If you are in a hurry, and want to know right now HOW to take
those steps,
please go directly to my
"Espresso
Business Success Program"
- Book &
Video:
If you are really serious about
this and want to take the first positive step towards the successful
opening of your business, and want to save time and money, you should
consider this program. It contains "real world", practical
information on what to do step by step, from choosing the right
location, to a business plan, to what works in this coffee/espresso by
the cup business and what doesn't, how to design your shop for speed of
service, what equipment you will need, a menu that could make a huge
difference in your bottom line, a list with all the products that you
will need to open, to how much money you will need to open your
business, etc. etc.
Note: This site was updated June 2002. It contains about 30 pages of
information that will help you to understand "How to Make Real
Money with Espresso".
- Opportunities in the Retail Coffee Business. Is there room
for me? How much can I make?
- Mistakes that people make and How to Prevent Them. These
mistakes may cost you thousands of dollars and may endanger the very
survival of your business.
- Opening a Successful Coffee Business: How to Do it Right!
- How I Can Help.
OPPORTUNITIES IN THE COFFEE BUSINESS
The specialty coffee/espresso by the cup business is growing at a
tremendous rate, but only 14% of Americans drink some kind of specialty
coffee at the present time, and that includes "gourmet" coffee
purchased at the supermarket. Though some areas of the West Coast seem
to be saturated with coffee shops and drive-thrus, the rest of the
country is wide open and offers great opportunities.
The "retail
specialty coffee by the cup business" is more rewarding,
pleasing, and requires less start-up capital than most fast food
concepts. And it can be a lot of fun! Though it may seem simple to an
inexperienced person - after all, what's so complicated when you are
dealing mainly with one product, coffee - it is a complex
business once you begin to understand it.
For a shop to generate
enough revenues from one product (coffee), selling at an average price
of $2.00, the business has to meet certain requirements in location,
work area design, appearance, marketing and product taste so as to
attract enough customers and bring them back day after day.
As an individual with
limited resources and clueless about this business, but ready and
willing to join the coffee race, could
you open a coffee shop or a drive-thru and become successful?
After all, you have never seen the back of an espresso machine or worked
in any kind of a food operation. How would you know what to do or where
to start? Could you make sure that whatever money you invested wouldn't
be wasted? And could you compete against the likes of Bigbuck$?
Of course you could!
You, as the owner-operator
of your own business could do much better serving your customers than a
chain or a franchise!
You could design your shop
for a more efficient operation, provide better and faster service,
prepare better tasting drinks, and take better care of your customers!
And you could do that for
half the cost of a franchise, without paying any franchise fees or
royalties!
There are hundreds of
independent successful coffee concept operators all over the country,
some of them right next to $$bucks, doing very well!
Most of the independents do
between $200,000 and $500,000 a year in sales. There are coffee houses
in some college towns that do over one million a year, leaving for the
owner around $250,000 in profits!
However, your sales and
profits will vary greatly depending on your location and on what
you mostly sell: Food, beans, brewed coffee, or espresso based
drinks.
Generally speaking, if
you know what you are doing, and assuming that you pay around $2500
in rent and your gross sales are $25,000 a month, you could put in your
pocket about $7000 a month, working yourself only a few hours a day. And
you probably could return the investment in your shop in a year or so,
provided that you have a decent location.
There are thousands of
communities across the country ready to offer people like you the
opportunity to make an excellent income with the right kind of a coffee
concept, without having to invest $300,000 in a franchise!
As an example, Starbucks invests $320,000 on the average
to open one of their shops. My
clients have invested from $63,000 - $220,000 to open their shops. You
would be surprised how many customers ask: "Is this a
franchise?". I help to open two shops every month on
the average.
Though some areas of the
Northwest seem to be saturated with coffee shops and drive-thrus,
the rest of the country is wide open and waiting for you!
The single most important factor for the success of a retail
coffee business is it's location.
There are still thousands of prospective good locations available all
over the country. However, good locations are not going to wait
forever! Will your shop be one of them?
Where are the best coffee shop opportunities for a small
entrepreneur, with a limited budget?
- College town locations. There are hundreds of small college
towns all over the country begging for a decent coffee house! The
best location, where your risk would be minimal, would be right on
the same block where the college bookstore is located. If you find
such a shop available for lease, run, don't walk, and lease it!
(Call me first). Recently I opened for a client a very successful
coffee house in Hillsdale, MI, next to a small college.
- Downtown business districts with high density walking
traffic.
- Older neighborhood business streets undergoing renovation.
Best locations would be on a corner, providing high visibility.
- Unattached small buildings on a high traffic road, with
easy access and visibility. Preferably on the morning commute side.
If you can add a drive-thru window, you could double your business.
- Corner shops in strip malls, with high traffic and easy
access. If you are in a large strip mall, somewhere in the middle,
with many rows of parking in front, you probably won't be visible
from the main road and do little business.
