What's the Secret to a Successful Coffee Shop_ - Forbes

72113 Whats The Secret To A Successful Coffee Shop - Forbes

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T EC H | 12202012 1259PM | 41388 views

Whats The Secret To ASuccessful Coffee Shop

Peter

Baskerville

Founder of 20

Cafes and Food

Businesses

Having detailed an answer to Why do most cafeacute startups

fail I guess it is only fair that I also provide an answer to the

question about why some succeed

There is no one secret to a successful coffee shop in fact

most secrets in business boil down to either hard work

extensive experience or luck or a combination of all three I

have taken success for this post to mean financially

sustainable with an appropriate ROI for the owner which

means not necessarily giving the customer everything they

would wish for

I have established and managed more than fifteen coffee shops with varying

degrees of success While there may be hundreds of reasons why a coffee

shop might succeed (including luck) here are the ones that I pursued in

Australia that lead to successful outcomes for me

1 Consistently serving the finest espresso ndash It is rare in business todiscover a product where consistently offering 100 quality is the bestcommercial decision you can make In fact I am the greatest advocate for the 80

is perfect model But espresso coffee is one of those rare products whereconsistent 100 quality matters Customers will walk past ten other competitorsto get the best espresso which is why this factor alone means you donrsquot need thehighly visible most expensive location So buy the best espresso coffee machine(34 group Italian made with e61 groupheads and set to the right pump and

temperature levels) install it with a water purifier and demineralizer use a conicalgrinder and only buy top quality Arabica or Arabica 90Robusta 10 freshlyroasted beans and make sure every cup is made by a fully trained barista who iscontinually seeking the lsquogod shotrsquo

2 Ergonomics is vital ndash Make sure the coffee workstation and layout is suchthat the barista hardly moves their feet in performing all their coffee makingduties and they are not competing for the space with other staff members Highvolume coffee sales are the foundation stone of every coffee shop so make sure

this workstation is perfectly laid out with easy access to underneath bins beanstorage and bar fridge milk having the right height benchtop with easy access tocups grinder accessories and reachable overhead storage of supplies The bestsetups also have a small inbuilt sink to allow for quick and easy ongoing cleaning

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Also place the cash register on the front counter in close proximity to the baristarsquosworkstation This allows the barista to hear the customer orders and get a headstart on making them in the busy times while allowing the barista to work alone inan efficient way in the very slow times

3 Use loyalty cards ndash I resisted using these for a long time hellip but they really dowork Make sure it is a quality card that will last the wear and tear and look goodin a customerrsquos wallet Nothing better than seeing a new customerrsquos face light up

when you give them a buy seven get the eighth one free loyalty card but tick offsix of them so that on their very next purchase they get a free one Cheapestcustomer acquisition ever

4 Promote multiple sales ndash A coffee shop will never make enough money topay the bills from coffee sales alone Coffee may be the prime motivator forcustomers coming to the business but they must leave with multiple sales if youare going to be successful As a target coffee should be no more than 40 of yourweekly sales and two item sales per customer transaction means you are getting it

about right So make sure the traditional coffee accompaniments (muffins cookiescakes) are close by at the point of sale and the coffee shop offers cold food colddrinks and hot food to ensure the best chance of multiple sales

5 Limit the assortment ndash Many newbies in the coffee shop game think thatwide assortments and extensive product offers are a key competitive advantageThey forget that the customer is simply hungry or thirsty or both and that a widechoice for most people creates anguish So cover the necessary categories but withlimited and strategic offers (eg three flavors are enough three sizes are enough

three types of fooddrink are enough) Every item you add to the assortmentcreates many multiples of management effort (costs) and mostly without addinganything to the revenue streams or customer experience

6 Merchandise your margins ndash Price according to perceived customer value

not according to accounting determined markups For some well known items you

will need to be at (coffee) or even below market price (coke can) and this lossshould be made up with high margins on other items that are exclusive to you or

in the lsquodonrsquot-care and addictiversquo mindset of your customers So donrsquot add a blanketmarkup to your entire assortment but price line by line according to customer

expectations and what the market will bear

7 Get your beachhead strategies right ndash Getting traction in a competitivemarketplace like coffee shops is vital and you will need to have a clear

understanding of how to get customers to initially give you a go and a plan for

keeping them returning and referring you to their friends This is a whole othertopic that I have now written about here hellip What are some Biz Dev best practices

for startups

8 Counter service ndash Counter service is the cheapest most efficient and effectiveservice system for a coffee shop and it is now fully accepted by customers thanks

