The Cost of Starting a Cyber Café Business in Kenya 2021
More than ever before, between 2015 and 2017 the cyber cafe business seemed to be on its deathbed. The wide adaptation of smart phones, and generally phones that could access the internet almost ground the business to a halt. Prices of laptops and desktop were possibly at their lowest making thus becoming accessible to more people. Not to mention the number of cyber cafes had risen such that the market was almost getting saturated. In a survey we conducted in 2017 within Nairobi the number of cyber cafes closing down was almost the same as those opening. The number of cyber cafes advertised for sale in the newspapers averaged six per week, which was a relatively high figure compared to the previous years. Revenue was going down with the average revenue per user reducing significantly.
Before the mass adaptation of internet enabled phone, and the reduction of data charges, a major reason consumers visited cyber cafes was to check email. With the new phones consumers could easily check email, search and visit other websites from the comfort of their palms. Visits to the cyber cafes were now largely to print, watch videos, visit data heavy websites and those that are were not mobile friendly. The other major draw to the cyber cafes was to use services like printing and download large files.
However since 2015 cyber cafes have continuously gotten a shot in the arm. One of the key drivers being the shift of key government services from manual paper work to electronic; the so called e-government. This has not only changed the way consumer’s access government services, but how they use the internet.
Positives
Colleges: The explosion of colleges has also given the cyber cafes a lifeline. Students use cyber cafés to prepare their projects. Partially typing but largely fine tuning printing and binding. Cyber cafes within a reasonable distant of colleges have survived without much effort.
Gambling: The coming into the market of various gambling services and what is described as the ‘gambling craze’ has drawn many to cyber cafes. Among the heavy users of cyber cafes are gamblers analyzing different stakes and placing bets. Though it’s possible to do the same through the phone, computers are more robust than the former. There are now customers who visit cyber cafes every day to place bets, spending an average of 40 minutes per session.
Devolution of Cyber Cafes: All the above trends have also led to the devolving of cyber cafes. Unlike a while ago when cyber cafes were only found in major towns, cyber have moved to estates, per urban and rural towns. Now it’s common to find three computer cyber cafes in small rural towns which for years didn’t have any internet services, and where one would not have imagined that such a business would survive let alone thrive.
Shrinking of Cyber Café Floor Space: Related to this is the shrinking of individual cyber cafes. Gone are the days of 100 plus computers cyber cafes, and in its stead are midsized cafes with less than thirty computers. Although there are a few of the large ones most cyber cafes have 5 to 20 computers. This can be attributed to the economics of the business. In urban areas, such as Nairobi CBD, the rent for space to set up a 100 plus cyber café would not make it a feasible venture. Such spaces have become competitive due to the expansion of colleges, and “dining hall “kind of hotels. These enjoy higher margins when compared to cyber cafes and thus are more than willing to pay more in rent.
Average Capital Costs
Disclaimer: The capital breakdown below is sourced from recent surveys and may be subjected to market adjustments.
Starting a cyber café business is highly capital intensive and requires critical research and proper case studies to be conducted. The Total capital required will vary based on the scale & market of the venture.
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