What is a Cybercafé?

If you were to visit all the cybercafes around the world, you might reasonably assume that most are no more than coffee shops or cafes with computers. With over 500 such establishments opened since September 1994 around this planet Earth, the typical cybercafe has a few computers, a good cappuccino machine and a small menu often consisting of soups, salads, sandwiches and an assortment of beverages.

The definition of a cybercafe by our contemporary standards is a dining establishment serving food, beverage and computer services. This takes many forms and variations, but generally, the basic form described above rings true throughout the genre. Some cybercafes provide more computer services than others. It is common that cybercafe managers and owners focus on the computer and multimedia aspects of their business more so than the food and beverage operation.

Generally speaking, an hourly or other rate for computer time is charged for use of the cafes computers and the customer pays for food and beverage as ordered. A common theme is counter service food and beverage operations which we will discuss later in this article.

Technically, the cybercafes usually have a small local area network with a reasonably high speed communcation with the Internet. The most common speed is ISDN ranging from 56K to 128K, although some cafes have fractional or full T1 lines (1.53Mb per second).

The purpose of cybercafes in society is to provide a communal setting wherein the public may use computers, socialize and enjoy food and beverage. The cybercafe is a logical extension of the home, but particularly, of the family room. Why so? Because that is often the room in which the home computer is kept and where the family computer user spends a great deal of time, often alone.

The most common form of cybercafe is an adapted coffee house and is somewhat akin to the coffee houses of the 18th century in England and France. The customers enter the establishment, register or simply sit down and use a computer and purchase food and beverage to accompany their computer time. Some have nice seating areas with sofas, comfortable chairs or conversation groups. Some cafes have bistro type tea tablesÉ small tabletops meant for no more than two coffee cups and spoons, these usually accompany uncomfortable chairs meant to keep you seated at a computer, rather than at a table.

The common cybercafe will have rather generic food…nothing special and standard beverages, often copied from local eateries or Starbucks. The cuisine, if one may go so far, is second rate in most cases, and is rarely intended to be a feature of the operation. Food, like beverages, is viewed by owners as little more than another tool to keep the customer content while at the computer. Often little thought has gone into this process and less into the trends in food and beverage in today’s society. As one owner remarked, “Don’t give ’em fancy food. Feed them ham and cheese sandwiches.. I like them, so everyone else must”.

How Cybercafes Started

In 1994 an enterprising group of British entrepreneurs saw the opportunity, the growth potential and the logic in opening an internet café. Whether they were influenced by such Hollywood models as 10 Forward on Star Trek: The Next Generation or the bar in Star Wars, these folks had a vision and were smart enough to start Cyberia. Since opening this great property in London, they have expanded to Paris, Edinburgh, Rotterdam and soon, New York. They are a brilliant group and have our applause, standing. Since their opening, Cyberia has expanded to sixteen or more properties throughout Europe.

Major city copycats like New York’s former @Café, Cyber Café and Cybersmith in Cambridge, Mass, have greatly expanded this type of operation bringing it to the United States, Canada, Mexico and other regions of the world. Perhaps because Americans often lavish extra interest on new media and technology, cybercafes in the United States had a lot of press attention from everywhere on the planet. More often poorly planned, they put up a good show and told a good story. As a result of extensive press coverage and media attention, cybercafes have popped up all over the US, Canada and other parts of the Western Hemisphere. The operations started in 1995 in the U.S. were role models for many other properties. But were they correctly handled? That is the question of the day. Were they right for their times? Yes. Are they right for the future? We shall soon see.

Filtering into the suburban and rural communities, cybercafes have gone from the big city to smaller cities and towns throughout the world. Probably the greatest reason for their rapid expansion is the public’s need to communicate. A business person traveling from city to city with or without a portable computer needs to get his or her email and keep in touch with the business, home, family and coworkers or staff. To do that, without the very high cost of hotel data communication services, it is easy to find and visit the local cybercafe. There you can read, print and respond to email, check industry trends, work on documents and spreadsheets, obtain information from your own or competitors websites, and find resources to resolve business problems that may arise. You can send greeting cards and emails to family and friends to let them know you are alright, tell them where you are and generally communicate.

