Buying a business: Tea rooms

Few industries have experienced more turbulence and uncertainty during the recent recession than the tea room industry. The classic English tea room, which has been a pillar of daily life on these shores for over two centuries, has never been more vulnerable than it is now, with visitor patterns oscillating wildly as a result of the economic downturn.

Several tea rooms have suffered a significant decline in footfall and revenue during the recession. Joe Armstrong, proprietor of Byermoor Tea Rooms in the North East, told us: “Business is dreadful at the moment, and not making any profit. The cost of fuel means people can’t drive around as they used to do.  Also, tea rooms are traditionally for the older generation, and they haven’t got the cash they used to have.”

But for every tea room that’s struggling, you can find one which is continuing to thrive despite the tough economic climate. One such outlet is The Bridge Tea Rooms in Bradford on Avon, Wiltshire, which won the coveted title of Britain’s Top Tea Place in 2009. The Bridge’s owner, Alison Hayward, says that business is booming at the moment, and believes that starting a tea room remains a good idea, even during the recession.

“Tea rooms are still quite popular – in fact there aren’t enough of them. There’s a coffee shop every 200 yards on the high street, but finding a tea room is difficult, so there’s a gap in the market.”

Hayward’s view would suggest that a tea shop can still present a viable business opportunity, with the right strategy and people in place. If you’re prepared to ride the inevitable fluctuations in footfall, and determined to pursue the highest standards of quality, you may have the tools to succeed.

Who is it suited to?

Tea shops may be a haven of relaxation for their patrons, but if you’re running one, the pace of daily life is altogether different. A tea shop, by its very nature, demands hours of hard work – you have to pour countless hours into preparing your core product, and fashioning an environment which is quaint and welcoming. To create the laid-back vibe essential to any tea shop, you have to select each item of furniture and ornamentation carefully, and you’ll probably have to scour the local craft shops and antiques stores if you want to create a unique visitor experience.

The days will also be quite long – you’ll probably open mid-morning, and then after lunch and into the afternoon things will probably be busy. Each of the proprietors we spoke to said that afternoon tea constituted their busiest period of the day; while many businesses are winding down in late afternoon, a tea shop is revving up to full capacity.

You’ve also got to be a people person. You’re going to be in contact with the public, pretty much all of the time. A welcoming face is important. “If you’re not a people person yourself, you need a frontman or woman, who is, instead. It’s not like walking into a burger bar, the pace has got to be relaxed,” says Paul Williamson from Ernest Wilson’s business agents in Bradford.

You also need to know your area so that you can field questions from your customers. If they’re tourists, they’re likely to be curious about what there is to see in the area. Perhaps they’ll want to know of any good local accommodation or the way to the station or the history of a local attraction. They’ll remember you if you’re able to be helpful. If you don’t already know these things, you might want to do your homework and read up on local history.

Finally, you have to be able to modernise. The tea shop may be a business rooted in history and classic values, but people’s tastes are constantly evolving. This is clearly demonstrated in research compiled by market analyst Mintel, showing that sales of standard tea bags have dropped 16% over the past two years, while sales of fruit and herbal teas have risen by 30%, and speciality teas, such as green tea, have experienced a 50% surge. If you want to keep in step with the market, you have to ride these trends.

Research

A tea shop should be something that you feel strongly about running, perhaps even a long-held ambition. It may feel like it is something of a calling. This will help because you have to live and breathe the business. Paul Williamson, of Ernest Wilson’s business agents agrees: “Like any other business you have to enjoy it, this will be reflected in the way you deal with customers. If they love every minute of it then it shows.”

You also need to think carefully about the premises you have available. If you have a unique location in mind, this may help to draw customers. The Bridge Tea Rooms, judged the UK’s Top Tea Room in 2009, owes much of its enduring appeal to its premises – a thatched cottage which dates back to 1502.

Sue Wood, who runs the Amberley Village Tea Room in Sussex, says she set up her business in 2008 “because I had the opportunity to purchase a derelict slaughterhouse next to my house, which lent itself to being a tea room. Customers come to us now because we are unique – there aren’t many converted slaughter-houses being used in this way! It’s a key part of our experience.”

