Pros and Cons of Opening or Owning a Coffee Shop

benco's Avatargold

Does anyone have experience with opening or owning a coffee shop? People say foodservice is a tough business to be in. But I would imagine a coffee shop has got to be one of the easier foodservice type of business to run, no?

posted April 04, 2012 09:08 (
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goodolbakeshop's Avatarname search

Baruch do you mind me asking what you do for a living…or more specifically…any food or bakery experience? Two reasons…1 is the costs/pricing of these products if purchased already completed, and commodity-based materials if you’re making good stuff? They have gotten to be very prohibitive the last few years. 2 is the ability for you to micro-manage the business. You would for sure have to quit your day-job, and recruit family (slave-labor) to allow for you to get a 4-hour nap per day.

Then, and likely ONLY then, can you make a few bux in this business, and that’s if you have a FANTASTIC concept. All the success stories you are hearing here can easily be matched up with hundreds or thousands “real” stories…failures. Ask the “successful” ones how many shifts per day the owners work. And these ventures take $$$$$$$$$. not just 20 or $25. I understand both are for dreamers, and I’m good with that for sure, but the chances of success,I believe, are here, in addition to the cost of the investment being a little more preferable here.

Other than that you should do well.

I had 15 years in. Saw tons of competitors come and go. They were the smart ones, it turns out. And I had fantastic concept and unique products, untouchable in scratch-baked goodness. I shipped wholesale to a number of Apple Orchards in Michigan as well, and hand delivered to many Borders Books Cafes and high-end grocers around Chicagoland.

As they say…mucho trabajo, no dinero.

posted April 08, 2012 19:52 (
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rion.motley's Avatar

Oh, and on the Alcoholic Beverages note – we’ve got some wonky blue laws on the books here in VA, but he just started offering microbrews and a short wine list – definitely alters the after-hours crowd demographics, and maintains a nice atmosphere.

Good idea on the “AfterLife Cafe” ;)

posted April 08, 2012 18:51 (
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rion.motley's Avatar

It takes some dedication. Check out Borjo’s – they’re located here in Norfolk, Virginia. I can talk to the owner, who started the place about 5 or 6 years ago, across the street from Old Dominion University. He does brisk business, even with a Starbucks on the opposite corner. I’m sure he’d be willing to email or chat with you about possible landmines. PM me and we can set something up if you’d like.

posted April 08, 2012 18:49 (
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benco's Avatargold

Peggy, that’s an awesome idea! In my town, I think something like that would be a big hit! The problem that I have also, is no food service background. That’s why I would have to partner with someone who can handle the food service end of things. Your idea is very creative and unique in the same way that mine is. The idea I have, would really appeal to the inventors and entrepreneurs among us.

posted April 07, 2012 20:58 (
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pegasus's Avatar

Ben I’ll give you a free idea for a unique coffee shop because I know I’ll never use it, I don’t have the food service backround necessary. Anyway, there is a funeral home in the small but fairly densely populated town I live in. Right next to it, on the same side of the road a small house is for sale on a business district road. I thought after seeing it that someone should but the house, have it rezoned business and open a coffee shop called the “After Life Cafe” It should have tasteful home-like decore and interesting facts written under the glass top tables about how different cultures perceive and deal with death, history, rituals, ceremonies ect. It should have interesting and inspirational quotes and artwork on the walls, and attentive and sensitive staff. I think it would get and overflow of customers from the funeral home, and regulars from the general public, just because it’s different. If it sold a limited white and red wine selections and dessert wine or port with good desserts and coffee it might add to the customer base. Maybe there is a space like this in the town you live in. Good Luck

posted April 07, 2012 20:45 (
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benco's Avatargold

Great resource. Thanks Andrew.

posted April 06, 2012 20:38 (
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cactusandy's Avatargold

SCORE is a great resource if you get connected to someone who ‘knows their stuff’. I have talked to some people who were great and others that were not so great. Perhaps you could have someone with SCORE help you put together a business plan. To really get accurate/solid figures for your business plan you may want to start doing some looking at retail space. There is a huge difference in start up costs if you are taking over an existing space (that you could use alot of whats already in there for your place) or if you are getting in as the first tenant. TI funds are also typically available from the landlord, and everything is negotiable (ask for TI $, free rent, etc…)

Try http://www.azcommerce.com/services/small-busine... for more resources.

posted April 06, 2012 20:31 (
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benco's Avatargold

Here in Tucson there are a ton of coffee shops. They all seem to do very well. For those of you that don’t know, this is a college town. So, there’s tons of students here who are attracted to coffee shops. Many times, they get full and there is no place to sit. Also, in my specific neighborhood, many people wish there was a coffee shop and there isn’t one.

