23.10.2020

Starting a Cyber Cafe Business - 5 Important Tips

What is a Cyber cafe?

Cyber cafes, also known as Internet cafes provide access to computers with the Internet, as well as other devices, such as printers, scanners, and lately also gaming consoles. The rapid growth in the popularity of computer games has enormously influenced the industry of Internet cafes and caused their greater focus on cyber sports. And this is no coincidence. Since the first release of Steam in 2003, it has developed into the world’s largest gaming platform, reaching a staggering point of 9 050 new games having been released in 2018 and over 20 million peak concurrent users in 2020.

number of games released on steam 2004-2019 - graphic by statista

Video gaming is a modern hobby enjoyed by men and women, young and old across the globe. According to Statista, there were an estimated 2.7 billion gamers worldwide in 2020, with almost 1.5 billion gamers in the Asia Pacific region.

gaming market value worldwide 2012-2023 - graphic by statista

In the unfolding of the gamіng topic, it is also worth noting the profitability of the industry. The entire video gaming market amounted to almost 160 billion U.S. dollars and is expected to grow further, reaching over 200 billion U.S. dollars by 2023.

number of video gamers worldwide 2020 by region - graphic by statista

In the context of the above-mentioned forecast, the outlook of the cyber cafe business is to be no less favourable. But let’s dig a bit deeper into the topic.

Is Cyber Cafe still a good business?

By good we mean here economically reasonable. If briefly, - yes it is. In fact, besides being profitable, cyber cafes are also a fast-paying type of business. Depending on the region and other factors, the payback of a cyber cafe can take from 9 to 14 months.

Once the idea of starting a cyber cafe hits your mind, the first question that follows is “How much does it cost to open one?” A cyber cafe setup can vary from 10K to over 100K, depending on many factors, starting from its size and location to the business model that you choose for it (e.g., running your own business concept or buying a franchise). For an Internet cafe with a layout of 20 seats, you should plan approximately 50K U.S. dollars.

5 Tips to keep in mind starting a Cyber Cafe

As already mentioned before, there is a multitude of aspects affecting the success of a cyber cafe. To give you an idea, think of the following considerations:

  • Is it going to be a small cyber cafe or a huge lounge, hosting 100 - 200 computers?
  • Are there gonna be gaming consoles or not?
  • Will it offer extra gaming devices and/ or chairs?
  • What other services and products will it offer?

This list can go on further, impacting directly your cyber cafe business plan. However, we have gathered up 5 most essential factors that you must give a thought when elaborating on a cyber cafe plan.

1. Find a good location

No surprise, that location is the first and most important thing you must consider before planning an on-site business. Location can either facilitate the success of your cyber cafe or bring its business concept to an end. When choosing between multiple geo-positions in town look at the following factors:

  • In which district is it situated? Is it safe there (especially, if you plan to work night shifts as well)?
  • Does it serve as an epicenter for your target audience (e.g., student campus, hipster’s gathering place, etc.)?
  • What are the nearest (non-)commercial objects that are directly/indirectly related to your business (e.g, copy centers, cafes, stores, universities, schools, etc.)? That said, consider both advantages and disadvantages that these institutions can cause.
  • Are there any competitors nearby? How far is the nearest competitor? What are their strong and weak points? What can you do differently?

Following the logic of the above-mentioned points, your location must be safe, ideally situated in the center with a good traffic intersection. It should be attractive and often visited by people, namely your target audience. It will be advantageous to have schools and other educational institutions, entertainment centers, or youth gathering places near your cyber cafe. Better - no or very few competitive items, such as other internet cafes, copy shops, or gaming centers. It is also worth mentioning here the premises of your cyber cafe. The building, where it’s situated should be visible, easy to remember, and well-accessible.

2. Write a simple business plan

The better you prepare, the more chances you have to achieve your goal. Having at least some business plan improves your results by 30-50%. If you have experience with elaborating business plans, then you need no further explanations here. However, if not, then it’s time to roll up your sleeves and get down to work.

In case you are going to apply for credit, or receive any funds from an institution or investor, a business plan is a must. Besides, it serves good as a benchmark, helping to research the market, take into account main complex issues, understand the competitive landscape, identify the influential factors, estimate the costs and outcomes. As a rule, your business plan will cover legal, organizational, financial, and marketing aspects.

