We Started The First Cat Cafe In Southern California ($40K/Month)
Hello! Who are you and what business did you start?
My name is Tony Wang, and I’m the general manager of The Cat Cafe in downtown San Diego. We are the first cat cafe to open in Southern California and we are the fourth oldest continuously operating cat cafe in the United States.
Our business opened in January 2015 and we were stunned at the amount of business coming in. While that initial pop of people wanting to enjoy handcrafted drinks with friendly adoptable cats was nice, after it faded, we had to build our business out the hard way.
It took years to grow the business to where it is now, but we’re now seeing revenue of up to $50K a month. That’s a long way from the days when we first opened when we’d see less than a third of that.
How did you come up with your business idea?
We first learned about cat cafes when we saw an article about Le Cafe de Chats in Paris. We learned that it had a wait of months to get a reservation and thought it was an interesting business idea.
We didn’t really pursue it until we learned about how one was getting started in San Francisco. Then we figured if someone had managed to find a way to work within the health code, we could talk to them to see how to combine animals and food.
Once we talked to the health department here and got buy-in, we figured we could make this happen.
Obviously, given that we were one of the first cat cafes in the United States and the first in Southern California, our prior experience had very little to do with the business we’re in.
But our experience with retail customer service in prior positions as well as our data analysis work we’ve done in the past gave us a good way to see how we were doing. And our advertising experience, both on the sales side and buying side, helped as well.
Give us a step-by-step process for how you built the first version of your product.
Our first step was working with a company with lots of experience building out coffee bars. They were able to tell us things that worked and things that did not, and we started with that. Their name lent a tremendous amount of credibility to the health department because they were one of the people who that department turned to in order to create standards for facilities like ours.
Once we did that, we had to search for a place to lease. Many property managers were hesitant because this was a completely new business with no history. We finally found a person who had one facility that was willing to take a chance on us, although they did demand the first year rent up front.
After that, we built out the facility in about 90 days and opened our doors.
Our business model initially was to charge people for food or drink and give them admission into the cat room for an indefinite time. We learned that wasn’t going to work, because people would buy one drink and linger for hours.
And, some people would buy our least expensive item to get in. We changed our business model to charging an admission fee for one hour of time with the cats starting at the top of the hour, every hour.
We were able to fund the business with some crowd funding but the majority of the funds came from friends and family.
How did you “launch” the business?
Because we were a completely new business, there was a lot of media attention around us. We had our local NBC, Fox and CW affiliates cover our opening as well as our local newspaper. Beyond that, we used social media to build awareness of our launch.
We were completely unprepared for the deluge of customers after the media attention. Normally, businesses crawl before they walk and walk before they run. We had to run almost immediately and it nearly killed us! After that initial burst of business due to the media attention died, we had to build the business back up.
If we were to do it again, we’d use the same methods to build publicity, but we would have the reservations system we have in place now ready to go and we’d use our current business model.
How have you grown your business?
We’re fortunate that our name has what we are in the title. We are The Cat Cafe, as opposed to other cat cafes that have cute names. Because of this, we have an advantage when it comes to search and we are listed ahead of even sites like Wikipedia when it comes to search on the term “cat cafe.”
Beyond that, we use print advertising in a local guide that is distributed to locations where tourists, who make up most of our business, are staying or likely to go such as hotels and the Convention Center.
And we are active on social media. We get the best response from Facebook and Instagram and in addition to organic engagement, we do paid advertising on those platforms.
An example of how this worked for us occurred during Covid. Without conventions and tourism for about two years, we had to shift our focus to local residents. We used personalized ads on Facebook and Instagram to reach those who were interested in animal welfare and coffee.
It helped us reach people who we didn’t really have to when we first opened, because the tourism industry brought more people in.
“Of course it’s hard. It’s supposed to be hard. If it was easy, everyone would do it. The hard is what makes it great.”
Give us a breakdown of your revenue & financials.
Our monthly revenue ranges from $40K to $50K depending on the time of year and whether there are large conventions. With Comic-Con happening in July, that’s always our biggest month. It’s like having an extra week of revenue in an already busy month.
We’ve grown from a business taking in less than $200K our first year to one that should exceed $500K this year. Most of that revenue comes from admissions into the cat room. Our ancillary sales (food and drink and merchandise) is about 25 percent of our revenue with the cat room driving the rest.
We are a profitable business despite the increasing cost of labor and providing benefits to employees that are not typical like a 401K. Our margins are around the industry average for our business.
What does the future look like?
We’re confident that we can continue to grow and thrive in both the short and long term. We’re in a unique niche where we don’t have to pursue every person, just the people who are willing to spend the money to enjoy visiting us. That’s a small segment of the population, but it’s enough for us.
We’re looking to improve the customer experience by doing some of the little things that we haven’t paid much attention to in the past due to our growth. Now that we’re a mature company we need to focus on that instead of chasing growth that will be much more difficult to achieve.
Through starting the business, have you learned anything particularly helpful or advantageous?
The biggest mistake we made was to not charge an admission fee from the beginning and trying to please even customers who were not profitable for us. When we changed to charging an admission fee and doing things that would make the customers we want happy instead of trying and failing to make everyone happy, the business got better.
Things we did well were to focus on what we could control instead of worrying about things we could not. After the 2016 election, our business dropped significantly because people seemed to be worried about the new administration. We couldn’t do anything about that, so we focused on getting the most revenue possible from people who did visit.
We were also, just like every other business, blindsided by Covid. We had to close for two and a half months. Fortunately, the combination of the PPP, EIDL and RRF allowed us to make it through.
Advice for other entrepreneurs who want to get started or are just starting out?
Two movie quotes describe the attitude you need to have if you want to succeed. First comes from A League Of Their Own:
“Of course it’s hard. It’s supposed to be hard. If it was easy, everyone would do it. The hard is what makes it great.”
The second is from Captain America: The First Avenger. It’s from the skinny Steve Rogers, who is getting beat up by a bully and he retorts, “I can do this all day.”
Running a business is hard. But if you work hard enough at it, and you succeed, it will feel great. And you will get beat up while you do it. When that happens, will you mentally be able to say “I can do this all day?”
Where can we go to learn more?
If you have any questions or comments, drop a comment below!
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Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
Download the report and join our email newsletter packed with business ideas and money-making opportunities, backed by real-life case studies.
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