Idea for a 24/7 Coffe Shop

[MeganWogan]

This is my very first post in a forum, Ever! I am 22 and in a lot of debt because of school and two vehicles and a house. I have a lot of time on my hands to bring up ideas and to create new paths to my destination. I have an over-indulgent need to open a coffee shop and I know my best bet is to open it in a college town without too much competition. I have about 6 years experience in the food industry working both at the bottom of the food chain and eventually I worked my way up into management. I know the risks involved and I know that the caffeine business is very difficult competition. I'll list my concerns in terms of importance.

1. Demographics - I live in Jefferson City, MO and I am concerned that not only is this town big, but I haven't lived here very long and will move to Sevierville, TN in about 10 years, that is the plan anyway. How do I go about researching how successful my business will be based on the people who live there since I don't reside in that town or state?

2. Competition - There are tons of coffee shops all around, especially franchises such as Starbucks and Dunn Bros. Where do I start when researching what competition I will have?

3. Cost - I want to provide a low cost way to provide caffeine to college students as well as other consumers. I understand from visiting many different coffee shops that a decadent, 6 oz caramel latte doesn't have to be $6. This cost is unreal to me, seeing as I can make a caramel latte at home with 4 oz of milk, 6 oz of strong coffee or 4 oz of espresso, homemade vanilla whipped cream, caramel sauce in the coffee and drizzled on top. This drink costs me less than $3 seeing as a whole gallon of milk costs roughly $3.50 - $4. In order to offset the cost of goods, how do I find out if my low cost drinks will make me money versus a $6 latte at Starbucks?

4. Marketing - I don't even know where to start in terms of marketing. I have creative thinking and I know what I want, I just need somewhere to start. I understand customer needs, but I know a lot more about my own personal needs and wants when it comes to coffee. There are so many different possibilities that fit so many different personalities.

5. Building/Storefront - I am a big fan of old style towns that have an old, down-town feel. It's very rustic and it's very personal to me since I was born in Chicago; an old, historic city. This idea hits home to me and I want to stick to this, however, I can't get my lovely husband to move to Chicago. He absolutely hates the idea of moving to a city. Jefferson City is the capital of Missouri and I am not a fan of it. It's a wanna-be Chicago, LOL.

I appreciate all the help you can give me. I know there are more concerns and questions that will come, in time. Again, this is my first forum post, Ever, so I hope I am doing this right.

Thanks Everyone

[Brian Altenhofel]

I'm just going to touch on a few things that stand out.


in a lot of debt because of school and two vehicles and a house

Not exactly wanting to start on a firm foundation, are we? Can you afford (both financially and mentally) to lose everything you put into the business? If not, then you're not ready to start a business.


3. Cost - I want to provide a low cost way to provide caffeine to college students as well as other consumers. I understand from visiting many different coffee shops that a decadent, 6 oz caramel latte doesn't have to be $6. This cost is unreal to me, seeing as I can make a caramel latte at home with 4 oz of milk, 6 oz of strong coffee or 4 oz of espresso, homemade vanilla whipped cream, caramel sauce in the coffee and drizzled on top. This drink costs me less than $3 seeing as a whole gallon of milk costs roughly $3.50 - $4. In order to offset the cost of goods, how do I find out if my low cost drinks will make me money versus a $6 latte at Starbucks?

Competing primarily on price is never a good idea unless you have a ton of volume. Also, the materials cost is not the only cost per drink. You'll have lease, utilities, payroll (even if just yourself), benefits (even if just yourself), shrink (made wrong drink, spilled milk, power loss caused a thaw out, etc.), marketing, etc. It might cost you $3 in raw materials and another $6 in overhead. At that point, a $10 drink has a net profit margin of $1.

The reason I'm willing to pay $5 (or whatever it is these days) for a venti caffe mocha from Starbucks is because I know I will consistently get the same drink no matter which Starbucks I go to. If I stop in a boutique coffee shop, I expect to get a consistent drink each time if I return. I might even be willing to pay a premium for the environment there particularly if it is quiet and has ample power outlets available.

When you're running a food service business, you're not just selling the raw product - you're selling the overall experience.

Don't get caught in the trap of "I wouldn't pay that much for this product". The price that matters is the price that the market is willing to pay. Depending on your target market, you might even be able to filter your customer base using your price range.


4. Marketing - I don't even know where to start in terms of marketing. I have creative thinking and I know what I want, I just need somewhere to start. I understand customer needs, but I know a lot more about my own personal needs and wants when it comes to coffee. There are so many different possibilities that fit so many different personalities.

You need to decide who your target market is and who your ideal customer is within that target market.

[MeganWogan]

Brian,

Thank you for your reply, I am very grateful.

Marketing - I want to target highschool/college students seeing as I know what demographic I want to target. My ideal customer is a student, on campus or online student, that is looking for a late night caffeine boost. Also, I work and live in a town that has a lot of factories that have employees who get off after 12 AM. As an online student and a night shift worker who gets off at 12:30 AM, I am always looking for a cheap, delicious cup of coffee, cappuccino or latte. I am researching how many people are willing to pay for a coffee after 12 AM so that I can figure out what my target market is. Social media is helping me out with this part. I want to provide a quiet, cafe setting with a lot of plug ins for laptops, tablets and cell phones. I have always longed for this type of shop in my town, and I haven't found one in the four years I have been in Jefferson City, MO.

