Starting A Retail Store Selling Beans, not a full blown 'coffee shop"

[BMarlin]

I was looking at the possibilities of starting a retail coffee biz selling bean from all sources, some main companies, locals, and smaller high quality roasters from all over. I was thinking like a wine/liquor store for coffee lovers. I would probably offer 10 - 12 daily brews for people, but not a full blown coffee shop w/ baristas etc. Offer weekly/monthly cuppings, etc.

Anyone doing this or tried it?

I have many years of retail/grocery sales experience & have even sold for a major starbucks rival.

Thanks for your thoughts/input

 

[CoffeeJunky]

I like to point out that most of the profit is in selling brewed coffee not really selling beans.

That just means, you have to sell many multiple pounds of coffee to be profitable.
For example, 1 pound of roast coffee, you can charge from 10- 18 dollars per pounds and your base cost can be around 4-6 dollars depends on the beans and your rent etc....

For brewed coffee, you can charge 1.70-2.50 per cup and per pound, you can make around 40-50 dollars per pound with about the same base cost.
I would think your business model is very interesting but it will take tons of work to be profitable....

Good Luck

 

[janry]

I'd like to see such a shop. Would be very nice if you also sold some coffee equipment. At least supplies such as filters. It is difficult even in Nashville to find Chemex filters locally.

I worry, however, your local roasters will be reluctant to share the profit margin with a retailer. I've wondered how much of the take Whole Foods gets from the sale of locally roasted beans as their retail price is the same price charged by the roasters in their own coffee shops.

 

[BMarlin]

I was thinking along those lines of selling coffee making accessories and supplies, mugs, carafes, etc. ( and probably some sort of pastry items) Setting a price for local roasters would be key. I know what grocery stores get from the big boys like Starbucks, DD, Peets. And believe me, the grocery stores get there cut.

From years of selling coffee in a grocery store aisle, people are always open to trying different coffees. Just like wines, beers, whatever. So my thinking in all this is a place where they can come in, try some different coffees and hopefully leave with a bag or accessory. Of course I'd want some sort of seating area/coffee shop vibe.

If there's anyone near Philly, I'm open for a partner!

 

[peterjschmidt]

You'd need lots of traffic; foot-traffic and parking. It'll have to be convenient. I don't think coffee on its own will have enough draw by itself to keep you afloat - look at the coffee shops in a metro setting, and find out what percentage is coffee vs. espresso based drinks.

 

[BMarlin]

Anyone else have any thoughts / input ? ?

 

[eldub]

Coffee doesn't age like wine. With freshness being a main concern, why not roast your own beans?

 

[doddcoffee]

Hope I can add a little input without sounding like a buzzkill. I will be open that I am involved in the coffee business and have my own marketing company as well. So this will all be based on what I have seen in the past. I do not know anything about your financial status for this, so I am just going to be guessing.

The amount of traffic that you will need will be outrageous just to keep the doors open, much less turn a profit. Even though the amount of people getting coffee from local roasters is increasing, it is no where near the amount of people that are still buying coffee from the grocery stores. You may be able to offer k-cups and large name coffee, but you will not have anywhere near the margins that the stores will have. You may be able to go up a little on the prices, but it would be hard to convince someone to continue to come in to your store and pay more for something they can get while they do their grocery shopping. Many of the people that do buy from local roasters will not have a problem with it, but they will also want their coffee to be fresh. With this in mind, typically they will not care if they have to order it online and wait for it to get to them. If you are able to work something out with the local roasters, how big will your margins be? Lets say you are able to get it for $8 a lb wholesale, odds are they are going to dictate what you can sell it at so that you are not selling lower than they are on their own site. Even if you were able to sell the coffee at $16 a lb, it will probably be bulk so you will only have a short time to sell it to those that do not mind paying that price. Personally if I am going to pay that, I want my coffee as fresh as possible. Get past the first week, and odds are I am going somewhere else. You will have a delicate balance between how much coffee to have that you can sell without it going to waste due to age. The waste alone will be hard to manage.

For the traffic that you are needing, you are going to need something in a high volume area. Those spaces are high, but we will work with an arbitrary number of $10,000 a month in total operating expenses, (odds are it will be much higher), and a profit of $8 lb. If that is the number that you are looking at then you will need to sell a min of 1250 lbs of coffee a month to get there, and that does not replenish what you sold, just paid the bills for the month. Most people that are in retail will tell you that you need at least 2.5-3 times the amount of inventory to give the selection needed to reach your sales goals. If that number holds true for you, then you will need at least 3000 lbs of coffee coming through your store each month. Given the way coffee ages, you will have to keep rotating the coffee and make sure that every order you get it in, is something that is going to sell. Unfortunately it is not like another product that you can hold on the shelf for 6 months if it does not sell.

As one of the other posters wrote, it would be better if you can roast your own coffee. This way you can bring in other types of business, and storing green coffee is much better than already roasted. This would give you time to buy in larger quantities, have a higher margins, and control your own pricing. I am not saying it is a bad idea, just please make sure you look at the numbers carefully before doing it. I have seen way to many people have an idea and run with it and get themselves into financial trouble that will haunt them for years. Build your plan for the amount of money you will need to start, need to sell monthly, and the amount of traffic that you need to make it successful. Once you have those numbers, multiply them by 3 and you will have a good starting point to work from.

I know I am new here, and really did not mean to sound rude or condescending if it came off that way. I am currently working with a client that does retail, and from the beginning I told them over and over that their numbers were off and they we insistent that I was wrong. They have been open for less than 6 months and are struggling just to keep the doors open. It is hard to see, especially when know the amount of money, time, and energy they have put into it. Its not something that I would wish upon anyone. Good luck with your venture!

 

[smksignals]

doddcoffee, great post.

 

[coffeeventure]

Doddcoffee is right on the spot.

if I may add from experience, you should draw clients into your store by offering things that they need on a daily basis (brewed coffee, kitchen or coffee making products etc)

once that you have that VALUABLE captive clients inside your store and they are in a coffee mode it is when your roasted bean part of the business kicks in and not the other way around.

I really really whish you well, it is a great idea but i feel that you have to tune it a little bit.

 

[peterjschmidt]

Since it's over 2 months since the OP posted, I'm wondering what he's up to...

 

[slurp]

It has been a while, he had an idea and everyone peed in his cereal bowl. His idea could be good for a kiosk in a mall for the holiday season. People are always looking for gifts under $20 and almost everyone drinks coffee.