Cybercafes have expanded to small towns and large… from major cities to minor ones, showing that this genre is one that is here to stay for a while. But for how long? Will cybercafes go the way of the trailer diner of the 1930’s? Will they be a passing fad in the restaurant business?

Sociology

People need to socialize. It is a simple fact of nature. It is important for humans to interact with each other in a communal manner going back to our cave dwelling days and before. The Internet is a massive form of community, available throughout the world. But cyberspace is a lonely place for many regular users.

Some people use the Internet simply as a research tool, only going in to fetch something and getting out equally fast. Others, and this is the majority of users, delve into the Internet and become engrossed in its vast, seemingly limitless possibilities. Whether chatrooms, email or simply surfing around, people are hooked on this new medium of communication. Often, we find people so ‘hooked’ that all around them becomes a blur to their experiences on that little monitor in front of them. I must admit my own guilt in this area. My family constantly has to call my name several times before I realize I am in a real world.

This tendency to get drawn in often results in actual loneliness, particularly where the user is the only one in the family or at the office that is really interested in the Internet. Teenagers are particularly susceptible to this problem and often it is the less popular ones that do. Hence, the term… computer nerd… the guy with thick glasses or the overweight girl that is not so popular at school but is the master of all he or she surveys in their virtual Internet world. I remember an employee at one property named Dean. The ultimate computer geek. If Dean did not have a keyboard, mouse and monitor in front of him, he was a lost soul. Unable to communicate to others, he could do so by email or in a chatroom. In person… lookout. Although a very nice young man who was liked by everyone, he was lost in the real world of communication with customers, coworkers and managers. Dean was typical of many of the 20 somethings.

Bringing real community to electronic communication is an un-calculated phenomenon of cybercafes. They have given computer users a place to go… to meet others with similar interests and to communicate in real terms with real people in the real world. Cybercafes have given physical reality to a chatroom in many ways. Depending on the physical structure and design of the café, one will often find people who’ve never met before, chatting with each other by voice instead of by keystroke. I recall that every day one customer would ask another… “What site are you looking at? That’s cool!”, despite never having met that other customer before. The reactions were always the same. Never a snub. One always got a warm response and a friendly answer. This often led to ‘cyberfriendships’ as I used to call them.

Many customers who start these conversations often find that they have similar interests and in some rare instances, find that the other person has been an active member of a chatroom or newsgroup frequented by the first.

Cybercafes also add another value to computer nerds families. The cybercafes provide a place to send the family nerd and get him or her away from the computer for a while. I recall starting to sell gift certificates.. I was the first to sell them at any cybercafe in the US… and could barely keep up with the demand. Parents and siblings mostly buying them as one parent put it “…to get him [her son] out of the house”.

The Aftermath of Fears of Aids

Why are so many people caught up in the chatrooms and newsgroups. The answer is a sociologic event in the history of Mankind.. the fear of Aids. I recall discussing this with a reporter for the New York Times Online who wrote about it. My opinion is simple. People during the later half of the 1980’s and early 1990’s were inundated with commercials, press and media coverage telling them to be careful who you meet, have sex with and in the early days, even who you share a cup of coffee with. As a result, people stayed at home. Finding a sense of larger community on the Internet, they became engrossed in their virtual worlds and kept at it, finding that they enjoyed the chatrooms, email and other communication mediums. They could become the shining stars, the Prince Charming’s and Snow White’s they had always dreamed of being. All it took was the ability to communicate through a chatroom.

In the mid 1990’s, around the same time that cybercafes came to the US, people had obtained enough information through the media to reduce their fears of Aids and HIV enough to get them back out of the house and into the real world. But it’s difficult to get people to give up a hobby or a regular part of their lives. Not that anyone was asking them to. So, as people started to come back out of their self imposed shells, they took their Internet related hobbies with them. Cybercafes gave them a place to go. They provided a medium through which a computer user could communicate in both the real and virtual worlds. Cybercafes introduced new media and new people to this recently released cyber community. As a result, cybercafes were the ‘in’ thing of the mid to late 1990’s.

