Buying an existing luncheonette...

AJPRATT

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Atlantic City, NJ
In my never ending quest to find just the right spot, I came across a little coffee shop (as in greasy spoon) for sale. Its a popular, local place and I know they are busy and do well. The asking price is reasonable and they also just got approvals for an expansion. The reason they are selling is that the mother is in her late 70's and the one son was just diagnosed with cancer (just after they got the expansion approvals), so they decided not to keep the business. I feel bad for them because they really are good people.

I know that its a good idea to buy an existing place. But would this kind of place be a good idea for me to "convert" into a coffee roasting/retailing location?

What about existing customers, those who would want omelettes that I don't have? How do I overcome that?

PLEASE share ALL of your thoughts.
 

Jackson

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Columbus, OH
Anne,
If I were you, I would let this location pass. Greasy spoon customers are NOT your customers. If you are not willing to offer the same fare that was previously offered, the existing customer base will not return. If the current owners would be willing to sell you equipment only, not goodwill, it may be a good deal. If the current owners have a good business going, they would be foolish to lower the selling price to not include goodwill. After reading all your posts, I believe that you want to roast select grade Arabica beans and run a high end coffee house. Look for a good location that will complement your business plan.
 

John P

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Salt Lake City
I wouldn't "buy the business" if it is a greasy spoon, and, judging from your posts and insightful questions, you are aiming for an above average to very good quality coffee shop. To me, the business is of no value. If they want out, they can sell their equipment on their own, and you can take over/re-negotiate their existing lease. If the purchase is for the actual real estate, then purchase real estate only, not much else is of value.

Don't do what's easy, do what's right for you concept wise, and business wise. Don't do this particular thing just so you can open your place-- if it's not right, don't do it.

As an example-- We have been looking for space in our downtown area to do a second project, now there have been 40-50 locations available in the past year we've been looking. Only five met our criteria for size, and only 2 met our criteria for location. Neither deal was right for us, and despite other offers and locations opening up, they are not suited for our needs... and this can be as "simple" as being 1/2 block in the wrong direction. So we have a couple of spaces we have pegged that have existing businesses that are doomed to fail. We are patient. Impatience leads to failure, but so does inability to seize the right opportunity. Be wise, be patient, think with your head, and ignore any emotional attachments to 'space' or (future) 'business'.

My cent.
 
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AJPRATT

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Thanks all. It would actually be the land, building, business, and equipment, but I am also worried about the customer base. Hey, I know a trucker would truly enjoy a good latte as much as the next person, but they aren't a likely customer.

Another place I just learned about... There is a new shopping center a couple of towns over (about 15 minutes from my home). Part of it is done (the strip behind us)... but there are two pad sites left. The guy was thrilled when I called because he had been talking to Dunkin Donuts but the guy he was talking to was dragging his feet (or something to that affect). One pad site is 2500 sq ft and comes with a drive thru (mine!) and the other would be for Saladworks. In the shopping center strip behind us there is a restuarant, a Subway, nail salon, and some other businesses. Across the one street is a hospital and across the other is a three story building with Doctor's offices. Behind the center is the township municipal building. The property guy said that it would be done by second quarter next year. He thinks it would be done sooner because they are getting their permit approvals now, but said 2nd quarter to be on the safe side. I am very excited about this one, but I don't want to get ahead of myself.
 

John P

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Most successful models are built on ~1200-1500 sq feet. Examine the size of a Starbucks sometime. Occasionally, they've done a lot of work for you, if you just know where to look. 2500 is too big. half that, and you may have a good one.

Personally, I wouldn't do any coffee in a strip setting (some exceptions),
and a big giant NO to the drivethru. Good coffee is not a convenience.
 
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AJPRATT

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I made a typo... Its approx 1000 sq ft. I thought I heard something about Starbucks doing drive thrus-- not that they are the standard for good coffee. LOL


What do others think about a drive thru?
 

Jackson

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Columbus, OH
Anne,
Doing the cafe and drive-thru at the same time is a bit tough! You may be smarter by doing one, the cafe first, learn the business and then tackle the drive-thru later.

