Monthly Archives: August 2010

Tips for Running a Profitable Coffee Shop

NOTE: This is a sequel to my post 10 Tips for Running a Successful Coffee Shop.

ALSO: To learn how NOT to run a cafe, watch my web series, The Baristas.

Last year, I blogged my own 2 cents about How to Run a Successful Coffee Shop, based on my experiences as a regular patron thereof.  (As a freelancer, I spend most days working via laptop at one of many local cafes.)

That post continues to drive traffic to my blog even today — presumably from aspiring coffee shop owners who are trying to boost business and increase sales.  Realizing this, I thought I’d follow up by getting some extra advice from people who actually run cafes for a living.

Thanks to some folks on Twitter (who suggested their own favorite cafes), plus the advice of the owners and baristas at several cafes I personally frequent, here are some business tips from actual cafe owners.  (Note: Each respondent was asked the same 3 questions, for the sake of simplicity.)

What do you wish someone had told you before you opened your current cafe?

“Have more cash in the beginning.  It takes time to build your customer base.”
— Bob Fish, CEO and co-founder of BIGGBY Coffee / @biggbybob / Biggby on Facebook

“I knew this, but thought I could ‘beat’ it: don’t get in bed with your contractor.  Or, like I did, let my lover lead the project.  What a disaster.”
— Bee, owner of Beezy’s Cafe (Ypsilanti, MI) / Beezy’s on Facebook

“We wish we’d known that to succeed in providing top quality coffee, we would need to locate in an area with an open mind towards food in general (e.g. The Strip District).  In our location, we need to serve the stupid drinks and have a lot of options for kids.  We spend a ton on training in coffee, but all that knowledge is useful to maybe only 10-15% of our customers.  The other 85% want dessert drinks.”
— Rich Westerfield, owner of Aldo Coffee (Pittsburgh, PA) / @aldocoffee / Aldo on Facebook

“We have gotten to the point where we have more structure within the cafe by implementing policies and making sure everyone adheres to them.  However, I wish someone had told us that is ABSOLUTELY ESSENTIAL for smooth transition during growth.”
— Sunni Gilliam, owner of Teavolve (Baltimore, MD) / @teavolve / Teavolve on Facebook

“I wish someone had warned me that the business would consume my life because I care about it so much.  I need to remember to make more time for family / friends.”
— Jessica Obst, owner, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“In a small, independent coffee shop, the regulars feel a sense of ownership — maybe more so than the staff.  It’s important to respect that this place was ‘theirs’ before you got there and it will still be theirs when you leave.”
— Ashlene, barista, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“I wish someone had encouraged me to make sure absolutely everything was organized before I got started. Shopping lists, a system to pay bills and record other expenses, where/how to file past reports, etc. Now that I’ve been half-assing it for the last 4 years, trying to tackle the problem of organization is extremely overwhelming.”
— Victoria Dilliott, owner of Affogato (Pittsburgh, PA) / @affogato / Affogato on Facebook

Marketing, service or quality: which do you feel is the key to a profitable cafe?

“You cannot separate these into “the key”; small business means that you will wear many hats.  In my old restaurant days we used to say I am the chief, cook, and bottle washer.  This is why many turn to a franchise (which typically has templated marketing and quality, so that you can work on execution of service).”
— Bob Fish, CEO and co-founder of BIGGBY Coffee / @biggbybob / Biggby on Facebook

“They’re not mutually exclusive by any means.  They have to work synergistically.   My staff giving great service is part of marketing, which is part of quality, which is all service.  The key for us is being able to define parts that matter most and really broadcasting it.”
— Bee, owner of Beezy’s Cafe (Ypsilanti, MI) / Beezy’s on Facebook

“Coffee is pretty much a three block business.  People won’t walk farther than that.  So you’re either part of that neighborhood scene or you’re a destination people will drive to because of something unique that has little to do with ambience. Usually it’s coffee, but could be pastries or food.  It’s not couches or wireless.

As far as marketing goes, word of mouth is still king. This is a business where you’re lucky to have an average sale as high as $4.00.  To buy a $250 ad means you’d need to sell $750-$1000 in goods for it to be worthwhile.  That’s 175-250 cups of coffee.  And that doesn’t happen from an ad. If we were to buy ads, they’d absolutely be for catering.  That’s where the highest profit margins are.  And we’re the best at it in the city.

