How to Finance a Cafe 86 Franchise: Ube Bakery Cafe Startup
By Chris Cornella
A Cafe 86 franchise loan finances a specialty dessert and drink cafe built around ube, the purple yam that anchors the brand’s pastries, baked goods and beverages. Because the concept combines baking, a drink bar and a counter-service storefront, financing has to cover a food-service build-out, bakery and beverage equipment, and enough working capital to carry the shop through its opening months.
US Professional Funding is not affiliated with, sponsored by or endorsed by Cafe 86; the name is used only to describe the business. Figures from the franchisor’s disclosure document can change, loan programs and terms vary by lender and borrower, and every loan is subject to lender review and approval. Nothing here is legal, tax or investment advice, and buyers should review the current Franchise Disclosure Document (FDD) and franchise agreement with a qualified franchise attorney and accountant.
Cafe 86 Franchise Loan at a Glance
- Concept: a counter-service cafe focused on ube-flavored baked goods, desserts and drinks.
- Franchise fee, royalty and marketing fees: set out in Items 5 and 6 of the current FDD; we could not verify current figures from the franchisor’s own materials, so confirm them in the document you receive.
- Estimated initial investment: disclosed in Item 7 of the FDD, and driven mainly by the lease, build-out and bakery and beverage equipment.
- Owner requirements: ask the franchisor for its current net worth, liquidity and experience criteria.
- SBA Franchise Directory: listed under code S8736, with a note about the lease rider when real estate secures the loan.
- Typical financing: SBA 7(a) loans, conventional term loans, equipment financing and working capital lines.
What Is Cafe 86?
Cafe 86 is a dessert and coffee cafe brand that centers its menu on ube. Guests come in for baked goods, pastries, sweet treats and specialty drinks, much of it with the deep purple color the ingredient is known for. The brand sells franchises to independent owners in the United States and is listed on the SBA Franchise Directory.
Store format. A Cafe 86 location is generally a retail cafe in a leased storefront, with a front counter, a drink station, display cases for baked goods and a back-of-house area for baking and preparation. Some shops lean more heavily on take-out traffic, while others offer seating.
Why lenders view it the way they do. Lenders like specialty concepts with a clear identity, but they also know a niche menu depends on local demand. Underwriting usually focuses on the site, the owner’s food-service experience, the budget for a bakery-capable kitchen and how quickly sales can ramp. Because public data on the brand is limited, lenders lean heavily on the FDD and the owner’s own plan.
Cafe 86 Franchise Costs
Cafe 86 does not publish verified cost figures that we could confirm on its own website, so the numbers you need come from the FDD. Here is how the costs typically break down for a cafe of this type and what to look for.
Initial franchise fee. Item 5 lists the fee, when it is due and whether any portion is refundable. Ask whether multi-unit or development fees apply if you plan more than one shop.
Real estate and build-out. Most shops are leased, so the largest variable is the build-out: plumbing for sinks and drink stations, electrical for ovens and refrigeration, ventilation where baking requires it, counters, display cases, finishes and signage. Landlord improvement allowances and the condition of the space can swing this line widely. Our article on restaurant build-out financing explains how lenders fund this phase.
Equipment and smallwares. Expect ovens, mixers, proofers or prep tables, refrigerated and dry display cases, freezers, blenders, espresso and tea equipment, ice machines and point-of-sale technology.
Opening costs and working capital. Opening inventory of ube and other ingredients, packaging, training travel, grand opening marketing, insurance, deposits and an additional-funds reserve for the first months round out the budget.
Total investment. Item 7 of the FDD shows the estimated total and each line item’s range. When you review it, map each line to the categories lenders expect:
- Initial franchise fee
- Lease deposits and pre-opening rent
- Leasehold improvements and construction
- Bakery, beverage and refrigeration equipment
- Furniture, fixtures and signage
- Point-of-sale and technology
- Opening inventory and supplies
- Training and travel
- Grand opening marketing
- Insurance, licenses and permits
- Additional funds for the initial period
Lenders will want each line supported by a real quote, lease proposal or contractor bid.
Ongoing Fees and How They Affect Your Loan
Royalty and marketing. Item 6 lists the royalty and any brand or marketing fund contribution, usually as a percentage of sales. Confirm whether any fee has a monthly minimum.
Technology and other fees. Point-of-sale, online ordering, loyalty programs, training for new managers, transfer and renewal fees can all appear in Item 6.
