Examples of monthly expenses/budget and opinions

[Beanster]

I've been reading this forum about a week and read A LOT of the posts so it's kind of run together in my head now and most info I've probably found but can't find exact threads. Basically just want an example of monthly expenses such as rent, etc. This will be just a small double drive-thru. Going to try and paint a picture of the area and what I plan to do and also get opinions on if you think it would work/be a good idea.


Also startup costs. I need to try and get it done as low cost as possible for me to be able to afford it. I'm looking at a building that isn't a drive thru but looks to be about the same size as a typical double espresso drive-thru I've been seeing online and on this forum. So drive-thru windows could be built on both sides. I am guessing for the most part the inside will just need to have the equipment dropped in. It's a small half-block from a university with an enrollment of about 6,500.

This block is basically an island block that follows a busy road this building is on(with the building being on the busy street end of the block). So on one side the busy 4 lane road, the other a street that has the college on the left, the half block on the right. Both sides have apts, college oriented shops/bars/university bookstore/laundromats/burger joint etc. Also a few small offices like real estate, chiropractors, etc. No coffee shops though. Heck, there is even a roaster down the street!

There is a drive-thru Starbucks down the road though less than 5 minutes but it's more when you get to a major retail/shopping zone. Also in another direction the popular local coffeehouse(that also has a drive-thru) that is less than 5 minutes away. Service there is slow though and half the time I'll give up on waiting at the drive-thru for someone to say something and just go in. There are no other specialty coffee joints in the city except for one inside a Hastings(like having a Starbucks inside a Barnes and Noble). And the city population is 90,000.

The location was previously a tiny take out/delivery pizza shop that wasn't open long. Probably been closed a year/year and a half. I remember there was a lot of buzz about it. A lot of business from college students dropping by for a slice or 2. I remember calling a few times trying to place orders and nobody would answer and would sometimes not be willing to deliver. I think they probably closed because they were overwhelmed and maybe over their head/ill prepared. Not because of lack of business.

So I think it could be a good location. It's not a very attractive spot I wouldn't think for most businesses because I don't think much could be done with the small space. Nothing special to look at basically a rectangular wooden box with paint. I don't think people would know what to do with it. But thinking along the lines of what I plan to do I think it could work well as a drive-thru. One negative is that driving down the main road from one side you can't see it until you're driving by because a vacant taller/larger building next to it(would be just enough room between for a drive-thru lane) is pretty close to the street. But coming from the other direction you can see it from a ways off and it's the right side of the street. I do still need to do a traffic count.

Like I said I'm trying to do this relatively cheaply. So I'm figuring it will be cheaper than having a building built and putting it on a site and having to get all the plumbing/electr. etc. done. And I know people recommend getting the best site as opposed to cheapest but I do think this one would be good and very low overhead. And once I proved I was making this work I could then have an easier job of getting some good financing and opening another location that might be more profitable. Although I do think this spot could work great. I'm guessing rent would be very low for this spot. Cost of living is low here in the first place. I freak out seeing people that have to pay thousands on rent. This place may be in the low hundreds I'm guessing. I figure I won't HAVE to sell as much coffee at this location as the avg. coffee drive-thru to make money. And I don't need to get rich, If I netted 25-30k/year for myself I'd be happy. And no I don't even expect to make much money if at all the first year.

So basically with all my rambling descriptions do you think this is the type of spot that could work? And could someone project startup costs, like cheap ways of getting the equipment(leasing? remember someone mentioning the distributor gave them free equipment to work with them exclusively? and so on?). It's possible when it comes to the building I may not have to do much more than drop the equipment, paint the exterior, get signage, and pave the lot(uh, just gravel right now). Of course, no way of knowing what's up on the inside right now so that's best case I figure. So what am I missing under the best case scenario?

Then also the monthly expenses so I can get an idea of how much coffee I'd need to sell? I do plan to serve bagels and muffins in the morning in addition to the coffee. Maybe breakfast sandwiches made out of bagels and croissants. And breakfast burritos. If you serve breakfast burritos in these parts, people WILL come. Then after 11am probably paninis.

Sorry for the long-windedness! Just drank a 'grande' latte and that java jive is making my brain jump all over the place!

 

[Comfy Place]

Whew! Where to begin? Well, much of what I have to say is based on my experiences in starting my own coffeehouse this past April. Before we opened, we worked on things for 16 months prior, and I still could have used more time for research. Let's start with a business plan. Have you written one up for this business yet? I'm guessing that if you have, it's not yet complete, otherwise why ask for the figures you are asking for. Location is important, as is ease of access, as well as visibility/line-of-sight.

One thing that immediately jumped to my mind was when you mentioned that there is a 4 lane road. Depending on the volume of traffic, this could be a negative. Example: in a larger city about 30 minutes from where I am, a new coffee shop opened along a very busy 6 lane highway. The trouble was that unless you were in the correct lane to get off and go to the shop, you couldn't move across the lanes to get there. Also, there was no traffic light at that intersection, which made things even more difficult. End result: they closed up within 3 months. I don't say this to scare you, but to have you try to look at your potential location from the perspective of a customer. How much of a pain is it to get there during certain times of the day? Is it enough of a hassle that they would rather keep driving down to Starbucks where they may have an easier time getting their java?

What kinds of traffic counts for the main road have you found out? How long has the Starbucks and the other independant been in business at those locations? Have you been into either of them to see what they are doing/not doing? What is the square footage of the potential building? I'm presuming that the building already has water and electric going to it, but are they up to code? What about any city regulations regarding drive-throughs (distance from curb, minimum space requirements, etc.)? Will you have enough space to adequately house all of the items that you need to run the business (cups, lids, coffee beans, napkins, straws, syrups, mixes, ice, milk, etc.)? And the questions go on and on and on....

