They say successful cafe owners are not made. They are either brewed, percolated or pressed.
One things for sure though, all successful cafe owners run profitable cafes.
Pass by any busy specialty coffee shop and it will likely be full of customers enjoying coffee, espresso, lattés, teas and a variety of pastries and other goodies.
The hugely successful business model of Serving quality coffees and snacks in a trendy, relaxing atmosphere is a model pioneered by Starbucks, which has grown to over 25,000 locations around the world.
Coffee shops can be big business but to really make it as a successful cafe owner, there may be some home truths you may need to consider.
What Options Exist for Starting a Cafe
There are three basic options for starting a coffee shop:
- Buy into a Franchise, and many of the major business decisions will be made for you. For a franchise fee, you are provided with a turnkey business in a location selected by the provider of the franchise.
- Buying an Existing Business. This is another way to acquire a turnkey operation. However, finding a profitable business for sale is not an easy task.
- Starting a Cafe from Scratch. This option requires the most effort but has the most flexibility and the best potential to maximise profits.
Whichever option you choose, the same fundamentals for success apply.
A successful business plan for how to start a coffee shop should incorporate the following key factors.
Successful Cafe Owners Know About Good Location & Reasonable Rent
In understanding what makes a successful cafe owner, it helps to understand what makes a cafe popular.
Coffee shops are great places to socialise – Statistics show that coffee shops are the most popular place to meet friends.
They are also a preferred spot for individuals looking to pass the time reading a book or magazine or surfing the web while consuming a beverage and/or snack.
Coffee shops are a popular place for informal business meetings or for students to catch up on schoolwork.
Walk into any popular coffee shop and chances are you will see a realtor reviewing listings with a client or a group of students collaborating on a school project.
With so many different reasons for a cafe’s popularity, a great location is obviously a very important consideration for attracting customers when you’re opening a coffee shop.
Location vs. Rent
If you are franchising or buying an existing business, the location is pre-selected and you should certainly do your research and decide whether the existing or selected location is a good one.
Note that the most central locations are not necessarily the best for your bottom line. Malls and other high traffic locations typically have the highest rents and often the most competition.
Storefronts are excellent locations for coffee shops – they have the highest visibility, the rents are usually lower than in malls, and you can set your own business hours (as opposed to a mall where your opening and closing hours are normally the same as the mall hours).
Vehicle Traffic and Parking
Unless you do locate in a mall or other high-pedestrian traffic site there needs to be easy access and adequate parking available for vehicle traffic.
If a customer has to make a difficult turn off a busy street to get to your establishment or finding available parking around your coffee shop is difficult, they are likely to take their business elsewhere. Ideally, you want a convenient, highly visible location on a busy street with plenty of parking so customers can easily drop in on their way to or from work or school.
With the popularity of cycling growing by leaps and bounds, having a secure lock-up rack for bikes can be a good idea.
In many small towns, coffee shops have become overnight successes – in large part because the location is near a busy crossroads with a lot of vehicle, pedestrian, and bicycle traffic and plenty of available parking.
Successful Cafe Owners Consistently Serve a High Quality Product
When opening a coffee shop, consider that gourmet coffee/tea drinkers want more than a mug of “instant” or a teabag in a foam cup.
Given the demands of discriminating customers, there is little chance a coffee shop business will attract a regular clientele and thrive unless you can consistently serve the best regular and specialty coffees, teas, and snacks.
Succeed in doing this and customers will choose you over your competition, even if you are not in a central location.
This means you will need to:
- Source the finest fresh-roasted beans
- Buy a high-quality espresso machine and related equipment such as grinders, water purifiers, etc.
- Serve fresh pastries and snacks
- Use only trained staff – a good barista is essential to the art of espresso making
- Offer innovative products like Frappuccinos, Chai Lattes, etc.
And, of course, spare some consideration for those with caffeine allergies. There is nothing worse than losing two or more customers just because you weren’t able to cater to one of them.
Successful Cafe Owners Provide Great Customer Service
Excellent customer service is the hallmark of any successful business, and most especially in the food services industry. Combine a great location, top quality products, and great customer service and chances are you will have a very successful coffee shop.
Surveys show that four out of five customers rank customer service as very important – one of the main reasons for Starbucks’ success is their professional and efficient service.
Counter Service vs. Table Service
Most successful coffee shops provide counter service.
Having customers order and pay upfront and calling them when their drinks and snacks are ready keeps your labour costs down and lets you better handle busy periods such as breakfast and lunch.
Table service is generally slower, more labor-intensive and better suited to restaurants where patrons may order full meals and spend more time in the establishment. Table service does give you more opportunity to up-sell the customer with desserts and/or snacks.
Successful Cafe Owners Create a Trendy, Relaxing Atmosphere
Surveys have shown that most people believe that one of the biggest attractions for a café is a great atmosphere.
When opening a coffee shop, creating the right atmosphere is key to attracting customers who’ll hang out with friends or business associates and consume additional products such as snacks, pastries, etc.
Go into any popular coffee shop on a weekday afternoon and chances are you will see groups of students doing their assignments (rather than in the school library or cafeteria).
An ideal atmosphere is one that is clean and bright with plenty of natural light and comfortable seating space.
Be sure to have plenty of lighting for evenings and dull days.
Having an outdoor patio space is a huge attraction in season and greatly increases the visibility of your business. Use a mix of seating and table types (such as bench tables) so you can accommodate single customers as well as groups of various sizes.
Unless you are a design pro, consider using an experienced interior decorator to design the interior of your premises because you’ll want that distinctive, personalised ambiance that will draw in customers.
Successful Cafe Owners Provide for an Excellent Selection of Pastries, Snacks, and Healthy Alternatives
Another key to success when planning how to start a coffee shop is to realise that while coffee and tea have a high markup (up to 80 percent on specialty coffees), a coffee shop cannot survive on coffee sales alone.
Multiple sales are a must.
Having an assortment of quality snacks on display at the counter will tempt the customer to make an additional purchase.
Popular items that go well with coffee and tea include:
- Cinnamon Buns
- Granola bars
- Yogurt cups, etc.
- Cold drinks
Make sure to recommend a food choice to the customer at checkout time if they are only ordering coffee or tea.
Prepare Food in Advance as Much as Possible
For efficiency, the food items should either be pre-made or purchased from vendors. Preparing made-to-order food (such as sandwiches, etc.) is time-consuming and reduces overall sales volume, particularly in busy periods. Baked goods can be sourced wholesale from local bakeries.
Successful Cafe Owners Offer Loyalty Cards
Assuming you are serving a great product in a good location, having a loyalty card program can be the icing on the cake for customers and really help you build up a clientele.
Getting a free espresso or latté on a loyalty card after 10 prior purchases will put a smile on anyone’s face.
Loyalty cards improve your bottom line by:
- Encouraging regular customers to come in more often
- Improving the odds of an infrequent customer choosing your business over competitors
- Encouraging customers to spend more
- Make sure to use good quality cards that have your business name and logo prominently displayed and won’t easily disintegrate from being in wallets or purses.
Successful Cafe Owners Serve on the Front Line
As with any customer service intensive business, when you’re running a coffee shop the owner should be present and fully engaged with the business as much as possible.
For many customers the sign of a good business is seeing the owner front and centre taking orders, serving, and greeting and conversing with the public.
Having a hands-on presence also helps to motivate staff to perform at their best. If you are unable to be present finding a good manager is essential.