Lunch bars have plenty to offer

LUNCH bars are emerging as a great entry-level business for people seeking a career in small business.

At last count there were 23 lunch bars in the rapidly expanding industrial suburb of Malaga. There are believed to be nearly 40 in Osborne Park and 35 lunchtime food outlets in West Perth between Parliament House and Princess Margaret Hospital.

A lunch bar can be had for as little as $50,000.

The beauty of running a lunch bar comes from its simplicity of operation and the relatively short hours of operation. However, they are labour intensive.

Operators do not need a food industry background. It is a cash-based business so accounting is easier, there is a good margin on prepared food and the service proves very popular with customers.

However, they do need to meet some insurance requirements and satisfy health and council regulations.

While most lunch bar operators usually start early to catch the breakfast trade, they can usually shut up shop and be on their way home by 3.30 in the afternoon. And the business usually only operates five days a week, leaving the bulk of the weekend free – something of a luxury for a small business operator.

The explosion of lunch bars in areas such as Malaga has caused existing food sellers some consternation, but it demonstrates the lunch bars’ popularity.

Some developers in Malaga have taken to fitting out a building in their development as a lunch bar, and it is usually the first thing to sell.

Small Business Development Corporation managing director George Etrelezis said the SBDC received a lot of inquiries from people wanting to open lunch bars.

“The days of people taking prepared lunches to work are gone because people are time poor,” Mr Etrelezis said.

“The average lunch bar starts with breakfast, and there’s the new brunch craze to supply, with lots of people snacking between meals these days.

“And then there’s the lunch rush. A lot of guys in these industrial sites build up a good appetite.”

Smoko vans – mobile kitchens that come on site to sell food to workers – have proven to be a real, but small, intrusion in the lunch bar market.

Goodwin Mitchell O’Hehir partner Graham O’Hehir said there were two distinct markets in the lunch bar business – the industrial and the office.

“There is a greater price resistance from customers in industrial areas than in office areas,” Mr O’Hehir said.

“And in the office market there is more of an emphasis on diet and healthy foods.”

Mr Etrelezis said there was a formula to running a successful lunch bar.

“A good lunch bar is well organised, clean and bright and has that smell that makes people buy something. It should have easy access to drinks and those impulse-buy items next to the cash register,” he said.

“There is high competition in this sector but to succeed you just need to be highly regarded in your area.

“If the lunch bar is well run you can usually build up a good clientele and therefore strong goodwill, which makes the business even easier to sell.”

Mr O’Hehir said the operator had to make sure the business ran efficiently to survive.

“The biggest single problem we see in lunch bars comes from a blowout in wage costs,” he said.

“The next biggest problem comes in speed of service and presentation.”

Ironically, while there is a proven formula to running a successful lunch bar, there has been no real attempt to franchise one.

After all, a franchise is just a proven business formula.

The closest examples to a lunch bar franchise these days would probably be Mr Bird’s MYO or corporate food franchises such as Muffin Break or Croissant Express.

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