Secrets to Success When Setting Up and Running a Coffee shop

Coffee shops are popular businesses - there seems to be one in every corner and if there is a corner free, why not start one there yourself? How di...

  • Secrets to Success When Setting Up and Running a Coffee shop
    Manish Khanna Image Manish Khanna

    Secrets to Success When Setting Up and Running a Coffee shop

    Coffee shops are popular businesses - there seems to be one in every corner and if there is a corner free, why not start one there yourself? How difficult can it be to brew some coffee? Plenty difficult, in fact, but it is also true that many coffee shops are incredibly successful. Below you will find some tips for starting and running a successful coffee shop.

    Know Your Market

    There is the old saying: “Don’t throw pearls at swine” and it means you shouldn’t give nice things, or offer your time and care, to people who do not appreciate it. Likewise, in business you should target your products to your market - pigs for example would probably prefer if you throw them some food to munch on.

    If you are opening a coffee shop in an upscale area that is pretty saturated already you have to a) have as high standards as the other coffee shops b) either keep much lower prices or have a unique concept that makes you stand out, like exotic flavors.

    If, on the other hand, you are setting up shop in an area that only has workmen cafes and the quality of the coffee is appalling, but the price tag cheap, you need a different approach. Chances are people here aren’t as willing to part with their money - prices need to be reasonable. They will surely appreciate a really good cup of coffee, but you can’t price yourself out of the market. Also, you might want to provide a new level of luxury, but you can’t scare people off by making it look so fancy they feel out of sorts. In the upscale area people have likely been exposed to all sorts of foods and drink from all corners of the world, but in the lower segment of the market, this isn’t necessarily the case. You can slowly introduce new flavors, but don’t make things too complicated to start off with.

    Also, if you are in an area where people are extremely eco and health conscious you have to adjust your products to that - organic, Fairtrade, healthy and sustainable is what you are looking to sell.

    There is another saying: “there is no bad weather, only bad clothing.” Likewise, there is no bad market, only badly made products and services for that market.

    Location

    Location for a coffee shop is essential - people won’t want to go out of their way to get their coffee. They need caffeine and they need it now. It’s not an expensive product, like a TV, where you set time aside to go buy it. No, coffee is something that is part of your everyday routine, or a treat when you go to town, or are out shopping. So make sure you find a location where people would normally pass by.

    If you are targeting the early morning commuter it makes sense to have a drive by location somewhere these commuters pass by and where it would be easy and convenient to stop for a coffee. If, on the other hand, you are targeting the same commuter after they step out of their car, it makes sense to have it near their offices - as near as possible. In an area filled with offices you want to be the most easy coffee shop to get to, where they can quickly get their coffee. This also means you might need extra staff during early morning rush hour.

    If you are offering a lot of lunch items, rush hour will be around lunch time and you might need tables for people to sit by and therefore find a location that enables this. That depends though - have a look at Pret A Manger - most of their locations to start off with offered little or no seating and they were still very, very popular, but then they had their target clear: they were selling sandwiches, whether for breakfast or lunch and that’s what they were pushing. Not for people to come in to relax and have a coffee.

    If you are in an office area and the only people likely to drop by are office workers, there will be less people who drop by to read a magazine, work on their laptops, or sit and read a book, so you need less tables. In a town center, on the other hand, these are the very people you are targeting (together with, of course, the employees of nearby businesses and shops) and you will need tables to catch them.

    Have a look at Starbucks - where do you find their coffee shops? You find them in malls, or close to a cluster of other shops. You also find them in busy town centers and along main roads where people would naturally stop for a break or to fill up gas. Of course, train stations and airports often have Starbucks as well. These are all places where people congregate, or where they could easily drive by on their way to work to have a coffee.

    Branded Franchises

    Starbucks is a franchise. Sufficient to say that most people know about Starbucks. They know them and those who like them trust them. The coffee will taste the same in every Starbucks around the world. This means that if you launch a Starbucks in your area, the branding in and of itself will sell the product, given people have enough money to buy it. If you are in an area that’s less favorable for a coffee shop, this might be the thing that can help you push through to success.

    Why would you want to buy a franchise rather than launching your own coffee shop? The branding is one of the main factors - if people know and like the brand they are more likely to pop by for a coffee than if they don’t. If you start a new brand you first have to convince potential clients that it’s a good brand. With franchises you also have a built in marketing budget and help with operational procedures and staff training.

    High Level of Service

    If people already have a coffee shop to go to (and caffeine addicts tend to have their favored watering holes) and they have frequented it for a while, becoming friends with the staff and owner, it will take quite something for them to start using another coffee shop. You need to convince them not only that your coffee and assorted products are better, but that your service is better. Caffeine addicts on their way to work are not prone to hang around and wait. And coffee shops are often a social business - people want to feel like they are coming home when they come there, so train your staff accordingly.

    Marketing

    A big sign outside the door announcing what’s on sale isn’t enough of marketing. Sure you need the sign, but you also need a campaign to kick things off. If there are other shops nearby, maybe do a deal with them and if a client shops there they get half off their first coffee if they bring the receipt, or give the employees at a certain company a discount Have a loyalty card and give the tenth coffee for free (and make sure customers sometimes get a few extra stamps when buying just to make them smile) - these cards work. Do special deals on certain days. Offer workshops, like coffee tasting, or host networking events, or speed dating.

    50% of your marketing will probably be word of mouth though, so that means you need great products and great service.

    Selection of Products

    You won’t survive on coffee alone. Have a few pastries and other products to sell as well. Both for the coffee and the pastries keep the selection large enough to offer some variation, but small enough to make ti easy for clients to pick what they like and for you not to have to stock and throw away unnecessary items.

    Mobile Coffee Shops

    All the above things apply to mobile coffee shops as well, but here location means even more as you are catching pedestrians and your selection is potentially smaller than in a regular shop, so make it count. With a mobile shop you also have the option of moving it - for example you might target office workers Monday-Friday and on a Saturday head for a farmer’s market and a Sunday to a weekly food truck festival. Really think about where you can catch the most clients and how to market your products to those clients.

  • Author Info Manish Khanna

    Manish Khanna is a serial entrepreneur, philanthropist and genuine Australian success story. In a decade he has built an online empire unlike any other. He is currently the Managing Director of more than 10 individual companies. These include the flagship Business2Sell which operates internationally in 6 countries. The others include CommercialProperty2Sell, Million Dollar Mansions, Netvision, BCIC Pty Ltd and Better Franchise Group, to name a few.

    With more than 21 years’ experience developing web applications plus very successfully creating, managing and growing start-ups, he is forging ahead to turn more of his innovative ideas into future success stories.