Integration into Society

Cybercafes are here. Whether they will stay is simply to be determined by time. However, they have had an impact on our culture. As a result, I believe their presence will be with us for at least three or four decades, no matter how quickly new media takes hold. Why? As I stated once to one owner, “Compare the use of a computer in a cybercafe to the Wurlitzer jukeboxes of the 40’s and 50’s. While they are not found in common American restaurants anymore, most diners still have tabletop models. The jukebox simply progressed. So will computers in cybercafes”. As I finished the statement, we passed the AT&T booth at the 1996 PC Expo. The theme of their display… a cyber diner (50’s style with 90’s influence) and of course, they showed the progression from a Wurlitzer Bubbler to Internet connected computers. Point made!

Franchising will soon happen in reality. It seems that almost every cybercafe operator has dreams of becoming the next Starbucks or McDonalds with computers. But the reality is simply that the marketplace will determine who will be successful. Frankly, it may not be a current player. Starbucks has announced a deal with Intel to ‘cyberize’ some of their properties and Apple Computers has planned the opening of 10 cybercafes worldwide starting in 1997. It is not easy to create franchise operations and from our experience, some owners think you just sell a package. Not so. Realistic, sensible planning will cause the growth of cybercafe franchises. Work by large committees of consultants, planners, attorneys, accountants and specialists will be what makes it happen. It will not be the pipedreams of owners, nor the press coverage, nor even a few good connections. Rather, a rock solid plan, a great deal of hard work and significant capital will be the real tools. We believe that these are the ingredients brought to the market by Cyberia in Europe and the reasons for realistic their expansion.

New technology and new media are ‘cute’. That’s it. Nothing more. They are not enough to make people come back for more, nor are they enough to cause a company to grow in size. It is not responsible for anyone to think that new media, created by someone else, will create a continued market for cybercafes. I’ve recently had such an experience with a pair of café owners who believe that their continued growth and consumer interest will be caused by new media and computer technology. Let’s be realistic. The technology that is newest costs the highest price. While some manufacturers will give cybercafes free product to demonstrate, they won’t give it to a franchise chain in large number. The risk is too great and the price too high. So there will be increased cost of technology for café owners. The speed at which computer users access the Internet from home is increasing rapidly. The new cable modems are out, and large portions of the US will be re-wired by 1998 making fractional T1 speed obsolete along with ISDN. T1 will not be far behind. Will the cafes be capable of providing T3 or higher speed? Somehow, I think most will fall by the wayside with this change. Those that survive will be successful because they planned for this growth in other areas and took precautions early on. The failures will not disappear. I think they will be replaced by the successful companies just as Wetson’s was replaced by McDonald’s in days gone by and Roy Rogers is being replaced by Wendy’s and Burger King today.

Historic comparisons are great. They show us how things happen. In the case of one café, the owners refuse to take the time to learn, listen and adjust their path. While riding a crest of good press at this time, the future, as I can see it, is bleak. Franchising is not a reality and even if it is, I expect them to fail, taking a number of innocent franchisees with them. They don’t plan and they don’t learn from mistakes. It is important that if you are a cybercafe owner you learn from within the cybercafe and hospitality industries. The mistakes you make have been made and documented before. Those, as they say, who do not learn from history, are bound to repeat it. Never has anything been more true.

Growth Within the Restaurant Trade

I recall another owner in a discussion about growth as a restaurant taking great insult at the idea of being a restaurateur. As someone once said… “If the shoe fits…”. The reality is that if you have a business that serves food and beverage for a price, you’re in the restaurant business. Cybercafes are not computer companies. They are computer consumers. No cybercafe has developed a new computer technology or new media product. Period! Nor will they. In their proper place, cybercafes are themselves, restaurants. That’s it. They happen to have computers and happen to be a potentially great part of the restaurant community. But practically speaking, to insure survival, they will have to get a realistic grasp on being restaurants.