We suggest you take a look at our blog post Internet Cafe Business Plan where we discuss the key aspects of this issue.

gamer playing games on a professional keyboard in cyber cafe

3. Get the required licenses and permits

For a business to exist and function properly, it is necessary to take care of all the legal documents and permissions. Start with checking juridical requirements for cyber cafe setup, find out the procedure of cyber cafe registration.

Business License

At the very first stage of establishing your business you will need to get a business permit (here, a cyber cafe license) from a state, that will allow you to legally operate on the market, employ staff, deal with partners and clients, make payments, get revenue and pay taxes.

State Permits

As you will deal with a multitude of hardware, devices, and wires, it is mandatory to plan the premises accordingly to safety norms and obtain permission from the fire service. In this context, it is also recommended to get a business and or company’s property insurance.

In case a cyber cafe plans to serve food or provide snacks it must comply with the sanitary and hygiene regulations and submit to inspections.

Those venues that aim to sell alcohol or cigarettes will have to obtain additional licenses and permits as well as may restrict visitors below the legal drinking or smoking age.

Software Licenses

Another important issue is to make sure that all your computers are equipped with the licensed software. To avoid overdue payments and penalties it is worth taking care of cyber cafe administration software, which among others will help you to control the process of paying licenses and fees.

Gaming License

As mentioned in the beginning, cyber cafes are also places for gaming. Thus, besides playing games, cyber cafes often offer their customers the opportunity to make e-Sport bets or online gambling. In case of the latter one, cyber cafe might be obliged to obtain a gaming license, as well as display information on gambling addictions.

4. Choose the right equipment for your cyber cafe

Having all the legal questions covered, time to clarify the equipment issues. Does it make sense to set up your venue with state-of-the-art devices? - No. Unless, establishing the world’s most innovative cyber cafe is envisaged by your business plan.

In a nutshell, it’s not worth buying the most powerful and advanced computers of the latest model. Firstly, they are expensive and secondly, their wear and tear goes fast. As a result their payback will last longer.

Way better will be choosing something in the middle - good reliable appliances at a reasonable price. As an option, you can hire a specialist who will find used machines of a good quality and will upgrade them according to your needs.

Keep in mind that the equipment in a cyber cafe should be updated every 2-3 years, while the peripherals (e.g., headphones, mice, pads, etc.) often break.

5. Start a promotion

Before your cyber cafe opening, devise a plan of basic promotion: spreading flyers, placing posters at the gathering spots of the target audience etc. Consider word-of-mouth as a method for boosting awareness about your venue. Enforce it with relevant special offers, such as “Bring a friend and get a bonus”. Introduce a system of incentives, e.g. small discounts on packages from 3 hours.

Marketing is a combination of economics and psychology, thus, whenever making up an offer, check its economic viability. Here are some tricks that might be of use:

Bundling

Remember, the effects of price bundling on consumer evaluations of offerings. Generally, it is way easier to sell complementary services at the time of the main purchase, as customers are less negatively affected when prices are bundled together, and they only have to pay once. For example, offer them to pay one price for X hours of using a computer and a snack included.

Unbundling

When it comes to gains, use the approach of unbundling. Numerous studies show that clients perceive two smaller wins as being greater than one big win. Thus, instead of offering a single 25% discount for a daily pass and a premium seat (40€ -> 30€) break it in two 25% reductions: one for the daily pass (30€ -> 22,5€) and one for the premium seat (10€ -> 7,5€).

In fact, marketing and pricing technologies can enormously help you to increase your checks and ultimately your cyber cafe earnings. Be inventive, experiment, and try different offers. Only in this way you can get to know your customers better and find what better works for them and you, as a business owner.

Summary

As you could see, cyber cafe, like any other kind of business, has its peculiarities and requirements. For you, as a business owner, it is necessary to have a big picture and look at all aspects of your business in general. Pay due attention to crucial and strategic issues, especially those which require considerable investments and are not easy to change, such as location and purchase of equipment. On the other hand, be more creative and flexible when it comes to marketing and pricing.

Your responsibility as a manager consists of ensuring the smooth and continuous operation of your business unit. Thus, another task of yours is to constantly work on the optimization of inner processes. With this regard, make use of cyber cafe management software. This will help you to improve workflow, as well as keep track of all the operations and business development.

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