I did as little reading about startup costs for a coffee shop. It seems on the low end, the cost will be about $75-100k just to start. In that case, my concept will probably cost about $300-500k to start, because it will have a lot of technology integrated into it.

Has anyone ever heard of the organization SCORE? I think I will meet with a couple of guys from this organization to bounce my idea off of them. They are very helpful.

posted April 06, 2012 19:36 (
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reed.thegrinch's Avatar

He owns the buisness Chap.

posted April 06, 2012 08:33 (
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reed.thegrinch's Avatar

Pasquale, I would give coffee to Reese Witherspoon for free LOL!

posted April 06, 2012 08:19 (
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bluekarma's Avatar

Yea, I know nothing about coffee. Just make coffee for people like Harrison Ford, Dustin Hoffman, Ewen MCgregor, Julia Ormond, heads of Fox Studio, Dexter, House, Greys Anatomy, Reese Witherspoon, Brad Pitt, Tom Cruise..etc, etc..

but ask these others, they know better.

posted April 05, 2012 09:46 (
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benco's Avatargold

So, I wanted to add a little more about this. It’s not the “coffee” shop itself that I’m crazy about. I’m not much of a coffee drinker myself. But, it’s the concept as a whole, what I want to combine with it, that makes it appealing to me. Ideally, I should partner with someone who is interested in opening a coffee shop. And we can both work on our parts of it together.

posted April 04, 2012 20:09 (
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benco's Avatargold

Wow. Thanks everyone for the wonderful feedback. There really is lots to think about. I have to do a lot more research and find out about all of the startup costs. I hate that I don’t want to give away too many details, but my concept is something that I think can be HUGE. Of course everyone thinks that about their own ideas. It doesn’t hurt to dream. But to materialize it, would be an amazing feat.

posted April 04, 2012 18:30 (
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cactusandy's Avatargold

Ben,
IMO, having worked in restaurants for many years, is a very tough competetive field. Its very hard for the ‘small’ guy to compete with the ‘big’ guys in terms of product costs, etc…although in many areas folks tend be be very supportive of the independent guy. This hold true, in my experiences, in towns with large colleges. If I recall correctly you are my neighbor to the south in Tuscon, so that demographic may be very responsive to a small independent coffee shop. To be successful in a new business, I believe the following is critical:
-Be prepared to eat, breath, drink, sleep your business 24/7
-Know your opening and operating costs. Lit up signage alone may cost you $6,000 – $8,000. Consider electrical deposits, Insurance costs, payroll, taxes, bank and credit card fees, phone/internet, food costs, repair costs, gas, water…
-Control your fixed costs -look for a location that you would need to do minimum TI to convert it to how you want it (often landlords will give you a certain $ amount for the tenant improvements) Also be prepared to negotiate with the landlord! If you are looking at a spot that used to be a coffee, try to figure out why they didn’t make it.
-Control product waste, which can be very difficult at first
-Be involved in the community
-Loyalty programs and of course be all over Social Media!
-Assume you will make no money the first 6+ months, so have funds to live on
-Don’t assume “If you build, it they will come!”
-Differentiate your self from the other 20 coffee shops in the area (like you said, perhaps have rentable meeting rooms, or have certain activities that make you different – open mic night, etc., be the meeting place for various clubs and groups, offer clown school, – just be unique!) Look at your clientele and offer services that may need – so if you are by a college town, have a section selling used books, or offer computer upgrades, etc…..Of course check local zoning and your lease for what you are allowed to sell.
Also, keep in mind that everything you sign (lease, loans, etc…) will require you to attach a personal guarantee to it.

My wife and I had our own business for 6+ years, and the ‘dream’ of business ownership can quickly turn into a ‘nightmare’. , Make sure you do your homework and as Betsy suggested, get a job in a coffee shop and “try before you buy”. Laura suggested a business plan which is critcal. You would be amazed by the information available on most city website (traffic counts at every major intersection, demographics, disposable income, avg. ages….) Talk to other coffee shop owners (chances are they are there working and making coffee very often). In my community there were several small independent coffee shops and over the last 2 years they have all closed – but we do have 3 starbucks and another independent just re-opened under a new name.