Other than some laptop warriors and a handful of certified coffee geeks, nobody really pays attention to Twitter or Facebook sites for coffeeshops.  Of the 1180 Twitter followers we have, maybe 25 are regular customers.  Half are from other coffeeshops around the world.”
— Rich Westerfield, owner of Aldo Coffee (Pittsburgh, PA) / @aldocoffee / Aldo on Facebook

“Each element is essential to a profitable cafe.  However, if I must choose just one, it would be service.  The marketing will come through positive word of mouth.  This isn’t to say that the quality of the product can be poor, but it doesn’t have to be ‘mind blowing.’  With the economy right now, customers want to know that they are being appreciated for choosing your cafe to spend their time and especially their money.”
— Sunni Gilliam, co-owner of Teavolve (Baltimore, MD) / @teavolve / Teavolve on Facebook

“I don’t think I can separate quality product and excellent customer service.  My business depends on word of mouth and the cafe’s reputation in the neighborhood.  To maintain that reputation, I need to make sure I’m consistently making a quality product, and that the coffee shop staff are friendly to my customers.”
— Jessica Obst, owner, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“As a barista, I like to think that I deliver the kind of service that keeps people coming back to the store, and that I make a pretty good cappuccino; but I know that without Jessica’s awesome homemade treats we would not be so highly regarded.”
— Ashlene, barista, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“I think service is the most important, but seconded VERY closely by quality. Without a good product, people won’t come back, but the first impressions from customer service employees have an even more immediate effect.”
— Victoria Dilliott, owner of Affogato (Pittsburgh, PA) / @affogato / Affogato on Facebook

What’s one recent mistake you made that you’d like to help others avoid?

“A mistake that I think many café owners make is to try and follow or emulate the market leader.  I don’t think it is wise to try to chase them; rather it’s more important to develop your own identity.”
— Bob Fish, CEO and co-founder of BIGGBY Coffee / @biggbybob / Biggby on Facebook

“Keeping underperformers.  Just don’t do it.”
— Bee, owner of Beezy’s Cafe (Ypsilanti, MI) / Beezy’s on Facebook

“The biggest mistake we’ve made in the past year was taking on some staff who were solid employees (good cleaners, showed up on time, etc.) but lousy baristas.  We lost customers due to poor drink quality. And we lost them to a café up the street that totally sucks, but the perception is that we’re “the expensive guys”, so a bad drink here is unforgivable.”
— Rich Westerfield, owner of Aldo Coffee (Pittsburgh, PA) / @aldocoffee / Aldo on Facebook

“Always have reserve funds for the ‘rainy days.’  When we had 2 major snowstorms this past season, it affected the entire service industry.  Many restaurants were forced to shut their doors or cut the staff.  We were not prepared to lose thousands of dollars in sales during Christmas weekend, nor were we prepared to lose thousands of dollars in food.  (We had several holiday parties booked and ordered accordingly.)  We were fortunate to be able to weather the storm; however, we still are not where we need to be financially. ”
— Sunni Gilliam, co-owner of Teavolve (Baltimore, MD) / @teavolve / Teavolve on Facebook

“I am there to meet the needs of the neighborhood and I need to take criticism without feeling hurt.  It’s hard not to take criticism personally when the business is my ‘baby,’ but I am trying to listen to all suggestions now with an open mind.”
— Jessica Obst, owner, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“Same as Jess: trying to not take things personally if someone doesn’t like the way I make something.  The beauty of working here instead of Starbucks is, there is no manual saying that every product is made the exact same way.  As long as we have the ingredients and I’m confident I can make it the way the customer wants, I’ll try my best to make it happen.”
— Ashlene, barista, Cafe Latte’da (Baltimore, MD) / @lattedafells / Latte’da on Facebook

“Do NOT keep employees on just because they’ve been there for a long time.  If there’s any lack of respect to the manager or establishment, it only fosters bad blood and shows itself in the quality of service, too.”
— Victoria Dilliott, owner of Affogato (Pittsburgh, PA) / @affogato / Affogato on Facebook

Agree?  Disagree?  Have another tip to share?  Leave your own stories in the comments.

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