I'd like to open this talk and it's topic up for discussion! New ideas, criticisms and arguments are more than welcome.
Thanks for your contributions one and all.
If we drop coffee into a larger food and drink category you'll find that very few of them are actually profitable and it would be unfair to suggest that other F&D businesses are doing better than we are.
Im not sure if anyone has managed to build a sustainable coffee business on the high price per cup model without having one of the following criteria in place, or perhaps even a few;
i) an existing successful coffee bar elsewhere to draw out the new bar's burn rate
ii) access to cheaper coffee, e.g. as a roaster/wholesaler
iii) an existing skillset and inventory to facilitate such an approach
iv) attached to a 'traditional' coffee bar i.e. a brew bar
v) pop-up approach, not designed to stay longer than a few months
vi) A pot of gold
There are two constants that are applicable across the board in all food and drink businesses: customer service, and customer satisfaction. If I the customer don't feel I was well-served, I won't be satisfied. If I don't feel that what I ordered measured up to the standard which I was anticipating, I won't be satisfied. If I enjoy the product, but feel uncomfortable in the environment, my satisfaction will be reduced. We won't be able to meet all the needs of all the customers, so we have to focus on whom we DO want to serve. So I find myself asking the questions, "What is good service? What is great service? What separates the two?
Who's retail experience is it? Is it the barista who believes they know what's best for customers, even down to whether they should use sugar, or is it the customer? If it's the customer then all are different, entering a shop with their own requirements/experience to colour perspectives of 'service'. Hopefully there is a meeting of the baristas' desire to serve (& serve the best) and wants/needs of individual customers. A key aspect of service is empathy, reading body language & interpreting customer priorities. Another may be an ability to prepare a drink quickly but still of high quality. Another is being able to multi-task with a line of busy people. For many shops success may be less about 'the coffee', more about the wider experience!
Regarding customer service, staff turnover seems to be an issue. For some, being a barista is not a vocation but a side gig while they pursue something else. But can being a barista for hire offer a long-term sustainable career? Or can that only come about by being a proprietor, trainer, etc, with the attendant risks of being self-employed?
Very true ... myself and partner can probably work twice as fast at consistently higher quality than any of our staff because we've put in way more hours. In addition, at the mo' at least, all we can do to mitigate risk of staff leaving is offer more people fewer hours, effectively a buffer, than offering just one or two people more hours. Of course, that means we can only attract 'casual' workers. We're considering different models of ownership to offer a real long term stake to staff. We're also looking at a spin off that could use 'social investment' and 'crowd-funding' to provide loans to launch young people into self-employment via their own coffee carts.
In Portugal, the coffee business is quite different from what has been described. It is mostly all about the product.
We drink espresso and every now and then a caffe latte or similar. The coffee must be strong without that burnt taste of over-roasted beans or resulting from poor maintenance of the machine. We take notice on having an espresso with a bit of foam, but if it is not there it doesn't necessarily mean the coffee is bad.
So if you want a coffee business to thrive all you need is to be near a work place and offer a few alternatives to people who don't drink coffee. A professionally trained barista would only be useful in a few high-end coffee places that open in the afternoon.
Is this conversation limited to coffee shops and food establishments?
Having years of retail management experience, I can tell you that you're never going to kill the employee turnover issue.
I think the trick is getting your customers to grow and adapt as you do. When you make major changes, your customers need to be right there with you and even a little impressed with what you've done.
A good example is Apple Store's system that allows you to check out without having to go to a register, in order to speed up holiday and back-to-school shopping.
Also, self checkout in grocery stores and the new Coke Remix machines you see cropping up in some shops.
maybe someone from Intelligentsia would have something to say about high priced, different coffee techniques and a sustainable bssiness model.
I think there has been a new boom in Coffee shops. for example Coffee consumption in Mexico is about 1.6 kg per capita, but is growing very fast. it's true we have a retail experience very similar to the one provided by sbux for example, but We are facing a new customer trend that appreciates not only quality, a fast and outstanding service but also innovation and differentiation. People love to feel different, special, trendy, and when you provide this trough out a cup of coffee, it spreads the word very fast wich might result in more customers, better reputation and a sustainable bsnss
I agree with Alex, as the retail store evolves customers need to evolve with it. The evolvement of a retail store can be of great risk to a consumer. I remember when the self checkout machines were first starting to come out they were terrible. This was a negative experience for customers. However, there are technologies that came out that the customer benefited from the start (the Apple checkout system was a good example).
I believe that the retail stores should evolve with behind-the-scenes tech that greatly benefits the experience. Employees should (with the use of technology) know who is coming in their store, their name, hobbies, what they like to eat, etc.
Do you see tech taking over the store of the future?
