Coffee Shop Different Revenue Stream?

[helloitswes]

Hello! I’m really new. Just created an account so I could post a question in here to get some clarity on a thought I had.

I’m looking to open a coffee shop in the midwest (Iowa), and I was wondering about a different kind of revenue stream. Essentially, I was wondering if anyone here operates like this or has ever thought of doing business like this.

The thought was to operate as a subscription based brick and mortar coffee company. Essentially, I would have my customers pay me ‘X’ amount a month for Unlimited Coffee. I was thinking around $30 - $40/month. Somewhere around in there I think. I would have the basic Black Coffee package for that, and then a premium package ($50?) for the iced, lattes, espressos, etc.

Here is my thought process on why it’s a good idea (I hope):

1. Recurring revenue on a monthly basis
   
2. The perception of ‘Free Coffee’ might (might) entice an upsell to the bagels/pastries/food I have.
   
3. Competitive differentiation

I have a way to track all of this, and my background is in CS, so I was just going to pull together a few API’s to make myself an app for this (really thinking about quitting my corporate job).

I imagine that if I had around 150 paying customers I could make a pretty decent living since I live in a fairly populated midwest town. Of course I would also sell by the cup, but I would really like the majority of my customers on this type of plan. I’ve done a bit of research on this and from what I’ve seen it’s really uncommon for people to outright abuse this model.

Does anyone have any thoughts on why this might be a bad idea? I’m just looking to have a conversation with a few experts to hear what you all think.

Thanks so much everyone!!!


--helloitswes

 

[Musicphan]

That's an interesting concept/idea. I would be a bit hesitant to do with espresso based drinks simply because the milk costs may eat you alive. But for brewed coffee - I think that would work. If you do offer a 'premium' offer - maybe limit it X amount of uplifted drinks per month. I have a subscription program for my coffee and I have very few people that cancel. It works super slick and the recurring revenue is nice!

I would strongly advise you not to do any type of payment portal via your app. You get into PCI challenges whenever you are passing CC info along... even when tokenized. Your looking at $10-20K+ to get your app properly pen tested and approved for PCI compliance. Take a look at the recurring apps out there - I utilize Shopify w/ Recharge (I would not recommend... lots of little bugs... moving to Bold's Recurring app). if you have questions on this PM me.. I spent 8 years in the InfoSec business focused on small business/developers.

 

[helloitswes]

Hey thanks for getting back to me! Forgive me if I have mistakes - I’m on mobile.

great to hear that I’m not the only one that might operate this way. Do you do unlimited black coffee then? Makes sense on limiting the premium drinks as well. If you wouldn’t mind, can you PM me more info about your subscription program?

also, good call on PCI. I might just build a Square app integration instead that operates on recurring billing. I haven’t found any out there that integrate with square. What are your thoughts on that?

also, have you heard of anyone else doing this that I should look at? Any other shops or anything?

again, thanks for all the help. Excited to keep building this out!! Thanks Musicphan.

 

[Musicphan]

I should clarify... I am selling whole bean coffee via mail order subscription - not brewed coffee on prem.

When I researched my solution I found that every POS app had diff pros/cons which were highly dependent on how you run your business. You will also find most of the POS focused companies do only a "OK" job at ecommerce, and ecommrece focused companies do only a "OK" job at POS (at least for my set of needs). What you may want to look for is a membership management software/plugin vs. recurring billing. The recurring billing does one thing - charge a customer X amount Per X duration. Typically not much else. You will need a way to validate if they are current, which most recurring billing may not do for you.

 

[Musicphan]

Stripe / Braintree (part of Paypal) are the two big 'billing automation' clearing houses.. you may want to dig through their site to see if there are solutions that tie to their API's.

https://stripe.com/works-with

 

[gettingthingsstarted]

Hi there, did you open a coffee shop and try this idea? Just wondering if has worked out as I had considered the same thing but without the background in CS..