to the global success of McDonalds Counter service is hassle free for both you andyour customer and it significantly reduces your wages bill So get the customers to

order and pay upfront give them a number on a stand with their drinks and

deliver the food or better still give them a buzzer that calls them up to the counterwhen the food is ready Counter service means that you can handle the peak

demands that occur in coffee shops at breakfast and lunch and it is a lot lessstressful on everyone ensuring the friendly banter can remain an important part

of your offer

9 Pre-make as much as possible ndash Custom-made assortments assume thatthe customers know precisely what they want They donrsquot Customers see you as

the expert and are hoping that you will suggest to them what combination of

fooddrinks they should be trying In a coffee shop context I found it best to pre-make the food and leave the custom making to the coffee Custom food is also a

high cost option for you because you canrsquot get the economies of scale making-to-order and it limits your turnover in those peak periods where you should be busy

pumping out the sales as quickly as possible not spending the time making customorders

10 Understand what you are really selling ndash Too many businesses

including coffee shop owners donrsquot fully understand the need they are really

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Jacob Jaber CEO

of Philz Coffee

satisfying for their customers and so they often concentrate on the wrong parts oftheir offer Customers frequent a coffee shop for many more reasons than just

hunger and thirst There is the escape from a stressful office the chance tomaintain or grow a relationship a place to get away to do some reflective work a

chance to engage with familiar coffee shop staff at a particularly lonely time or as

a place to do business and reach an agreement Understanding the needs you arereally catering to will help you better construct your offer and make decisions that

keep your customers returning and so maintaining the coffee shoprsquos success

11 Target takeaways ndash I know all your friends will tell you to get comfortablelounges free Wi-Fi table service and lots of in-house entertainment hellip but

customers sitting on one cup of coffee for hours enjoying all these benefits wonrsquotpay your rent My most financially successful coffee shops had a limited number of

not-so-comfortable bench amp bar stools to make the coffee shop look lived in and

loved but I concentrated on building the takeaway business Takeaway customerspay the same price as the sit-down customer but without any of the occupancy

costs and you will serve ten of them by the time your sit down customer hasfinished sipping on their first cup of coffee as they enjoy a chat with their friends

on Facebook using your free Wi-Fi

12 Serve on the front line - Coffee shops like restaurants are much more apeopleservice business than they are a goodstransactional one While a

goodstransactional business can still succeed with a non-present owner a coffee

shop needs the ownerrsquos care attention and engagement Customers expect it andstaff are far more enlivened when the owner in on hand taking orders or making

coffee or is generally hovering in active care of the business

Probably worth mentioning why I havenrsquot included high traffic location on

the list The reason is that it doesnrsquot necessarily work for coffee Sure you

have to be located in the area where there are a sufficient number of people

but you donrsquot need the high traffic location in that area For a start it will carry

the most expensive rent secondly you will be competing for that space with A1

tenants (Banks telcos fashion houses franchise chains) making it near

impossible to get as a stand alone coffee shop business anyway and thirdly

high traffic dose not always translate into high turnover for coffee I made that

mistake once failing to realize that coffee is a destination rather than an

impulse purchase and too much traffic can mean that people are more

focused on getting somewhere else rather than stopping to enjoy your offer

Believe me my 1 will overcome the need to get that high traffic location and

the lower rent will make your coffee shop far more financially sustainable and

successful

This is not an exhaustive list but it will give you some ideas on what you

should be considering if you want to build a successful coffee shop See also

What is it like to ownrun a coffee shop which provides further insights into

the coffee shop business

hellip

1 Passionate people who start it because they are passionate

and talented with coffee not because they want to start a

business

2 Product that tastes better than any other nearby

3 Donrsquot act like yoursquore in the coffee business When yoursquore in

Retail yoursquore in the people business

A lot of the other things usually take care of themselves

This question originally appeared on Quora More questions on Small

Businesses



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Also place the cash register on the front counter in close proximity to the baristarsquosworkstation This allows the barista to hear the customer orders and get a headstart on making them in the busy times while allowing the barista to work alone inan efficient way in the very slow times

3 Use loyalty cards ndash I resisted using these for a long time hellip but they really dowork Make sure it is a quality card that will last the wear and tear and look goodin a customerrsquos wallet Nothing better than seeing a new customerrsquos face light up

when you give them a buy seven get the eighth one free loyalty card but tick offsix of them so that on their very next purchase they get a free one Cheapestcustomer acquisition ever