Within the restaurant trades, cybercafes are often viewed as oddities. Many have opened over the years and some have been successful for a time. Some of these oddities have lasted. One, many years ago, was a small restaurant in Kentucky serving nothing else but chicken, biscuits and gravy. They had an owner who was both a personality and a visionary. His name was Colonel Sanders. He built a phenomenon that lasted. So too cybercafes may last. But only those owners who can be realistic visionaries, practical planners and good business people will succeed. Cybercafes, in my humble opinion are here to stay for a good while. Which players will still be on the field in a year or two remains a mystery that only time will tell. Who will be successful in the long term depends on who is practical enough to do the right planning.

Who will run the cybercafes of the 21st century? The mystery remains. There is no doubt in my mind that it will be a restaurant company. Perhaps a firm like Planet Hollywood or Restaurant Associates. Why, because the general public will see that these cafes are restaurants. The novelty will wear off as the press coverage does. It will take a large, well organized firm to handle constant, long term press attention, to make cost effective deals with computer and software manufacturers and to develop a responsible franchise plan. It will take a large, well organized firm to handle multi-unit food and beverage operations. Let’s not forget that despite the rates of inflation, the original McDonald’s cost of producing their first burgers was very close to today’s cost. Their growth saved them money. My cousin used to remind me that the first pair of ladies nylons cost a Million dollars and today women buy them for around $2. He was right. The cost of setting up a comprehensive cybercafe operation will be astronomical. Only a large corporation, or one with ALL the right ingredients can grow to that level. No matter who the players are, they will be restaurateurs.

The ability to cross barriers from cybercafe to restaurant is critical. Many will fail and several have done so already. The public dines out. That is a simple truth. Will they ‘surf’ out while dining? I think so. My experiences and the rapid growth of cybercafes say it’s true. But some cybercafes have not planned for this. One, in a really major market, has no kitchen and a lease that prohibits cooking. This is an example of poor planning and a lack of vision. Others I know of have kitchens and only hire cooks, not a chef. Their menus leave a lot to be desired because they have a cyber, not restaurant focus. Will they survive? Doubtful.

What the Future Holds

I have a vision. I suppose that makes me a visionary. I see a cyber dining establishment… a restaurant with small screen monitors at the table. Elegant furnishings and fine foods. Not a four star ‘haute cuisine’ restaurant. But a good restaurant with a real chef, real food that real people eat. I see a company running this that has the common sense to adjust to the local marketplace and provide what the market demands. I see a restaurant that uses computers as an entertainment for computer users and has a cyber-lounge for die-hard users. The restaurant will be a multi-million dollar operation annually as many restaurants are. Operational expenses will be carefully monitored and planned to the penny, resulting in a successful, financially stable business operation.

The cybercafe is a unique special events venue that hotels have, for some reason, rejected. I guess that most hoteliers have not seen the volume of special events business that cybercafes can generate, particularly in large markets. These are not kiddie birthday parties. Rather, they are large, expensive high tech events for large corporations. I’ve handled around a hundred such events from a wedding rehearsal dinner to formal cocktail receptions. The market is there and growing. Why? Because more and more mainstream corporations are moving their business operations to the Internet. Whether they are simply posting a page there to let people know what they do or actually conducting commerce on the Net, these companies want people to know about it. Press parties are the most common for the announcement of a new website or a new component to an existing site. A properly managed property will have a catering sales team like any good hotel. When I saw a seasonal change in special events business coming, I urged one client to hire a particular salesperson. They did and it paid off. Events grew from one to eight per month and from an average price of $2000 to $8,000 per event. Special events are a significant market for this restaurant genre and a good income producer.

Our Vision of the Operation

As the leader of a hospitality consulting firm, I get the privelege here of speaking for my own company. We have a real vision of the operation of a cybercafe company. We know where to turn and what to expect. Epicurus (my company) has seen the growth of the cybercafe business and has been at the forefront of its development. We have seen, learned and written about this subject. Four of the eight people in Epicurus have cybercafe operational experience. In addition, we can see the future of cybercafe design. Many cafes have elected to go super high tech selecting designers not accustomed to comfort and restaurants but office and artistic design. Some cybercafes are cold and inhuman. Ian Hooper has designed furnishings for cybercafes and discussed them in an article that can be found in Epicurus Online. We concur with this vision of design and feel that cold and calculated design is more of a turn-off than a turn on for repeat customers.

