27 Questions we answered at the London Coffee Festival
We spoke to over 1000 people at the recent London Coffee Festival, and this wis what they asked
Click on a question to reveal the answers
The cost to open depends on so many things so is very hard to answer easily. At the top end a coffee shop may cost up to £250k to fit out, if the unit is a shell that needs electrics, plumbing, floors and ceilings. At the other end of the scale as low as £10k, if you just fill a ready made space with equipment. We can give you a much better idea of this of course, if we have the details of what you want to achieve.
The amount of money you need will be the cost of fit out plus money for training, stock, marketing and importantly enough to cover your cash flow for the first year
This is up to you, should be inline with your passion for your business and your customers tastes.
The coffee shop boom has ensured there are no shortage of roasters around, from micro roasters to large scale commercial roasters.
The question should be what roaster will give me the best service in terms of a consistent product and ongoing training, as they will become long term partners in the success of your business.
The answer to this is more about who is a good coffee machine supplier.
Your coffee machine is a considerable investment and will be the lifeblood of your business. You should never buy from someone who will not service and maintain it for you.
Buying second hand or cheaply from the Internet without a service agreement or warranty, will become a ticking time bomb, and a broken down coffee machine is effectively a closed coffee shop.
One of the easiest mistakes to make is to not understand commercial property agreements. They can be very onerous and full of unexpected surprises that can be very costly; so spending money on a property lawyer, will be money well spent. We have personally been very thankful to the advice we have been given, without which our business would not still be operating.
Remember when you sign a lease, you are agreeing to pay the landlord the annual rent X the number of years of the lease, so a 10 year £50k lease is effectively £500k.
From our experience, knowledge and mistakes, we can give you unbiased honest advice and support. We have put together a comprehensive coffee shop opening pack that will take you from your initial idea to opening the doors and marketing your new business. From choosing a great site to open to finding the right suppliers, we have it all covered.
Making a mistake when setting up your coffee shop could cost you dearly, so we are can protect you from making mistakes.
In fact we have the answers to the questions you haven’t even thought of yet!
The coffee shop market has grown considerably in the last ten years, the chains like Starbucks and Costa have educated the public to a point where they won't tolerate poor coffee anymore.
This new level of knowledge has encouraged people to actively search out independent coffee shops, to a point that a recent survey suggested that 80% would prefer to visit an independent coffee shop rather than a chain.
The answer to this is, it depends. The coffee machine we have already mentioned above but there is an opportunity to use second hand equipment, with the exception of a dishwasher and ice machine, due to their high usage and tendency to break down.
There are auction sites that sell second hand catering equipment, and online stores that sell at low cost. Tables and chairs can be bought second hand too, but only if this is the look you are going for, and beware of having tables that are too big as this will reduce your seating capacity.
You need to factor this into your business model. Knowing your numbers is the only way to get an answer to this one.
The principles we teach and are in The Daily Grind, are transferable between, town, city or country, high street or mall. There will be some cultural differences between areas, but in general a good coffee shop will be a good coffee shop anywhere.
The magic ingredient of any coffee shop business is its connection to the local customers and community, who will want you to succeed.
The big chains spend millions and use a scientific approach to selecting a site to open in. Sometimes this is good because if you have a chain coffee bar in an area you want to open in then it means they have done their homework and think that the area is suitable.
The beauty of the site chosen by an independent is that it does not have to tick all the boxes on a Starbucks executive’s spreadsheet, and can be a little quirky or off the wall and something that the big boys would never choose, thus adding to the independent gene of your new business.
Landlords look for lots of things in their potential tenant, with strength of covenant being high up on the list, however if a landlord, particularly in a shopping center or mall is looking at the overall attractiveness of his complex to other businesses he may prefer a quirky attractive independent coffee shop as an anchor tenant to enliven the area.
Tea is a big part of the coffee shop business it must not be overlooked, however the teashop market is much smaller than the coffee shop market, due in part to the ease of replicating great tea at home without the need to invest in an espresso machine.
You must produce a fixed recipe and costing and ensure that all food hygiene guidelines are followed, especially around eggs.
You may find that the extra effort and staff energy and equipment costs may tell you that getting them made by someone else is a smarter decision.
The key to making these types of businesses work is either to find enough customers within your catchment to sustain you or having a wider appeal that has specific attraction to your target audience as well as others.
One in five people now believe they have some type of food intolerance, so every coffee shop needs to cater to these markets as well.
Spending time understanding your dream and what your coffee shop will look like, and who your ideal customers will be, is a good place to start. Doing lots of research is a must, reading some great coffee shop books and working in a coffee shop yourself to understand the way the business works is essential.
Andrew worked in retail, so had experience of a fast moving retail environment and Claire as a midwife, which is one of the most people centric jobs going. We liked the atmosphere in a coffee shop and saw that the trends were expanding out of London. We decided we wanted a change, to work together and start our own business, so after a lot of research we both handed our notices in on the same day and jumped into the world of coffee.
We would have worked in a good coffee shop for 6 months, spent more time understanding our vision and not have become a franchisee.
We would recommend you reading every book you can get hold of that will help you. There are some great up to date books out there, as well as some some years old now that pre date the coffee shop revolution.
The Daily Grind is from our own personal experience gained over ten years in the coffee shop business, and as such is unique.
Yes, if you get the fundamentals we talk about in the book right, then you are going to be successful.
With any business there are outside influences you can’t control that may change the metrics though, however by following our advice you will know your numbers and be ready to take appropriate action much faster.
You could be, you just need to understand your business model really well. Takeaway coffee is more and more widely available through vending machines in transport hubs, offices, and anywhere they can be installed.
Knowing your why, your competition and customers will give you this answer. The customer can be price sensitive but you won't be able to compete on price, so quality, service and choice will allow you to improve your margins.
Look at the local competition and position yourself in the market, this will then allow you to work out what to charge.
Everyone seems to know the cost of a coffee, thanks to the constant analysis by newspapers, and it's around 30p.
The challenge for anyone who starts from this type of question is to understand the total costs involved with the production clearly and know what their break even sales figure is. When you achieve breakeven then the business can become profitable quickly.
About five years ago we asked a similar question, we thought that we had done everything we could to improve our business.
We were wrong and by getting an expert to help us, we were able to improve so much and our bottom line profit literally changed our lives for the better.
It's not a bad question in itself as we would always recommend our clients ask for a lower price! The issue is the mindset of that person asking the question. The value that reading our book generate, will exceed its cost by many thousands of times therefore will prove great value. Learning where and who to ask for a price reduction is the key to success.
The answer by the way was no!
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