How lenders factor them in. Percentage fees come off the top of every sale, ahead of food cost, labor and rent. A lender will build a monthly cash flow model that subtracts royalty, marketing, ingredients, packaging, payroll and occupancy before testing the loan payment. A Cafe 86 franchise loan sized to that model, rather than to the full budget alone, is easier to approve.
Franchisor Requirements for New Owners
Cafe 86 sets its own approval criteria, and we could not verify published net worth or liquidity minimums. When you speak with the franchise development team, ask for:
- Minimum net worth and liquid capital
- Required food-service or management experience
- Whether owners must work in the shop full-time
- Training length and location
- Any multi-unit commitment expected
The approval process. Expect an inquiry, introductory calls, delivery of the FDD, validation calls with current owners, site review and franchise approval. Lenders like to see the franchisor’s approval letter and the signed franchise agreement before closing.
Ways to Own a Cafe 86
A new shop. Most owners open a new location. Lenders underwrite on projections, the build-out budget and the owner’s experience. See our page on franchise start-up financing.
Buying an existing shop. If an owner sells, a buyer can acquire the business with franchisor approval. Lenders underwrite the shop’s actual sales and expenses, lease terms and equipment condition. Our guide to buying a franchise resale walks through the transfer process.
Multiple shops. An owner with an established shop may add locations, financed partly by the first shop’s cash flow.
Financing Options for a Cafe 86 Franchise
SBA 7(a) loans. Because Cafe 86 is listed on the SBA Franchise Directory, an SBA 7(a) loan can combine the franchise fee, build-out, equipment and working capital in one loan.
SBA 504 loans. The SBA 504 program fits owner-occupied real estate and long-lived equipment. It applies when an owner buys a building for the cafe, which is less common for leased storefronts.
Conventional term loans. Borrowers with strong credit and collateral may use a conventional business loan, especially for a second or third shop.
Equipment financing. Ovens, mixers, display cases, freezers, espresso machines, blenders and ice machines can be financed separately. Learn more about restaurant equipment financing and leasing.
Working capital and lines of credit. A new cafe needs cash for payroll, ingredients and marketing before sales stabilize. Dessert and drink traffic can also shift with seasons and holidays. Explore restaurant working capital options.
Seller financing on resales. On a resale, the seller may carry part of the price. A seller note is typically subordinate to the senior loan, and SBA programs may limit how it is structured.
SBA Loans for Cafe 86 Franchisees
The SBA Franchise Directory lists brands whose franchise agreements have been reviewed for SBA eligibility. SBA lenders generally require a brand to be listed before making an SBA-guaranteed loan to one of its franchisees. A listing does not approve any borrower; it clears the franchise relationship for review.
Cafe 86’s listing. Cafe 86 appears on the SBA Franchise Directory under code S8736. The directory note says that when the real estate where the franchise business is located will secure the SBA-guaranteed loan, the Rider to Lease Agreement may not be executed.
What that note means. Many franchisors require a lease rider that gives them rights in the shop’s lease, such as the right to take over the space. If the owner, or an affiliate, owns the building and pledges it as collateral for the SBA loan, there is no third-party lease to attach those rights to in the usual way, and a rider could conflict with the lender’s lien. In that case the rider should not be signed. If you lease your space from an outside landlord, the note does not change anything.
The SBA 7(a) program maximum is currently $5 million, though program rules can change. A single cafe’s loan will be sized by its budget, your equity injection and projected cash flow.
SBA application tips. Bring the FDD, franchise agreement, lease proposal, contractor and equipment quotes, monthly projections, personal tax returns and a personal financial statement. Our SBA loan calculator can help with early payment estimates, which are for planning only and are not an offer or approval.
How Lenders Evaluate a Cafe 86 Deal
Personal credit and financial history. Lenders review credit, tax returns and a personal financial statement, and typically require a personal guarantee.
Net worth and liquidity. Lenders want to see the equity injection plus reserves left over after closing.
Industry and management experience. Bakery, coffee or restaurant management experience strengthens the request. If you lack it, a plan to hire an experienced manager helps.
Business plan and projections. Model daily transactions, average ticket, the mix of baked goods and drinks, ingredient and packaging costs, labor schedules and the royalty and marketing fees. Our article on how lenders read a Franchise Disclosure Document shows which FDD items feed the plan.
Site and lease. Visibility, parking, foot traffic and the community’s appetite for specialty desserts all matter. The lease should run at least as long as the loan.