- Some of the best opportunities for existing business owners
in good locations is to add a cart or a small kiosk to the
business. There are carts/kiosks in antique shops, book stores,
music stores, beauty salons, etc. With a relatively small
investment, many of these businesses could add a substantial income
to their bottom line. Make sure that before you commit
yourself, you clear it with the Health Department in your community.
If you were planning to add espresso to your present business please
go here: add espresso.
There are many excellent locations across the country that could
greatly benefit by this concept. They may be existing food
operations, book stores, spas, and any location that is "highly
visible and easily accessible". Finally, there are many
oversized stores in good locations that are wasting valuable space
that could be turned into very profitable coffee shops. If you have
such a store, and are not sure if such a concept would work, why
don't you give me a call?
- Small strip mall or service station owners could greatly
benefit by the addition of a drive-thru
coffee stand to their parking lots.
PROCRASTINATING and MISTAKES
Many people would like to be in business for themselves. But when it
comes to put their money, time and effort into it, they drag their feet.
Wishful thinking alone never started a business for anyone.
For most people taking the
first step is the most difficult. I have encountered dozens of people
that were in a continuous state of "researching" this
business to death!
Are you?
They talked to numerous
equipment salespeople, tasted a great number coffees, envisioned the
decor of their shop to the smallest detail, attended industry
conventions, read books on the subject and visited a zillion coffee
shops. And the more they "researched," the more confused
they became! The truth is, they were scared of taking action and the
research gave them an excuse to postpone that first step.
Unfortunately, while they were "researching", other
people were acting, taking the best available locations in their
communities, not only for coffee shops but for other businesses.
However, once you stop
dreaming and start acting, secure your financing, find the right
location, and finally open for business, considering how much time,
money and emotional investment you have put into it, it would be a
terrible waste of money, time and a great loss of opportunity if you did
not know how to maximize the potential of your business, wouldn't it?
Maximizing the potential means getting back the money that you have
put into it, and start making a profit. In fourteen of my own sixteen
shops that I opened, I got my money back from eight months to eighteen
months.
For all you business novices, profit is what is left over
after you pay all of your operating expenses.
Making a profit in any business requires, first of all, understanding
of the business.
Unfortunately, many people jump into the coffee business with very
little understanding, turning what could have been a great opportunity
into a disappointment for themselves, their investors - and their
customers.
I assume that you don't want to be one of them.
While on consulting
assignments around the country, I have the opportunity to visit and
observe many coffee concepts. They range from "Ma & Pa"
small independent shops to large franchised chains. Here is what I have
observed and learned:
If
you start planning without the knowledge of what makes this business
"tick", it would be equivalent to buying an airplane without
knowing how to fly, and with only a short lesson by your salesman,
attempt to fly it by yourself.
You might be able to take off, but the
landing could be pretty rough!
Though no one can guarantee
your success, not even a $300,000 franchise, you can take steps
that will minimize your risks and maximize your chances to succeed.
Though the location
of a retail coffee business is the single most important element
for it's success - or lack of it - there are some other reasons why
coffee shops, drive-thrus or additions of espresso to some other
existing business may have slow espresso sales:
1. Lack of an effective
marketing strategy: If you do not know how to attract customers when
you first open and how to sell them espresso based drinks instead of
brewed coffee, your revenues may be greatly reduced; it may take you
longer to return your investment and it will be harder to build a great
number of loyal daily customers, which is the base of any successful
coffee by the cup business.
2. Improper store design
and equipment layout: If your work area is not designed for speed
and efficiency of service, it may take you much longer to prepare the
drinks, the customers will be inconvenienced by waiting longer than
needed, you will sell less in a given time period, tire your employees
sooner and irritate your customers. Unfortunately, many espresso work
areas around the country are designed more as monuments to the
architects' ego than to the customers convenience and speed of service!
3. Poor taste of the
product: If your customers do not like the taste of your espresso
based drinks because of faulty preparation techniques (not
equipment or coffee), they either won't order it again or won't come
back. Unfortunately, most of the espresso served in this country has no
relation to the real thing, and the only way it can be consumed is by
drowning its thin, overheated, bitter, flavorless, overpriced taste with
some fancy flavored syrup. By the way, the taste of an espresso based
drink has more to do with the way it is prepared than with the coffee or
equipment being used. I had some tasteless cappuccinos prepared with
$11.00 a pound coffee on a $10,000 machine, while some excellent ones
made from $5.00 a pound on a $3000 machine.
4. Wrong kind of coffee
blend or roast used for the US market: The best of beans used for
excellent espresso in Italy may not be proper to prepare the (mostly)
milk based espresso drinks consumed in the US.
5. Lack of understanding
of espresso extraction process: If you do not understand this
process, and how it influences the taste of the espresso based drinks,
it will be very difficult for you to prepare the best tasting product,
regardless of the coffee you are using. Unfortunately, many coffee bar
operators and so-called "baristas" have no clue! This reduces
customers satisfaction, frequency of return and the amount of money in
your pocket!