The wider location is just as important. Alison Hayward, proprietor of The Bridge Tea Rooms, says: “There are quite a few tea rooms in the Cotswolds, for example, and they’ll be busy throughout the summer but less busy during the week. Somewhere like Bath will be even busier; if you’re on a street in Bath, you’re going to be busy all year round.”

For Sue Wood, her tea room’s rustic location is the secret to its consistent appeal. “We’ve got a mix of cyclists, walkers, older people, younger people, and families. We cater for the whole lot. We’re at the foot of the South Downs, and we have quite a lot of walkers.”   Ultimately, you have to strike a delicate balance. The location has to be laden with quaint, bucolic charm, and tourist appeal; a grimy industrial area won’t create the atmosphere you need, and is likely to harbour a swarm of coffee chains which could significantly erode your potential customer base. However, you can’t stray too far from the beaten track. Joe Armstrong, of Byermoor Tea Rooms in Newcastle, said: “The location has to be a place people are drawn to. If it’s in the sticks, you at least have to have something nearby, like a farm shop or market garden.”

Your tea room needn’t be on the beaten path, as tourists are more likely to explore back streets and will find you. You’ll want to be accessible, obviously, but things like car parking won’t really matter so much. Typically, your décor will be different from that of a café. Cafés may be more likely to be tiled with prominent refrigerated counters. Tea rooms should generally have a cosier feel – lace table cloths and doilies are popular. Of course, the décor is totally up to you, but if you want to market yourself as a tea room, then you probably don’t want people to confuse you with a café.

Uniqueness is crucial – you want the tea room to feel like home. With this in mind, Sue Wood got her tables from a made-to-measure specialist in unfinished pine, and sourced her crockery from the local pottery. Likewise, the owners of The Bridge Tea Rooms have enhanced their 16th-century cottage with open fires and historical ornaments. Alison Hayward, who took over the business in 2008, said “the original owners bought everything from antique shops, and you can do this fairly easily.”

You should also source as many potential suppliers as possible. HSBC’s Steve Nightingale says: “It gives you extra flexibility if you have three or four suppliers and you should do this before you start actually looking for the premises.”

Rules and regulations

One of the first things you must do is call your local council’s environmental health officer. They will advise you of the regulations that you have to conform to. These involve registering as a food premises, food hygiene and temperature.

Check with your local council about advertising, as your shop front will have to conform with local planning laws. There will be additional regulations to consider if you wish to open your team room in a listed building – your freedom to make alterations to the building will be restricted.

Even if the building is un-listed, you may face rigorous regulations regarding the size and material of your sign, particularly if your business is based in ancient towns such as Bath and York – so it pays to check with your local council. Before too long, you may also have to start paying for the privilege of putting tables and chairs outside your shop; in September 2011, Lambeth Council said it was “standardising” charges for placing street furniture outside local businesses, with a maximum charge in excess of £800.

And, if you plan on seeking awards to build your reputation, you’ll need to complete a rigorous series of tests and checks. Alison Hayward says: “If you want to try and win the best tea room award, which we won in 2009, you have to be part of the Tea Guild, which promotes tea rooms in the UK. They have a set of criteria for every detail – you must serve semi-skimmed milk, you must have sugar cubes and you must have tongs.

“You must also have a selection of cakes, in quite a nice environment, and the staff have to have a knowledge of teas. All your crockery has to match as well, which is why a lot of top-quality tea rooms only have white!

“You have to pay for assessment by the Tea Guild, and if you pass you get an award of excellence. Those with the award go into a competition where they are assessed secretly on three different occasions, and the ones with the highest mark get the top tea room award.”

How much does it cost to buy a tea room?