I would also start asking around about the previous business and why they didn't last long in that location. You might learn some very interesting bits of information that would help you to be successful. Example: in my town a few years ago, there was a coffee shop that had been open for 2 years, but then closed. I had been in it before it closed, and thought that it was pretty decent. Just a month ago or so, I had the opportunity to talk with one of the former owners of the business, and I learned that they had to close because of other family members' health issues. Now, in this case, it turned out not to be lack of business that caused them close, but it was still interesting to speak with her just to learn more. Who knows, maybe that pizza business just didn't do their homework on costs and just didn't price their products right. But you never know unless you ask.

As for equipment, my suggestion is not to get yourself tied to any one particular supplier or roaster. Granted, this will probably mean that you will need to put out money to get your equipment, new or used, but at least you won't be shakled to a vendor/supplier/whatever, which allows you the freedom to keep on the lookout for better products to bring into your shop. Be independant, but always try to ask for advice and to learn more.

I'm sure that I didn't cover all of what you were looking for, and hopefully others can toss in their 2 cents for you as well. My final advice at this point is to keep asking questions, and research, research, research. The more you know before you jump in, the easier it will be to swim. If you wish, you can e-mail/message me for a more detailed give and take between us.

 

[Beanster]

Thanks for the info. Like I said I still need to do a traffic count. It's a 4 lane road, I don't know if a 2 lane road could even provide enough traffic? But it's not a road that makes it hard to turn into a parking lot from the other side of the street and you'd only need to change one lane to turn. Baker Street has been there 3-4 years, Starbucks maybe 2 tops. Anyone else want to address my post?

 

[brewcrew]

A general rule-of-thumb: Focus more on worst-case scenarios than best-case. That seems harsh, but this is the real world. Nobody ever has regrets when things work out better than what they've planned.

 

[kimbica]

drive thru questions

Hi Beanster! You are smart to try to assess this location very carefully before you commit. I am in the process of opening my own espresso bar and it has a drive thru window that was there before. I really do believe drive thrus can be wonderful money producers IF the location is excellent. I don't know wat kind of traffic you have there, but I would look for high counts of morning commuter cars. The traffic can be heavy at other times of day and not help you enough, or you may have too many people in your area getting their fix at home to save $ or at the office. Make sure that they are passing by your store and can easily get into and out of the parking lot. I mean very easily. If it is tricky, it is probably very risky.

I do worry a bit when you describe the structure - is it permanent, and will it pass codes in your city? I know here in Tucson they are really particular about the access required for any drive thrus whatsoever and they need to be permanently attached to a slab foundation with full utility service. The space that can be required can be a LOT, much more than you would guesstimate by looking at the parking lot. Check with your city zoning dept to make sure you can comply with any (outside the shop) space needs. Do you have enough room for a lot of paper and plastic cups, napkins, straws, sugar, syrups, etc? This stuff can take up some serious space. Wall shelving is a great help when floorspace is limited, but if this is really tiny it may be a factor.

I agree with comfy that you should try not to get into any "deals" with roasters or suppliers that force you into a relationship. You can get some great buys on ebay if you shop saavy. I scored a used dual (half cold) pastry case made by Millbrook for $950 that retails for over $8K. It takes some time this way but it is worth it for your freedom. Also consider having training from someone who is not selling you anything. These follks usually know their stuff and have your best interests in mind as they need referrals for new consulting biz. Get fresh beans in your shop - not something sent from overseas or even across the country. It's ideal if you have a good local roaster but try the coffees first - do a cupping and try to get a custom blend for your house espresso. I am using my roaster as a consultant but he is charging me for his time and does not care if I choose to roast with him or not - he just likes to see new independent shops make it.

Don't make the mistake of waiting until you sign a lease to get started planning everything out. It is true that you may not get the space and you spent all that time researching, but you learn from it and it will save you money in getting your doors open earlier once you are paying rent. Oh, and don't be scared of higher rent either. A busy spot can make you much more $ even with more overhead than a slow spot with cheap rent/tax/ fees. High volume is everything in this business. Do make sure to visit the "thriving" coffee house, the one you said was slow on service, and figure out exactly what they are doing right and what is needing improvement. You absolutely MUST be fast in making great drinks working a drivethru window. If it takes more than 1-2 minutes to take and order and fulfill it, you will lose a huge number of customers who will go down to the SBux drivethru instead. This is partly why training can be so helpful and worth every penny. People will judge you harshly from the first day you are open - I know it sux - there is no "grace period".

You might find it helpful to talk to other successful small restaurant owners in your city and glean knowledge of the process of opening up shop in your area. It can be a hassle to jump through the hoops required to get open. In my city it is the county health dept. that is brutal. Some ppl have had their shops ready to open for weeks until the final health inspection was done and "passed" to allow them their Certificate of Occupancy. Maybe since you are in a much less urban area this will be a simpler process for you. I hope so!

Sorry if this sounds awfully negative overall - it isn't to deter you. It is just that I am learning a lot about the business, especially financially, that I never would have guessed when I was merely a coffee bar customer for many years. It is not that cheap to start and it takes time to break even in most places. Even over a year sometimes, so have savings to live on in the meantime.

Feel free to email me if you want to ask questions or talk shop. I am really busy but I like talking to others who are getting into this too! Good luck and definitely make sure you have enough $ budgeted for the project ahead of time - before you sign anything!

--Kim
Crave Espresso Bar - to be opened this fall (Please!)