6. Not having a true
standard of product taste comparison: Most of the owners, managers
and employees of coffee bars/houses/carts in this country have never
tasted a properly prepared "cappuccino"! You would be amazed
to know what a slight variation in grind, extraction time and proper
combination of steamed milk could do to the taste of a cappuccino or
caffe latte! And to your bottom line!
7. Lack of focus on
what your main product should be: If you try to please everyone with an
extensive menu, you may end up pleasing no one! You will be much better
off if you specialize on fewer menu items and preparing them correctly.
8. Not being a daily
espresso based drink consumer yourself: How can you sell with
enthusiasm and understand what you serve to your customers if you do not
like the product yourself? Many times, when I ask the owners or
operators if they drink what they serve to their customers, they tell me
they only enjoy "that blended frozen sweet stuff".
Here is a perfect
example of a missed opportunity:
Some time ago, while on a
consulting trip to a large Midwestern city, I came across a coffee
shop with a big neon "ESPRESSO" sign on the window. As
it was time for my second "latte fix" of the day, I decided to
give them a try.
The shop was in a very busy
downtown business street, with thousands of pedestrians walking by.
Inside, the smell of fresh grinding coffee filled the elaborately
decorated shop. A brass covered espresso machine was sitting on the back
counter under a wall menu that seemed to list every flavored coffee and
espresso drink in the universe.
I ordered a caffe latte and
watched with fascination as the "barista" proceeded to murder
my greatly anticipated drink by doing everything wrong:
- The machine was
installed improperly on the back of the counter with no room
for the operator to prepare the drinks efficiently;
- The coffee beans in the
grinder seemed like pieces of tar, dark and burned;
- The operator did not put
enough coffee in the filter, the beans were too coarsely ground, he
did not "tamp" the coffee forcefully enough -
consequently, producing some under-brewed bitter-brown hot water,
instead of a creamy espresso "shot;"
- He overheated the milk,
almost to the boiling point, making it too thin;
- The menu was too
confusing, too long and without any explanations;
- The terrible
"latte" was overpriced. ($2.50 for 12 oz.);
- It took about three
minutes to prepare the drink, four times as long as it would have
taken a well trained operator with a proper setup;
As I sat there trying to sip
my overheated, tasteless, overpriced latte, I noticed that most of the
customers were buying the flavored brewed coffees that were displayed on
the front counter for self service. I wondered how many espresso based
drinks did they sell, and if they had any repeat customers? By the looks
of it, and the taste of my latte, I would say not too many! This also
may hurt the coffee supplier's reputation, as the customer tends to
blame the coffee if he or she does not like the taste of the drink.
This was not an isolated
incident. Unfortunately, that is exactly what happens in many
coffee shops, espresso bars and other establishments serving espresso
all over the country. In my travels, while consulting, I make it a point
to visit as many diverse coffee concepts as I can. They vary from large
book/coffee chains to one person cart operations. At times I get so
frustrated by the poor tasting drinks, slow service and a complete lack
of an espresso marketing strategy that I feel like screaming at the top
of my voice:
"What is the matter with you, don't you want to make any
money?!"
This lack of an effective
espresso marketing program, slow service and poor tasting drinks not
only contributes to lower revenues, but it may also endanger the very
existence of the business should a more expert operator open nearby.
It is distressing to see a
business where the owner has invested so much money and time wasting
such a golden opportunity!
Many of you may be
apprehensive to invest your hard earned money in any kind of business.
This feeling is completely natural, as it serves to protect you from the
unknown. The apprehension comes from not having the necessary
information to formulate the right decisions.
Thirty years ago, when I opened
my first coffee shop, I was also very anxious. Unlike
today, there was no precedent to this business, and no one to teach me
anything about it! It took me years to get my act together and
begin to understand all the factors that contribute to it's success.
By the time you open your
coffee business you will have invested from $15,000 to $300,000,
depending on the concept and location. Most of your money will go into
remodeling your shop, into equipment, fixtures, furniture etc. Don't
jump into this business before you get all the information that will
prevent you from making major mistakes
and risking that investment.
I have positioned all my shops, and now my client's shops, so as to
generate at least 80% of gross sales from espresso based drinks and 20%
from the rest, including brewed coffee and pastries. Why? Because
that is where the real money is in this business, and not in brewed
coffee or 99 varieties of beans!
Additionally, what I have
learned from my own thirty years of experience, and after observing many
failing or poor operations all over the country, is that most of the
failures could have been prevented. The best way in preventing a
business failure is not to start the business in the first place unless
you have your act together! And most of the failed operations
didn't.
I am a firm believer in properly prepared and marketed
espresso based drinks. Though thousands of coffee and restaurant
concepts in this country serve espresso, very few of them understand
how to market them effectively and prepare them properly for better
taste.
One of the main reasons why
many coffee shops fail or under- perform, even in some excellent
locations, is that the owners do not understand, or failed to implement,
an effective espresso focused marketing program.