Does it make a profit? I looked into it but the startup and running costs means I would have to sell more than 100 pretty expensive coffees per day just to break even.
Yes. Margins are high in coffee. We serve a high quality product that customers feel is priced in the value range and we are at like 70-80% blended gross margin. There are plenty of busy shops at >80%.
It takes time to ramp up, but 100 orders a day is nothing. We do more than that in an inexpensive suburban strip mall. You can easily get into the hundreds in a high traffic location.
The key is to develop a base of regulars. Even a couple hundred of them is enough to keep the lights on.
We are open from 7:30-3 and do about $50k/mo. Work is like being at a party all day and cleaning up at the end. It’s the same people all the time so you’re basically hanging out and chatting with them all day.
I have so many questions. What was your initial startup investment? How did you pick the location to set this up in? What did your business plan look like? How many employees did you start with? How long did it take you to make a profit? Were you a coffee connoisseur before you got into the business? How do you select your beans? How did you do your marketing? I would love if you would answer these questions.
Alternatively, how did you figure all of this out when you first started out? Who did you go to so I can find a local analog here.
I didn't know anything about coffee, but I do have an MBA and held leadership positions before this so I wasn't completely clueless.
It took between $150k and $200k to start up. We had to demolish and rebuild an existing retail space. We also spent a lot on our equipment. You can definitely do it for less.
We picked a location near our house because we were tired of leaving our city to get good coffee. It's in a fairly busy shopping center with a supermarket.
We did the best we could with our business plan. It was wrong though - both good and bad.
We were pretty much cash flow positive by the second or third month. There were a few occasions where we had to put in a little extra cash during the first several months though. We were maybe 7 months in the last time we did. We turned a profit our second year. It's not easy though. You struggle to survive for at least 12-18 months.
We started with 3 employees. We still have 2 of them and the other went off to college. We have more now, but it's mostly part timers with the original 2 picking up most of the hours. We extended our hours since we first opened and we were open 360 days last year.
We selected our beans like idiots because we didn't know any better, but it turned out to be awesome. Normal people hook up with a local roaster. We went to Costa Rica to meet farmers. We visited a bunch of places and ended up with a direct trade agreement. We started importing green coffee in bulk and roasting it locally in small batches.
For marketing, we make silly social media videos and run ads on Google and Meta. We also did some local news stuff in the beginning. We do the typical local SEO stuff, get great reviews, etc. We are the highest rated shop in the area so a lot of people find us that way. We do some influencer marketing - a lot of bang for your buck there. We also offer a great loyalty program - nearly 60% of our revenue goes through that.
We have SMS opt-in from thousands of customers so it's easy to blast out a quick promo and shake the money tree on a slow day. Offering double points can turn things around quickly.
A surprising number of people will provide an email address or phone number on their first visit. I'll keep track of those first timers and load them into a retargeting campaign on Meta if they go a few weeks without coming back. I spent $16 doing that this month and got $940 in revenue from those customers.
Ultimately, the most important thing is to make sure everyone leaves happy. We work hard so that people leave happier than when they came in. Mistakes are made too. When you're making a couple hundred drinks a day and doing food orders, you're bound to screw something up. All our employees have the authority to give discounts, refunds or comp items. They keep an eye on people when they get their order. If it looks like they don't like it, our staff will be proactive about it. It was hard in the beginning when we were scraping by and giving away a drink because somebody didn't like what they ordered, but it pays off in the long run. You must have solid repeat customers to stay in business.
You can usually find a local roaster who will help show you the ropes. Often, they are the local channel partners you go through to buy your espresso equipment anyway. If you call up La Marzocco, Sanremo or Simonelli, they will put you in touch with some people. Local chamber of commerce meetings are good too. You can also meet other coffee shop owners in the area. I'm friendly with a couple owners of places that are far enough away that we don't compete with each other.
It's an attention issue. We have these phones with constant dopamine hits. We were getting it a little bit on the web before the rise of smartphones, but it's just out of control now. We have 100 apps constantly vying for our attention and giving us endless things to scroll through.
The only thing that fixes it is to put the phone down. Do something else. Play video games. Read books. Go outside. Anything to stay away from the phone (but not TV). These phones are as bad as drugs.
I've been pushing to read a lot more books this year and it helps a lot.
Agreed with all of the above, except the "100s of apps."
Turning notifications off of most apps solves a bunch of little problems.
The big problems need to be forcibly named at every chance. In no particular order, youtube, tiktok, insta, facebook (or meta?), are all guilty of making the world a worse place. Reddit and twitter's endless scroll is bad, too, but it seems their content got so bad the addiction is less strong there, like poop-flavored cigarettes.
They probably lose a ton of traffic to AI or anticipate that happening. This is a way to keep people on Google search.
Like you, I use both search and AI separately. Even casual, nontechnical users are starting to work like that. Including AI with traditional search results will keep a lot of users from jumping ship in the first place and will help win back users from ChatGPT.
I know a lot of people hate AI - at a minimum, there’s a vocal minority - but the reality is AI is eating search like nothing we’ve ever seen.
The performance is certainly what you would expect from Ferrari, but it doesn’t matter. This isn’t a car that should have a Ferrari emblem on it. This will go down as one of the all time automotive blunders.
I think Jony Ive is done too. He was responsible for those awful MacBooks that generated a class action lawsuit and now this. It’s hard to come back from two consecutive flops.
Agreed. Aside from obsolete hardware that was replaced with newer products, there isn’t really anything on this list that I miss except for HyperCard. Just about everything worthwhile became another product or got rolled into something else.
Oh, man. I remember that one. He absolutely destroyed that truck. What’s notable about that video is that the other trucks handled the abuse dramatically better than the cybertruck. He was determined to break every single vehicle in ways they would never actually be used, but it was laughable how bad the cybertruck was. If I remember correctly, he made the wheels fall off and had to get it repaired in the middle of the “test”. I think the Ford was still running at the end.
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