4 Promote multiple sales ndash A coffee shop will never make enough money topay the bills from coffee sales alone Coffee may be the prime motivator forcustomers coming to the business but they must leave with multiple sales if youare going to be successful As a target coffee should be no more than 40 of yourweekly sales and two item sales per customer transaction means you are getting it

about right So make sure the traditional coffee accompaniments (muffins cookiescakes) are close by at the point of sale and the coffee shop offers cold food colddrinks and hot food to ensure the best chance of multiple sales

5 Limit the assortment ndash Many newbies in the coffee shop game think thatwide assortments and extensive product offers are a key competitive advantageThey forget that the customer is simply hungry or thirsty or both and that a widechoice for most people creates anguish So cover the necessary categories but withlimited and strategic offers (eg three flavors are enough three sizes are enough

three types of fooddrink are enough) Every item you add to the assortmentcreates many multiples of management effort (costs) and mostly without addinganything to the revenue streams or customer experience

6 Merchandise your margins ndash Price according to perceived customer value

not according to accounting determined markups For some well known items you

will need to be at (coffee) or even below market price (coke can) and this lossshould be made up with high margins on other items that are exclusive to you or

in the lsquodonrsquot-care and addictiversquo mindset of your customers So donrsquot add a blanketmarkup to your entire assortment but price line by line according to customer

expectations and what the market will bear

7 Get your beachhead strategies right ndash Getting traction in a competitivemarketplace like coffee shops is vital and you will need to have a clear

understanding of how to get customers to initially give you a go and a plan for

keeping them returning and referring you to their friends This is a whole othertopic that I have now written about here hellip What are some Biz Dev best practices

for startups

8 Counter service ndash Counter service is the cheapest most efficient and effectiveservice system for a coffee shop and it is now fully accepted by customers thanks

to the global success of McDonalds Counter service is hassle free for both you andyour customer and it significantly reduces your wages bill So get the customers to

order and pay upfront give them a number on a stand with their drinks and

deliver the food or better still give them a buzzer that calls them up to the counterwhen the food is ready Counter service means that you can handle the peak

demands that occur in coffee shops at breakfast and lunch and it is a lot lessstressful on everyone ensuring the friendly banter can remain an important part

of your offer

9 Pre-make as much as possible ndash Custom-made assortments assume thatthe customers know precisely what they want They donrsquot Customers see you as

the expert and are hoping that you will suggest to them what combination of

fooddrinks they should be trying In a coffee shop context I found it best to pre-make the food and leave the custom making to the coffee Custom food is also a

high cost option for you because you canrsquot get the economies of scale making-to-order and it limits your turnover in those peak periods where you should be busy

pumping out the sales as quickly as possible not spending the time making customorders

