Because I really enjoy the cats. So why would I have to go to a cat cafe to enjoy cats? It's probably because I don't have cats at home. Maybe I have a cat at home. But most people like little cat cafes because they just can't have cats at home or the number or variety of cats that you would have at a cat cafe. Because a lot of these cat cafes have really interesting breeds, rare ones from Persians to Bengal cats. And there's a good chance for cat lovers to kind of see all the different kinds of cats. So it really works in big cities. If you're in a big city in your country, the likelihood of it being successful is higher because you have a lot of density. You have a lot of people there. Also, big cities is apartment living, and a lot of people are not allowed to have pets in apartments. So they'll get their pet fix at a cat cafe. So you want to make sure you have enough traffic, a plethora of traffic. And one of the things that I would recommend is make sure you're in a big city, a major city. It helps if you're close to a residential area, so people can either walk to you or have a short drive. And of course, it allows people to see you. You're gonna have a lot of foot traffic. A lot of things like cat cafes will advertise, run deals in Groupon in major cities to get some traffic initially. The second thing is your pricing structure, which works into your business model. You need to make sure that you are making money. My advice is, if you're going to open a cat cafe, go high end. Do not go cheap. Make sure that you're attracting a clientele that is really happy to part with some money to have this experience. And you would invest in this cat cafe so it's clean, the one that was in Japan. You would not imagine how clean this place is. I mean, all the litter boxes for these cats were hidden within the walls. Little cubbies that you couldn't even see. They would have to go through, like, these flaps to go to do litter and then come out. It was spotless, and it smelled amazing, and it was really, really cool. Now, I really thought their business model was really interesting. And I would probably go with something like this. This was a really nice cat cafe. And therefore, for a session, each session, I think I believe, was 90 minutes. And then for every additional 30 minutes was a charge, they actually had free drinks. You can have free drinks and soup as a part of the package. So you could drink as much as you want. When I say drinks, I'm talking about coffee and tea, not alcohol. And they actually did it through vending machines. Of course, it's Japan, they love vending machines. But they included the drinks and the price. And I think there were some extra things that you would pay extra for, like some food as well as feeding the cats was extra as well. But for a 90 minute session it was quite pricey. I wouldn't say it's expensive, but it's more than you expect to spend at a cafe. So I think believe per person for 90 minutes was equivalent to $30. Now you might say, wow, that's more than a movie ticket. But for many people that love cats, this is way better than goromovie. Being around 20, 30 cats, beautiful cats, friendly cats. Seeing them play with each other, playing with the cats, that's a lot of fun. And the space was quite reasonably large, so it probably could fit Pre Covid about 20 or 25 guests at a time. One of the things I really thought was interesting is that their business model is about the length of time they stay. So the longer they stay, the more money they make. So this is the third component that I would say is that make sure you have lots for them to do other than just playing with the cats. Because after a while the cats might be sleepy, they might be tired. You want people to kind of stay longer, even though the cats may not be interested anymore. And what they did was very, very smart. They had video games, they had a bunch of TVs and Nintendo Switches and PlayStations you can play. They had retro Nintendo games you could play. So it's kind of like you're just lounging at home. They had board, they had cards, they had books, they had like these loungey kind of couchy type of furniture that you would see like at an airport lounge or where you can really nap if you wanted to. They had pillows and, you know, kind of sitting on the floor type of situations that were really comfortable. So before you know it, you're spending two, three hours and you're enjoying yourself. You're sipping your coffee, you're having your soup. It's just a great experience. So incentivize people for staying longer. Try to give them reasons to stay longer. The last thing I would mention is do the math. You need to charge enough so that you're paying for all your expenses. You're not only paying rent and paying for the staff as well as utilities and the drinks and all that kind of stuff. You're also paying for the Maintenance of taking care of these cats, all their shots and their grooming and their litter and their food. You have to price it accordingly so that you're making a profit. But also mention and how many people can you hold in this place? And even if you're at full capacity every hour of the day, how much money is that? How much money are you making month over month? Do the math to find out and then divide it in half because you're never going to be at full capacity all the time. And that half number will really give you a picture of like this is kind of the potential of me being successful. Is that enough money for me to be happy to of course pay for all my expenses and have some good profit at the end.

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Love today's question from Jacob about starting a cat cafe. I hope that helped. Jacob, my last piece of advice is before you start a new business, and this is your first business, remember and open a cat cafe. One really good hack that you could do is to work at a cat cafe for a month or two. Okay, even a month. You'll learn a ton about the business, about what works, what doesn't, the maintenance. What is it gonna, you know, take for you to have a successful one? Even if you go to one that's not successful, you learn what not to do. See this as recon and it will inform your decision before you start. It'll inform what you need to do and focus on before you start building out that cat cafe. Jacob, don't forget to write in and let us know how it all goes. I'd love to know about it. I would love to see some photos of your cat cafe one day. Thanks for writing in and asking today's Q and A Wednesday's Question if you have a question you want to ask, just go ahead and email me over@omar00nba.net I'd love to answer it right here on Q and A Wednesday. Don't forget to smash that subscribe button so you don't miss a beat on whatever you use to listen to podcasts. It's absolutely free to subscribe. When the next episode is out is on your device automatically. Before I go, I want to leave you with this. It's so, so fun to start a business. You have all these great ideas. It's exciting, but sometimes you just need to take a timeout and ask yourself, what are some of the problems with this business? You got to be a little bit of a detective here and say, what are some of the problems that can arise? This is not negativity. This is kind of preempting some of the challenges you're going to have so you can be prepared. What are some of the problems? What are some of the challenges? What are some of the things I have to look out for? What can go wrong? Okay, doing this at the start can help you big time. Thanks so much for listening and I'll check you in tomorrow's episode. I'll see you then. Take care. Hey Fidelity Can I get a second opinion on stocks in the Fidelity app? With Fidelity, it's easy to get an outside opinion from independent experts in a single score. And then, when you're ready, trade US stocks and ETFs with no commissions. That's right. I am always right. Investing involves risk, including risk of loss, online US equity trades and ETFs and retail fidelity account sell order assessment fee not included. Some account types and securities excluded. Details@fidelity.com commissions Fidelity Brokerage Services, LLC member NYSE.