Three days ago we found out that we were forced into bankruptcy and now have less than 3 days to raise enough money to keep Brooklyn Café and Brooklyn Baking’s Co.’s doors open.
After widespread support and encouragement from our friends and customers, we have now decided to open a crowdfunding campaign to help us continue the story of one very loved community café in the heart of Punavuori. To contribute, please click here.
How can a successful café run the risk of going out of business?
The café business is a tough one: throughout our 8-year history of running our business, there hasn’t been a year that we would not have had a bankruptcy claim against us. Most people find this hard to understand — how can a loved café with over a 25% profit margin struggle to survive? The quickest way to explain the realities of the industry we’re in, is to ask you to think of any café in Punavuori that would have lasted there for more than eight years.
From heavy taxation to competing with international chains, it is a challenging environment to be in. The industry is built to support the big players and chains- especially in that small businesses are expected to meet the same compulsory financial standards as the bigger companies however with significantly less resources. For example, wholesale pricing for a café normally caps out at 10% in Finland, while bigger players have buying power to negotiate better rates. We knew this going in and we know it still today — but it doesn’t mean there isn’t a way for smaller business owners to come up with creative ways to survive. We have been fortunate enough to create niche products (as all of our food is our original recipes), but more importantly, we have built a trusted and growing customer base that knows us from our start as a small 14-seat café who only sold cupcakes on Saturdays- to a company that now has a separate bakery that has made more than a quarter of a million bagels over the years, 2 million plus cupcakes and have been a part of many special life events.
We know now that we have waited too long to increase prices to match increasing cost of products. This is mostly due to the fact that my sister and I wanted to always have approachable prices (what’s a café without students and starving artists?). But keeping the balance between non-predatory pricing and a healthy business will always be the smaller business owner’s quandary.
Finally, our ultimate financial challenges have come from the lack of initial financing. As with any business, we encountered unexpected costs such as broken machinery, major electricity rewiring costs and bureaucratic process costs (this accounts for the majority of unexpected expenses for a small business in Finland). A long story short- when these problems arose- we didn’t have enough reserved capital to cover these costs. Therefore, it created a 6-year long domino effect in a game of “catch up.”
Why we believe in Brooklyn.
From a purely business standpoint, the Brooklyn brand has proven that it can exceed industry standards with a 27,5% profit margin on the conservative end and continued sales growth in catering (which saw a 48,5% increase from 2018 to 2019 alone). Had profits not been solely committed to paying back debts, Brooklyn would experience a healthy capital and reserves. These numbers support how we’ve been able to “stay alive” even with insufficient funding.
From a non-business perspective, my sister and I have committed to building a unique Brooklyn experience. The reason we chose Brooklyn as a name in the first place was because it was in Brooklyn, New York that we experienced such enticing culture through food and atmosphere that we believed we could create and share this same experience in the heart of Helsinki. In recent days, customers and friends have made that abundantly clear to us. They’ve made it clear that we played an important part, not only in the food industry in this city, but as a catalyst in a necessary cultural shift in Finland where you dare to challenge the norm. We stick to our dark roasted coffee and our buttercream cupcakes- and that’s why we’re loved.
What’s next and how can you help?
Over the past few days, we have been overwhelmed by the number of messages of love and support we have gotten from our friends and customers wanting to know how to help us keep our doors open. We hadn’t considered crowdfunding as a way of saving our business. Up until now, we have spent almost a decade in the business of hospitality and it didn’t occur to us that the same people we have been serving could be in a position of saving that very same business. So when our friends rallied around us to come up with ways to keep our doors open, they reminded us that a community that we have shown a lot of love to would in turn appreciate the chance to return the love.
To contribute to our crowdfunding campaign, please click here.