10 Understand what you are really selling ndash Too many businesses

including coffee shop owners donrsquot fully understand the need they are really

Q U O RA rsquo S PO PU L A R PO S T S

What Do Americans Think Of ObamasPerformance As A President 268872 views

Why Are Lawy ers So Expensive Even With TheExcess Supply Of Lawy ers 82433 views

Where Does Marine Force Recon Fit In TheWorld Of Special Operations 79047 views

How Close Are We To A Real Iron Man Suit61498 views

How Much Did It Cost Y ouTube To StreamGangnam Sty le 57406 views

MO RE F RO M Q U O RA

The Coffee Connection Ltdwwwthecoffeeconnectionca

Albertas Premier Coffee SupplierConsumer Choice Winner 2013

New Business OpportunitywwweniginnetBusinessOpportunity

Run Your Own Energy Saving BusinessComplete Start-Up Pack from $14k

Need A Gas Linewwwatlheatingcom

Free In Home Quotes on all above andunderground lines



Jacob Jaber CEO

of Philz Coffee





























successful





hellip



business






Businesses



TweetTweet 32

Top Coffee Brands

New Business Ideas

Best Coffee Makers



Best Fruit Juices



See Also

A DV ERTISER V IDEO





From Around the Web

How New iPads are

Selling for Under

$40

How to Exercise

Y our Brain to Make

It Strong

How to Speed Up

Y our PC - Tricks

Manufacturers Hate

How Penny Stocks

Create Millionaires

Every Day

Tricks Car

Insurance Agents

Dont Want Y ou to

Know

How Cruise Lines

Fill All Those

Unsold Cruise

Cabins

New Tech Lets Y ou

Speak a Language in

10 Day s

How to Add $1000

to Y our Social

Security Checks

286 124 35 31k 0




Inside Forbes

Enter Your Comment




is called out


+ expand 3 comments



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Privacy Statement

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RealClear Sports

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Techonomy

Publications

Free Trial Issue

Subscriber Services

Buy Back Issues

Data Partners


Thomson Reuters

AdChoices



2012 and June 2013

see photos




see photos





Jacob Jaber CEO

of Philz Coffee





























successful





hellip



business






Businesses



TweetTweet 32

Top Coffee Brands

New Business Ideas

Best Coffee Makers



Best Fruit Juices



See Also

A DV ERTISER V IDEO





From Around the Web

How New iPads are

Selling for Under

$40

How to Exercise

Y our Brain to Make

It Strong

How to Speed Up

Y our PC - Tricks

Manufacturers Hate

How Penny Stocks

Create Millionaires

Every Day

Tricks Car

Insurance Agents

Dont Want Y ou to

Know

How Cruise Lines

Fill All Those

Unsold Cruise

Cabins

New Tech Lets Y ou

Speak a Language in

10 Day s

How to Add $1000

to Y our Social

Security Checks

286 124 35 31k 0




Inside Forbes

Enter Your Comment




is called out


+ expand 3 comments



Channels

Business

Investing

Technology

Entrepreneurs

OpEd

Leadership

Lifestyle

Lists

Company Info

Forbes Careers





Privacy Statement

Contact Us

Sitemap

Help

Affiliate Sites

Forbes China

Forbes India

Forbes Israel

Forbes Mexico

Forbes Middle East

Forbes Poland

Forbes Romania

Forbes Russia

Forbes Ukraine

RealClear Politics

RealClear Markets

RealClear World

RealClear Sports

Forbes Conferences







Techonomy

Publications

Free Trial Issue

Subscriber Services

Buy Back Issues

Data Partners


Thomson Reuters

AdChoices



2012 and June 2013

see photos




see photos





TweetTweet 32

Top Coffee Brands

New Business Ideas

Best Coffee Makers



Best Fruit Juices



See Also

A DV ERTISER V IDEO





From Around the Web

How New iPads are

Selling for Under

$40

How to Exercise

Y our Brain to Make

It Strong

How to Speed Up

Y our PC - Tricks

Manufacturers Hate

How Penny Stocks

Create Millionaires

Every Day

Tricks Car

Insurance Agents

Dont Want Y ou to

Know

How Cruise Lines

Fill All Those

Unsold Cruise

Cabins

New Tech Lets Y ou

Speak a Language in

10 Day s

How to Add $1000

to Y our Social

Security Checks

286 124 35 31k 0




Inside Forbes

Enter Your Comment




is called out


+ expand 3 comments



Channels

Business

Investing

Technology

Entrepreneurs

OpEd

Leadership

Lifestyle

Lists

Company Info

Forbes Careers





Privacy Statement

Contact Us

Sitemap

Help

Affiliate Sites

Forbes China

Forbes India

Forbes Israel

Forbes Mexico

Forbes Middle East

Forbes Poland

Forbes Romania

Forbes Russia

Forbes Ukraine

RealClear Politics

RealClear Markets

RealClear World

RealClear Sports

Forbes Conferences







Techonomy

Publications

Free Trial Issue

Subscriber Services

Buy Back Issues

Data Partners


Thomson Reuters

AdChoices



2012 and June 2013

see photos




see photos





Inside Forbes

Enter Your Comment




is called out


+ expand 3 comments



Channels

Business

Investing

Technology

Entrepreneurs

OpEd

Leadership

Lifestyle

Lists

Company Info

Forbes Careers





Privacy Statement

Contact Us

Sitemap

Help

Affiliate Sites

Forbes China

Forbes India

Forbes Israel

Forbes Mexico

Forbes Middle East

Forbes Poland

Forbes Romania

Forbes Russia

Forbes Ukraine

RealClear Politics

RealClear Markets

RealClear World

RealClear Sports

Forbes Conferences







Techonomy

Publications

Free Trial Issue

Subscriber Services

Buy Back Issues

Data Partners


Thomson Reuters

AdChoices



2012 and June 2013

see photos




see photos





Channels

Business

Investing

Technology

Entrepreneurs

OpEd

Leadership

Lifestyle

Lists

Company Info

Forbes Careers





Privacy Statement

Contact Us

Sitemap

Help

Affiliate Sites

Forbes China

Forbes India

Forbes Israel

Forbes Mexico

Forbes Middle East

Forbes Poland

Forbes Romania

Forbes Russia

Forbes Ukraine

RealClear Politics

RealClear Markets

RealClear World

RealClear Sports

Forbes Conferences







Techonomy

Publications

Free Trial Issue

Subscriber Services

Buy Back Issues

Data Partners


Thomson Reuters

AdChoices



2012 and June 2013

see photos




see photos



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What's the Secret to a Successful Coffee Shop_ - Forbes