Historical financials for resales. For an existing shop, provide several years of profit and loss statements, sales reports and tax returns.
Bakery and Beverage Equipment
A Cafe 86 shop runs two operations at once: a bakery producing ube pastries and treats, and a drink bar making coffee, tea and specialty beverages. That means ovens and mixers alongside espresso machines, blenders and ice machines, plus refrigerated display cases that keep products presentable. Equipment is both a significant startup cost and useful collateral, and some owners finance it separately to keep the main loan smaller.
Multi-Unit Growth and Development Agreements
Owners who want several shops should ask whether Cafe 86 offers development agreements and what schedule they require. Lenders finance growth one unit at a time, looking at the first shop’s performance before approving the next. Our article on multi-unit franchise financing covers how those deals are structured.
Real-World Scenarios
A first-time owner with a hospitality background. A former hotel manager opens a new shop in a leased storefront. An SBA 7(a) loan covers the fee, build-out, equipment and opening working capital.
An owner buying the building. An owner buys a small retail building for the cafe and pledges it as collateral. Following the directory note, the lease rider is not signed, and the real estate is financed with the business.
A buyer acquiring an existing shop. A buyer purchases a shop from an owner who is relocating. The lender reviews the shop’s financials and lease, and part of the price is carried on a subordinate seller note.
Common Mistakes to Avoid
- Signing a lease before reading the FDD and confirming franchisor site approval
- Underestimating build-out costs for plumbing, electrical and ventilation
- Leaving too little working capital for the opening months
- Ignoring the lease rider rules when the real estate secures the loan
- Projecting sales without accounting for seasonal swings in dessert traffic
For more pitfalls, read common restaurant loan mistakes.
Next Steps to Finance Your Cafe 86 Franchise
Step 1: Request the FDD. Review Items 5, 6, 7, 10, 17 and 19 with a franchise attorney and accountant.
Step 2: Confirm the requirements. Ask Cafe 86 for its current net worth, liquidity and experience criteria.
Step 3: Find and price a site. Get a lease proposal and contractor quotes, and confirm franchisor approval of the site.
Step 4: Talk with a financing specialist. Compare SBA 7(a), conventional and equipment options.
Step 5: Build your loan package. Prepare projections, quotes, tax returns and a personal financial statement.
Step 6: Close and open. Fund the build-out, complete training and keep working capital in reserve.
Cafe 86 Franchise Loan FAQs
How much does a Cafe 86 franchise cost?
The estimated initial investment is disclosed in Item 7 of the current FDD. It depends mainly on the space, the build-out and the equipment package.
What is the Cafe 86 franchise fee?
The fee is listed in Item 5 of the FDD. Ask whether multi-unit discounts or development fees apply.
What royalty does Cafe 86 charge?
The royalty and marketing contributions are listed in Item 6 of the FDD. Confirm how they are calculated and whether any minimums apply.
Is Cafe 86 approved for SBA loans?
Cafe 86 is listed on the SBA Franchise Directory under code S8736, so qualified borrowers can apply for SBA financing. Each loan still requires lender approval.
What does the SBA directory note mean?
If the real estate where the cafe operates will secure the SBA loan, the franchisor’s Rider to Lease Agreement may not be signed.
Can I finance equipment separately?
Yes. Ovens, display cases, espresso machines and refrigeration can often be financed with equipment loans or leases, subject to approval.
Can I buy an existing Cafe 86?
Possibly, if an owner sells and the franchisor approves the transfer. Lenders underwrite resales using the shop’s historical financials.
Does Cafe 86 offer financing?
Check Item 10 of the FDD, which discloses any financing the franchisor offers.
Can a first-time owner get a Cafe 86 franchise loan?
Yes, with franchisor approval, a solid business plan, the required equity and relevant management experience or an experienced manager.
How long is the franchise term?
The term and renewal rights are in Item 17 of the FDD. Lenders prefer a remaining term at least as long as the loan.
Final Thoughts
Cafe 86 offers a distinctive ube-centered menu, and financing one means planning for a bakery-capable build-out, beverage equipment and a solid working capital cushion. Buyers who verify every figure in the FDD, understand the SBA directory note and approach lenders with a detailed plan give themselves the best chance of securing a Cafe 86 franchise loan.
US Professional Funding helps franchise owners and buyers finance start-ups, acquisitions, equipment and working capital. Learn more about our franchise financing and restaurant financing solutions.