We see the restaurant operation described above, with a complex set of suites or dining rooms, each taking care of a different segment of the client market from business people using a cybercafe for a demonstration of a site or product or simply enjoying a multimedia meal experience, or tourists wanting to experience something innovative to kids playing the kinds of multimedia games that are not available to play at home. We see lounges where people can come to do real computer based work with support from technicians not available at home or at most offices. Our vision includes suites that can be used for events or seminars to teach the public or for companies to provide training. We can see the future for cybercafes and feel it is a bright one.

Into the next millennium, cybercafes will grow, fall and rebound just as any other business. Some will fail. Some will just barely survive. But the ones that take advantage of that vision I have described will last and make a lot of money for their investors. Prehaps our vision will become such a model for the future of not only cybercafes, but restaurants generally, that a cybercafe will be selected for the dining room of our first large multinational space station.

The Visionaries

Proprietors of cybercafes that are visionaries will organize a great team early on. They will include a good attorney or lawfirm, a big six accounting firm, a restaurant or hospitality consulting firm like Epicurus and a group of dedicated management that have a stake in the growth of the business.

Consultants who work for such companies will need to have technical knowledge of computers compiled with an in depth knowledge of the broad-based hospitality industry. They must know about trends, seasonal changes, operations and the cybercafe and computer markets. There are few consultants at the end of 1996 that have such experience.

Franchisers seeking to grow a cybercafe operation must have the vision to build and share their dream. They will have to be willing to commit pieces of their business to those willing to make it grow. Their management team must consist of truly dedicated individuals willing to plan the future of that business in real terms and to see the cybercafe as a restaurant.

Franchisees will have the greatest responsibilities. It will be incumbent upon them to see the truth about cybercafes… that they are restaurants, not computer companies… and that their purchase of a franchise implies responsibilities, requires dedication and a lot of work.

Conclusions

Cybercafes are our future and perhaps the future of the restaurant business in the next millennium. It may turn out that all restaurants eventually become ‘cyberized’ in one way or another. But for the foreseeable future, they are a specialty that has not yet become a part of the restaurant industry which stands awaiting them with open arms.

There will be growth, I feel, and many will take part in it. Consultants will play as important a role as owners and attorneys or other professionals to make this a bright future for some cybercafes. It will be those who reject sensible strategic planning and realistic growth that fail.

In the long run, we may expect to dine in the not too distant future with not only a knife and fork, but with a keyboard and mouse. The cyber future awaits us all.

About the Author

Robert Angelone is Chairman and Chief Executive Officer of The Epicurus Group of Companies. He served as Management Consultant and General Manager of New York City’s Cyber Café for more than a year during a period of tremendous growth, adaptation and development of that particular and most other cybercafes. During his consultancy with that café, more than 400 cafes opened around the world. Mr. Angelone’s opinions on cyber café and internet related matters were sought out by press from all over the planet including Der Spiegel, The New York Times, NY Daily News, NY Post, National Chilean Television, Japanese Playboy, GNN, CNN, ABC News, NBC News, Fox TV News, CBS News, the BBC, The Times of London, Le Figaro and other European, Japanese and South American publications and electronic media.

The author has approximately 20 years of tangible experience in the hospitality industry and demonstrated successes in the management of single and multi-property operations in hotels, restaurants and catering establishments. Mr. Angelone holds degrees in Economics from London School of Economics and a Grand Diplome from Cordon Bleu in Paris.

Mr. Angelone, along with Steven Acosta and Sam Wells from Epicurus managed that particular café through this period and developed significant expertise in the operation and management of such properties. Along with the operational experience gained in this period, Epicurus’ top management also gained significant exposure to the leading indicators of where the cyber café genre is going within the hospitality community.

The Epicurus Group

Founded in 1978