As you have read the different posts from the coffee guru's on this forum, even the equipment is different from cafe to drive-thru. If you can fill a 1000 square foot facility to capacity, 5 days a week, you will be ready to add a drive-thru.
If you do not fill a 1000 square foot facility, you need to figure out why.

Anyway, that is my 2 cents!!!
 
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AJPRATT

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Jackson, you make a great point. I don't have to do it all right away. I would rather start with one, master it, and then expand when we are ready. When the building is constructed, it will have a drie thru. I can always open that later on.

Also, since this won't be open until next year, I have plenty of time to carefully weigh what I want to (and will be able) to do.
 

Tweaks

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SC
Glad to hear that advice. I am negotiating a corner space with the intent to open the cafe first, and have the capability to handle drive through business in the future if desired. I felt that trying to operate both sides right from the beginning was too much and planned to just start with cafe. Good to see confirmation.
 

CafeBlue

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Toronto
drive through

Just a note of counterpoint from the pro-drive through crowd.
What is your customer base? Are you a destination cafe with seating service only? Do you offer take-out cups? Are you in a commuter destination, travel route or residential area? Do you ever have inclement weather? Does the driving traffic include a large percentage of mommy-vans?
I think most operators wish they had spent more effort to design drive-through capability into their site selection, equipment selection, floor plan and start-up budget.
Perhaps your design includes at least rough-in for expansion to drive through capability? Avoid re-modeling and re-positioning fixtures/equipment when opening drive through later. I think you can effectively open with drive-through, if you plan and design for it effectively. Search older postings - lots of other forum threads refer to drive-through.
 
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AJPRATT

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Thanks, CafeBlue... I am glad that it is not impossible to do and that it may benefit me. The pad site will be on a busy county road, surrounded by a hospital and medical building, and just off of the Garden State Parkway. There are a couple of daycares that I would be on the way. Its on the right side of commuter "going to work" traffic, too.

I will be sure to do a search on drive thrus. Its funny because its not something I even thought I would be able to do, until I learned about this property.
 

morrisn

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Personally I would be quite excited about the addition of the drive thru, there again Starbucks has done your home work for you, they know it is a good thing to do business wise. I have to disagree with the statement that " coffee is not a convenience". While in a perfect world maybe we should always take the time to sit down and enjoy our coffee but it isn't a perfect world and why should someone in a hurry be forced to drink bad coffee because we are not willing to provide a service. It al comes down to what you want to provide.
 
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AJPRATT

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morrisn said:
...why should someone in a hurry be forced to drink bad coffee because we are not willing to provide a service. It all comes down to what you want to provide.

Thanks! And, unlike Starwhatever, we feel that good coffee should be aforable for all. The best part is when I roast at home and the grind a brew and someone tastes that truly fresh quality coffee for the first time. The reaction is priceless.
 
Hi Aj,

I like the greasy spoon. What will you serve? What is the price? You will not be a diner that is obvious. You will be a coffe shop, but will you serve lunch?

The customers of the greasy spoon will be looking for a good cup of coffe and a blue plate breakfast and lunch. Is that part of your plan?

If you want what most coffe shops want, pastries and lite lunch fare then who else would your customers be besides truckers? Truckers will visit your location if you have fast service that is a normal meal (breakfast of eggs and bacon and lunch of hamburgers and a blue plate special.)

If you do buy a "Truckers Special" expect them to want that. But if it is a LOCATION by a college or downtown, then you can change that perception.

My advice, look at the current cliente. Judge from that, but keep in mind whether or not it could be changed!!
 
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AJPRATT

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Hi, cherylann324... Thanks for your interest. After a little further investigation, I decided not to pursue that location. There are people who for YEARS have been going there for breakfast and lunch and I wouldn't offer most of what is on the current menu. And, I don't want to start off on the wrong foot. Plus, after doing a walk thru, there is a LARGE storage shed attached to the building (with all of the freezers and storage) that has to be removed because of some thing with the municipality. So, I wouldn't have that and the addition hasn't officially been approved yet. So, I would have very little room for the roaster and next to no storage for the bags of green beans.

So, we are hopefully going to wind up at a pad site in front of a shopping center. Like someone else said, when a door closes, another one opens. I really hope this is the door for me! LOL
 
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