Whole Foods is a client of mine, and at a recent all-day retreat with their C-level execs, they asked me what I would change about their model in the future. I gave them two suggestions. First, the cost of eating well is a bit prohibitive to folks in lower socio-economic categories and they are also the people who might very well benefit the most. Second, I recommended that they introduce a pilot program for online ordering and local delivery. We have two Whole Foods in our local Nashville MSA, which is a higher penetration their normal for them, but it still takes too much time to drive there, shop, and get home. Previous attempts by other retailers have floundered, but at SOME time this will have to take root.
I envision the possibility of different tiered models. I think we are as stuck on the Starbucks model as we are the Stumptown, Blue Bottle etc model. Right now its almost identical setup, identical design, identical offerings and near identical price. Why not have varying stores each with different price points, which relate directly to the quality of beans being sourced. Why do we all have to sell 90+ beans?Why when we talk about different models are we only mentioning higher priced ones? Many different quality of beans can be wonderful if prepared in a professional manner. I am nearly as universally disappointed at top shops as I am of lesser ones. It doesn't have to be this with way if all types are quality driven.
Starbucks just partnered with Square to put the Square Register & Pay with Square systems in place in all Starbucks locations. That's going to be a monumental push towards large chains adopting newer POS systems.
I don't patron Starbucks (nothing personal, just not a coffee guy), but it'll be interesting to see how Starbucks' customers respond to it.
I don't quite know what the criterion is for a "high price per cup coffee business" but I do think that our place, Spro in Baltimore, is skirting that ideal. Depending on the week, we may offer coffees upwards of fifteen dollars per cup and our baristas are preparing coffees over a range of brewing methods. Currently, it's summer here in America, which means greater demand on iced coffee and other cold beverages and a lighter load on hot, brewed coffees - so our selection is limited this time of the year. Here's our current menu:
One of my biggest concerns is staff compensation. I've been thinking that the proper unit number is $1.5million in revenue that will allow the business to pay good salaries.
Does coffee have to follow beer, wine, whatever down the elitist, only for the well-heeled, road? Cutting cost per cup can open great coffee up to more people while preserving a liveable margin. There is a whole debate to be had there, including automation of dispensing brewed coffee, payment processing, kiosk delivery, etc. But many who come into my shop don't just want coffee - there's a whole bigger picture out there related to vibe, relationship, values.
I think you can sell higher priced coffee without being overly elitist. A good analogy with brewed coffee is wine imho. You have variable pricing on a wine list, giving you the option to pay more for quality, interesting varietals etc. But there should also be house wines at decent prices. I don't see why coffee should be any different.
I'd love more people to drink brewed coffee. While people want coffee in a hurry, I assume that espresso & espresso-based drinks will hold sway. My question to those who know is whether bulk brewing has the potential to deliver a quality product quickly at an affordable price point? Call it house coffee.
There are plenty of unique and interesting ways that one could sling coffee. I've always imagined a Japanese style noodle bar type set up. A bar, and seats around the bar. You get a seat, you get coffee. You order, consume, and pay from the same place. The baristas can face all the customers at the same time, answer questions, take money, everything. Low space, low volume, high intimacy with the barista, a unique experience. Prices would be highish, but overheads would be lower. Not everyone's cup of tea, but an example of an alternative model. Might work for a pop up.
Keep in mind, we don't have to find a solution for EVERY business. Set goals, then figure out how to reach the goals. Prioritize, and lose the things that hold you back.
It's sad for me to see that many find the conceptual model of a higher end cafe as inherently elitist. Some things cost more. This is okay, in fact, this is why coffee is so attractive to me. I grew up poor, and I'm a barista, so not swimming in cash. However, coffee has always been an extremely affordable way to enjoy something complex and intriguing. Even if it's £5 for a cup, it's cheaper than good wine, and very rewarding. I understand having a nice environment and decent coffee where the baristas don't wax philosophical about the drink. I get it. I find it boring. Just personally. I don't think it's a bad model, or that people who like it are bad. I just don't want to go there. Which is fine! I don't shop at every shoe store either.
James, I really wanted to get your take on this. As far as I am aware the Penny University shop was radically different to any offerings then and now. The lack of espresso machine must have both disarmed and intrigued people and although the prices do not appear to have been high, I'm assuming price was not a huge deciding factor to those who visited.
Do you feel the shop could have been a sustainable long term business; as it was and also if you took into consideration Colin's points 2 & 3? ii) access to cheaper coffee, e.g. as a roaster/wholesaler. iii) an existing skillset and inventory to facilitate such an approach.
Apologies if I have posted this twice.
Thanks for your contributions one and all.
Thanks for your feedback! Team Branch