Cost - In terms of cost of running a business, including product and shrink, I know I can't do it now. I will need to pay off both of my cars and pay at least half of my student loans off and move into an apartment instead of living in a house. At this point, since I am starting so early with a family and roots, I can't take on the financial responsability at this time. Also, you and many other people probably think the same thing you did, "The reason I'm willing to pay $5 (or whatever it is these days) for a venti caffe mocha from Starbucks" is because you know it will be consistently delicious. I have had too many different Starbucks giving me different versions of a hot Caramel Macchiato (my favorite Starbucks drink). But what about their hours? Most shops are not open past 9. I know of one in Columbia, MO that is open til 12 AM but not any later than that.

Debt - I am a person that has grabbed life by the horns and jumped all in. I agree that it may not have been the smartest thing, but it is working for me and I am happy. When I graduated with my Associates in Business Management, I knew I couldn't start a business until way later in my life, when I am done having babies and done doing things for others. By that time, all my debt should be just about gone and my husband and I will have an empty nest. This is a long term goal.

Love - My love of coffee is what helped me make the decision to start my shop later in life. I want to live my life and have my kids. Coffee is my love and the art of it has become a hobby of mine. I don't want to open a business just so it can consume my life. I know a business can suck the life out of families and relationships, so I want to wait.

In summary, my main concerns are costs and marketing, along with the research that comes with it. I need to start figuring out where to start, and I have found this forum to see if someone could help me.

[JC]

Brian,

Thank you for your reply, I am very grateful.

Marketing - I want to target highschool/college students seeing as I know what demographic I want to target. My ideal customer is a student, on campus or online student, that is looking for a late night caffeine boost. Also, I work and live in a town that has a lot of factories that have employees who get off after 12 AM. As an online student and a night shift worker who gets off at 12:30 AM, I am always looking for a cheap, delicious cup of coffee, cappuccino or latte. I am researching how many people are willing to pay for a coffee after 12 AM so that I can figure out what my target market is. Social media is helping me out with this part. I want to provide a quiet, cafe setting with a lot of plug ins for laptops, tablets and cell phones. I have always longed for this type of shop in my town, and I haven't found one in the four years I have been in Jefferson City, MO.

Cost - In terms of cost of running a business, including product and shrink, I know I can't do it now. I will need to pay off both of my cars and pay at least half of my student loans off and move into an apartment instead of living in a house. At this point, since I am starting so early with a family and roots, I can't take on the financial responsability at this time. Also, you and many other people probably think the same thing you did, "The reason I'm willing to pay $5 (or whatever it is these days) for a venti caffe mocha from Starbucks" is because you know it will be consistently delicious. I have had too many different Starbucks giving me different versions of a hot Caramel Macchiato (my favorite Starbucks drink). But what about their hours? Most shops are not open past 9. I know of one in Columbia, MO that is open til 12 AM but not any later than that.

Debt - I am a person that has grabbed life by the horns and jumped all in. I agree that it may not have been the smartest thing, but it is working for me and I am happy. When I graduated with my Associates in Business Management, I knew I couldn't start a business until way later in my life, when I am done having babies and done doing things for others. By that time, all my debt should be just about gone and my husband and I will have an empty nest. This is a long term goal.

Love - My love of coffee is what helped me make the decision to start my shop later in life. I want to live my life and have my kids. Coffee is my love and the art of it has become a hobby of mine. I don't want to open a business just so it can consume my life. I know a business can suck the life out of families and relationships, so I want to wait.

In summary, my main concerns are costs and marketing, along with the research that comes with it. I need to start figuring out where to start, and I have found this forum to see if someone could help me.

Hi Megan,

I like your enthusiasm! It's great to be passionate about what you want to go into business for other than money, I think it makes all of the hard work (and there will be a lot) so much easier. I also think it's nice to have a long term goal like you do, as you will have years of experience gaining business wisdom before you even start, esp if you keep seeking knowledgeable people as you have on this forum. My suggestion would be to continue to study business throughout the years that your children are growing and also try to put away as much money as you think you'll need, starting as soon as possible.

[MyITGuy]

But what about their hours? Most shops are not open past 9. I know of one in Columbia, MO that is open til 12 AM but not any later than that

Before committing to a 24/7 shop, you have to ask yourself why others aren't doing it if there is a market for it?
What sets you apart from the other shops that may be open at that time (Dennys, StarBucks, Dunkin Doughnuts and etc...)

Personally, I'm not a big coffee drinker, but I will get a venti caramel mocha from Starbucks when I feel the urge and everyone I've gotten from many different locations have all been consistent in taste. I've tried to find a similar drink from Dunkin Doughnuts and other ships and they have all failed miserably and tasted like crap.