Question: More Expensive to Roast and Serve Versus Just Doing One?

[cestrin]

I was talking with a co-worker and he was saying that he thinks it would be more cost effective to be either a roaster or coffee shop but not both. He seems to think that doing both would cause there to be some extra costs that you wouldn't see if you were just a roaster or just owned a coffee shop. I think it would be cheaper to be the roaster of the beans used at your coffee shop since you cut out any mark-up that would come from the roaster.

Any thoughts/actual experience with this?

 

[eldub]

I'd be curious to hear more about those "extra costs" your co-worker thinks come into play.

Vertical integration, in this case means paying much less for fresh coffee beans, as a coffee shop and having a steady outlet for the beans of a roaster. There are also multiple revenue streams available to coffee shops roasting beans.

On the other hand, there would be increased start-up costs involved.

 

[CoffeeJunky]

Only extra cost i would think would be the coffee roaster and the space you need to work out of. But I would agree it would not be good idea to be both if your only selling few pounds worth of coffee a day but if you are planning on selling or currently selling large amount of coffee, (25 pounds a day or more) it would be great idea to be both. I know very successful coffee houses who roast their own coffee. So it really depends on what your target market and business model.

 

[CoffeeLovers]

Well, it depends on how big is your coffee shop. Just make your own evaluation if a roaster is really needed. Once you roast your beans, you need a big startup capital but in the long run if you can have many patrons in your shop, then you can have more earnings.

 

[John P]

It's not whether it's "cheaper", it's whether it will yield more profit.