Starting a coffee roasting business

[Kbeans]

Well, I have plenty of room upstairs and would make it climate controlled. I don't mind carrying bags upstairs for a little while until I get my business built up enough to justify leasing a facility. I saw that the 5kg weighs 700lb. I may have to renforce the floor. It would be cheaper for me to finish the upstairs room for roasting then renting a place. When you two started, were you leasing a space and did you have any customers at that point? I just really want to minamalize my expenses to mainly the cost of the roaster, some other equipment, beans, and finishing the upstairs.

On another note, if you are ordering beans from a certain lot and that lot changes, how do you maintain your unique blends? You said that they change from harvest to harvest.


Eldub- Your website looks great! Thanks for sharing that with me. I will definately order a pound from you and check your beans out.

 

[eldub]

Cheaper doesn't always mean better, imo.

We committed to the space and began paying rent months before we had our roaster, let alone any customers. I worked on getting the space in order for a couple of months before the roaster showed up and then worked on my roasting skills and developing blends for about a month before we got cleared by the health dpt. and received our organic certification from the USDA.

I don't think you have any idea how much heat that shop roaster will put off. Nor do you realize the effort it takes to move a roaster around and to get the venting installed.

Our initial bean order was 8 bags, each weighing between 130 and 150 lbs. And no, I didn't have any clients before receiving that shipment. But I was committed to making the business a success.

Btw, the specifics of our blends usually change every few months. Beans change from harvest to harvest, but wholesalers offerings change even more frequently from lot to lot. (The only lot which has remained the same since our initial order is an Ethiopian Sidamo from Royal Coffee.) However, I really enjoy the process of cupping, evaluating improving our offerings. Imo, my roasting and blending skills have come a long way since the day we moved that roaster into the shop. And I strive to continue improving on the quality of our offerings every single day of the week.

That said, I would never in a million years consider putting a shop roaster in the upstairs of our home, nor lug 150 lb. bags of beans up those stairs. (I would consider putting a roaster in a garage.)

After months of scouting out potential sites for our roaster, we settled on a space 1/2 block off of the main drag of a (small) historical shopping district in West Des Moines. Our rent is only $650/month for the 1,200 sq ft facility. We have a small retail area in front. We punched a large hole in the dividing wall between front and back to allow for some counter space and a view of the roaster in back. The space has high ceilings, two air conditioning units, a three hole sink, employee hand wash station, floor drain, mop sink and a large ceiling fan/vent directly above the roaster. (All of those features were present before we moved in.)

We retail pounds of coffee beans and tea from our shop as well as various coffee and tea making equipment and mugs and tee shirts with our logo. I'm happy to say that we have slowly but surely been developing a loyal customer base over the past eight months. We also sell beans, retail, through a local online food coop. We wholesale beans to various food markets in the metro area and upscale restaurants and coffee shops. I'm in the shop six days a week. (It's still a one man operation.) I'll prolly bring in a part-time person once I open a few more wholesale accounts. My wife has a great job, so we have been able to plow all profits back into the business. I love what I do....

 

[Kbeans]

I would be lying if I told you I wasn't jealous. I know it's probably not a practical idea to roast upstairs. I'm going to look into renting a space. My thoughts were to start small while i still have a job. I just dont have the ability to quit my job until we have some steady income and business in the roasting. How long did it take to get your roaster made once you ordered it?

 

[eldub]

It was supposed ot take three months to finish the roaster, but it took more like five, if I remember correctly.

I understand your concern with opening a shop before having income. To be honest, I wouldn't be sleeping well if we had to rely on the coffee roasting business, at present to pay our personal bills. We are operating in the black, and have been for some time, but our overhead is low and all profits have gone back into growing the business.

You might want to consider roasting sample batches on your home roaster and presenting them to prospective customers before getting a larger roaster. (If it does a good job roasting beans.) I'm not sure what I'd do if I was in your position.