Just trying to give you my honest opinion…got a ton more info (if you are interested) just PM me!

posted April 04, 2012 17:22 (
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dlovley's Avatargold

One thought for you, I’m no coffee shop expert. Conferences have decreased a lot since the financial troubles began. Conference calls are the new norm in my experience. Every company uses the old conference thing as a nice area for cuts. Now if we see a boom in a couple years, maybe then would be a better time. I used to go to conferences every year in Chicago and Dallas and so forth, now thats all gone and I get an email for a mandatory conference call with time and date.

posted April 04, 2012 15:58 (
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bluekarma's Avatar

I actually own a Mobile Espresso truck here in Los Angeles. Yea, it’s a tough business to get started in. A lot of roadblocks to success exist in the form of Health Dept regualtions, permits, insurance, commisarry and that is before you even start looking for customers! I have been at it for 6 years now. Yea, profit margin is good per cup, both regualr and espreso drinks. I also make smoothies and frappes. The overhead is less for sure. One think you have to do, in a mobile business, is be consistent. You can’t have a person depend on you to be there and then not show up, especially when you are talking coffee! I do only planned events like Farmers markets and Commerical and TV/Movie work.
Owning a shop probably in this day and age, with McD’s, Starbucks on every corner is tough. That is why I went mobile and it has been fairly good for me.

posted April 04, 2012 15:36 (
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betsykaufman's Avatarg8_badge

I think the first step is to get a full time job in a similar biz and work around the clock learning anything and everything you can. Make mistakes and learn on someone else’s dime—-not your own.

posted April 04, 2012 13:44 (
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laura1003's Avatar

I like business plan pro, its a guided way to write ur plan and easy to use :-)

posted April 04, 2012 13:39 (
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benco's Avatargold

I don’t have experience starting or running a business. So, I know this would be a huge challenege for me. I know a lot of you are advising against it. But, I think I’m onto something. You will all love the name I want to use for it. Hmm… I better start putting together a business plan.

posted April 04, 2012 13:27 (
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reed.thegrinch's Avatar

Tough market IMO McD’s is pretty decent coffee cheap and for the high end there seems to be a Bucks on every corner…jus sayen.

posted April 04, 2012 12:52 (
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laura1003's Avatar

Even though the market is saturated, no matter what it is, if its unique enough you can do it. Coffee has a pretty good return if ur paying $.50 a cup and selling it for 3.50. I remeber watching a show about a guy that started a coffee shop in washington state and was laughed at until he opened up and had a full glass service window and girls in bikinis serving the coffee, I think he opened up 2 or 3 more shops after that and still can’t keep up with the demand ;-)

posted April 04, 2012 11:57 (
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benco's Avatargold

It won’t be just coffee. I had an idea this morning for an awesome kind of coffee shop. It will be very “interactive” and there will be certain unique things about it, but I don’t want to give away too many details just yet. It may also include a rentable conference room or space for co-working.

posted April 04, 2012 11:10 (
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funfam4's Avatargold

Caffino’s (now franchising!) makes excellent product and does great drive-through biz! I remember when they first came to Napa, CA..where I used to live…even when (multiple) Starbucks came to town afterwards..they still kept a pretty constant/regular line of traffic at their site (in the middle of a parking lot/strip-mall/Blockbuster’s)!

http://caffino.com/index.php?option=com_frontpa...

But agree with Jane that location is the biggest factor, even with Starbucks!! (Hmm…now where did I just read about a new “mobile” Starbucks’ shop??? I think on Twitter!)

posted April 04, 2012 10:39 (
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goodolbakeshop's Avatarname search

Fuggedaboudit. Biskit Knows. Nuff said.

posted April 04, 2012 10:03 (
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toni's Avatarg8_badge

Don’t do it Ben. Just think how many cups of coffee you would have to sell just to pay the rent every month. Too much competition.

posted April 04, 2012 09:59 (
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imajane's Avatarname search

My niece is part owner of a local coffee shop. They are struggling against the Starbucks a mile south inside the Krogers store, plus McD’s is about a half mile west and they have a drive-thru window. Very tough. They started off trying to sell sandwiches and other “lunch” items, but not many customers came for that. Great Boston Stoker coffee, but the location is the key, I imagine.

posted April 04, 2012 09:51 (
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