If you’re going to do the premises up then that is likely to cost money. In setting up Chattaways in Whitby, Irene Roach says she spent around £20,000 on a new ceiling, painting the exterior, decorating and signs. “It was purely cosmetic,” she says, “including things such as new menus and a new computer accountancy package.” However, if you shop around, the cost can be significantly lower. Sue Wood says that, in fitting out the Amberley Village Tea Rooms in Sussex, she “got things like chairs and dressers from auction – it cost hundreds, not thousands, of pounds. Possibly the biggest expense was an electric wall kettle, which cost around £200.”

Sue’s shop closes during the winter months; because of the seasonal nature of her business, she only employs staff on a part-time basis, paying just above the minimum wage.

Similarly Alison Hayward, owner of the award-winning Bridge Tea Rooms in Wiltshire, says she employs girls from local schools and colleges on a part-time basis. Employing staff in this way is cheaper than hiring full-time workers, and allows you to adjust the size of your workforce in response to demand. Insurance cover is around a few hundred pounds per year. This is pretty comprehensive though and covers for such eventualities as her being ill and needing work cover.

And how much for the stock? Just how much can hordes of hungry tourists get through? When her business was at its busiest, Irene Roach’s Chattaways consumed 56 loaves of bread, seven trays of eggs and 42 four-litre cartons of milk every seven days. The yearly stock bill, after VAT, reached £30,000. Ultimately, your expenditure will depend on what you are offering your customers; Alison Hayward, whose business specialises in tea and scones, says she spends around £500 a week during the peak summer period for items such as tea, milk, clotted cream and jam.

Although Britain’s banks have come under heavy criticism recently, each of the major lenders offers a dedicated loan facility to help you get your business off the ground. Barclays and Nat West both offer start-up business loans on a 50:50 basis, while Lloyds say they may even offer more generous terms – however you will need to supply key details such as business plans and credit references. If you’re taking over an existing tea room, the banks will also expect you to provide details about its trading history.

You may find it worth considering buying a tea room business in comparison with our guide on starting a tea room or coffee shop from scratch.

How much can I earn from a tea room?

It really depends where you are based. Places on the tourist trail will earn more than those which aren’t. Whitby is a good guide. A good sized tea room there can come away with around a couple of thousand pounds a week turnover. In summer, this will probably double, while in winter it may almost halve. It also depends on the seating capacity of the business. Although it is difficult to quantify as no two businesses are the same, Paul Williamson, of business agent Ernest Wilson, suggests that between 20 and 25 seats would be needed to make the business viable.

Given that from around Easter many start opening seven days a week, you may walk away with at least £1,000 a week during your busiest holiday periods. However, it will ultimately depend on the size and location of your business. You might make more if you have a larger business; conversely, if you just have a small room with three or four tables it would be less. If your tea room is nestled in a tourist hot spot, you might be busy all year around; if you choose to open a tea room in a less obvious or fashionable location, you may be busy for only small pockets of time.

Based on our interviews with tea shop proprietors, it seems that many businesses are still profitable – but the numbers aren’t huge. Until the current recession is over, you may have to survive on a relatively small profit, so it’s important to be realistic in your expectations.

Tips for success

All businesses depend on their customers but this is particularly true of tea rooms. If people stay away, then you’ll run into trouble. That’s why it’s so important to enjoy serving people, having contact with them and making things as hospitable as possible. You’ll find that if you’re a hit with the locals, then your business can become a goldmine and you’ll attract the same customers year after year.

It can be down to the smallest things, even the smallest rooms: “Customer satisfaction is the most important thing,” says Irene Roach of Chattaways. “Even if someone comes up to you and says ‘I have to say how nice and clean your toilets are,’ then it’s worth everything. It’s a way of life and you have to make it as pleasant as possible.”

Top tips

• Smile. People won’t linger in miserable places – and they certainly won’t come back
• Be prepared to do some work on the interior when you move in – it’ll rarely be as clean and smart as you’d like it
• It’s got to be inviting, weary walkers will want somewhere comfortable and relaxing to chill out
• Check out the competition – and make yourself distinctive
• The council will advise you as to what you can and can’t do to your building. You don’t want to be an eyesore – and it won’t make you popular.