I have mentioned the cafe idea before as well as some of the process of discussing business ideas with the board of accountability we have for New Frontier. One of my board members is also working in China, has run a cafe here, and is looking to set up another cafe. He knows the difficulties of the food industry in China, and here are some of his comments:
Though I know and understand the difficulties I faced running the cafe in Liuzhou, I have found that the situation changes drastically every time you change location in this, sometimes bazaar, country! On the other hand, some things remain the same. In any case, I thought I could discuss some of the issues I have wrestled with through it all.
First, I would like to say, in response to a prior question, that cafes are an excellent idea almost anywhere in China right now. Apart from foreign tourists, Chinese people have proven themselves over and over to be very interested in foreign enterprises and products. They are craving the Western experience and most are willing to shell out hard earned "dollars" to have it. Many foreign cafe ventures are recapturing their capital investment within the first year of operations. Just about every foreign cafe that I have researched has drawn an immediate and sustainable customer base.However, there are considerations and cautions we must heed before jumping into the "lucrative" restaurant business in China. I learned (from trying to salvage a restaurant in China) that you can not market towards China's "middle class." If you open a cafe, you are selling a luxury item. Western food is just considered that way. If they want inexpensive food, they will choose Chinese. If they want to try something different or impress their friends, they will be expecting (even demanding) to pay a premium.
Secondly, and closely linked to the first point, environment is everything! They really can not tell the difference between high-quality and mid-quality Western food yet. This is especially true in less developed or rural areas like we live in. However, they do pay close attention to the setting in which it is served. Now, I am not talking about size! I have seen several examples of relatively nicely done cafes not larger than 100 square meters.
Thirdly, know your local peoples dining habits. Are they big savers like people in Shanghai? Or, are they more like Guiyang and Liuzhou people who spend almost everything they make, chasing after that lifestyle they see in Shanghai! Try hosting some sample dinners for local friends. How did they respond? What do they like? That may be a hypothetical question at this point.
Fourthly, do you know someone in the city with rank who will go to bat for you? I can not understate the importance of this one. If you do not have this person, you may need to consider good, old 'guanxi'—your 'relationships' or 'connections' which form the basis of your family, friend, and business relationships, and in China, determine your level of influence. How can you pull in some 'guanxi'? You could offer some sort of seminar for the local officials. Ask them what kind of Western expertise would be helpful to them. Maybe you could arrange a short seminar with some special speakers from overseas who want an excuse to visit China?
Finally, I would like to agree with some prior comments about the time commitment. Without a serious effort made by the foreign owner, the cafe will quickly become just another cafe, with a small degree of Western flavor. Additionally, to remain effective long-term, the cafe needs to keep itself fresh, which, again, requires time and passion.