 

[Kbeans]

Did you pay for the whole roaster before gettng it? Im sorry if ive asked this before, but how much did the 12 kg roaster cost?

How many pounds a week are you going through at this time? Are the wholesale accounts where the bulk of the business comes from? In your opinion, how many pounds a week would make you really profitable (paying bills and sleeping)?

My roaster does pretty good but then again I can't compare it to another roster because that is the only one I've used. I am in the process of getting my logo designed for our bags and website. I was thinking about selling 10oz bags from my roaster (the max finished product from my roaster in 1 batch). My only concern is buying full bags and roasting 12oz at a time. It would take me forever to go through one bag. Do you think if I were to go this way for the time being that I order from someone who sells smaller portions?

 

[eldub]

I'd buy smaller quantities if roasting on that small unit.

We made the final payment the day I picked up the roaster. Total bill was $24,500.

Profitability depends a lot on fixed costs. We have low overhead and that has allowed us to get into the black quickly. I figured the wholesale end of business would be our bread and butter, but I really haven't had time to bring in accounts while watching the shop at the same time. I'd be happy (in the short term) to retail 400 lbs/month and wholesale 400 lbs./month. That would roughly leave us $45,000 after paying fixed and variable expenses, allowing me to hire a part-time person and a draw for myself. I'm hoping to get to this level in the next six months. That would be just over a year after opening for business.

 

[Kbeans]

I think I would rather wait to give potential customers my coffee beans until I have a better roaster. I think that my roasts are going to be completely different. I am thinking about buying a used roaster in the 2-5kg range to start out with. I have enough room downstairs in my house where I currently roast. Did you look into the Ambex rosters by chance? They seem to be a deicent price and are made in Florida. I figured that way I can get into developing my roasting techniques on a better roster and give/sell small batches until I build up some sort of customer base.

Do you make much on your teas and other merchandise? Do you plan on opening an actually coffee shop eventually?

The prices for people selling smaller quantities of beans are roughly in the $5 range for 1lb of organic/FT coffee. Is this much more than buying it by the full bag?

 

[eldub]

We are generally paying under $3/lb for most ft/o coffees we carry. The Ethiopians are a bit higher as well as some estate offerings from the Americas.

We sell our coffee related items (mugs, tee shirts, French presses) and teas for double the cost to us.

 

[Kbeans]

Wow, so I definately should buy from a broker. Do you know what the price difference is between ft/o and regular is?

 

[eldub]

Prices fluctuate, but I've really only priced organic and ft/o beans.

 

[Kbeans]

Ok thank you very much for all of your help. Good luck with your business!

 

[coffeem]

you have to make a fundamental decision up front if you are going to treat this as a business going forward. if you start small i would do it with a small home roaster (e.g. hottop) for a couple of months ONLY then decide if roasting was for you, etc. at that point, if it is, i would at least start with nothing less than a 5 kilo machine. i would skip the sample roaster because they are very expensive. rather see you put the money towards a bigger machine. and my philosopy is 2 5 kilo are better than 1 10 kilo (i know a bit more expensive), but there is nothing like having backup, backup, backup (coming from the IT / telecom industry). US Roaster does make an excellent roaster and they are great to deal with!

 

[Bardo]

I am a similar place as Kbeans, and have been sitting back and reading many of the questions I would have asked myself. So thanks to everyone for the great information. Thoughts on used equipment? If used, European vs American? Also, I am interested in the ft/o market as well. Does "rainforest alliance" product fall into the fair trade category as well? I have started businesses before and have no illusions about it, but for some reason fallen in love with roasting coffee. Still too much to learn to make a decision about how to proceed, but I am roasting small batches for myself and learning as much as I can. Thanks again!

 

[eldub]

Rainforest Alliance isn't fair trade.

Basically any coffee that is shade grown (SHG) is bird friendly, imo.

 

[Bardo]

Is organically grown coffee comparable in quality to other good beans? I guess that depends on the grower...but in general.