Is this opportunity as good as it sounds to me?

[Ruby]

ElPug- because you don't think it would be worth the little to no income you would make or because you think you would lose income?

 

[ElPugDiablo]

With such a small population base, it is very very hard to make any money. More likely you will lose money while you enslaved yourself. Believe me coffee shop is a numbers game, small population is a big no no. Let's put it this way, to make it worthwhile, at bare minimum, you will have to get about 100 ~ 150 customers everyday, month in and month out. That is about 4% ~ 6% of your town's population. You will have to do everything right and prey like there is no tomorrow to get that kind of percentage. Heck, if you can do that kind of percentages, you should open in a 10,000+ town and make a six figure income.

By the way, $15,000 strictly for equipment is doable, if you buy used, but you better know what you are doing as most used restaurant equipment are trashed. If you end up with a few lemons, the repair bills could be pretty high, not to mention years of headache down the road. From your descriptions, looks like this was a deli/restaurant that went out of business. Do you know if all those equipment are in working order? What about the bathroom? Heating and AC? If you need any kind of construction and renovation, budget $20,000+ for it.

If I were you, I rent the space out and be a landlord.

 

[Ruby]

Yeah I see what you are saying about getting the numbers. I obviously am not interested in this for the money. . . I love my little small town and would love to see a little coffee/smoothie shop in it. I think I need to find out about how many customers the subway, DQ, and gas station get in our town during the hours I would be open. I know the gas station gets a TON of morning traffic for coffee- If I could get even a 4th the amount of traffic they got in the morning I think I would be able to stay afloat. But I'm really not sure I can because even though most people that come in the morning aren't getting gas they don't care about the quality as much, probably care about cheap price more, and some of them are wanting to buy soda or cigarettes at the same time. I'm pretty confident that I can get the teenagers to make my place one of their top hang out places after school and on weekends but I also know they are probably the customers that will linger the longest and spend the least!

I think its very possible I just wouldn't be able to get enough customers. Thanks for taking time to talk through this with me. Still not giving up on it completely but I appreciate your helping me think realistically.

Oh and as far as the used equipment goes- the stuff he has is from a bar and I think he bought the stuff new and he was only open a year. But that still leaves me pretty much equipment to buy. I figured I would give myself 6 month to a year to look for equipment used off craigslist from St. Louis which is about 2 hours. My plan was to find a business that had bought new equipment within the last 3 years that seemed to be well taken care of. I figure it is a gamble but probably still cheaper than going all new. Especially if I take my time and don't rush to buy the first stuff I find. The espresso machine and coffee maker I might splurge for new but expecting such a small flow of traffic compared to most coffee shops I figured I could probably get by with a 1 group espresso machine and 3 burner bunn brewer.

 

[PeterCoffee]

Ruby,
buying the building and not having a mortgage is a good investment no matter how you cut it. Especially if you plan to stay there for a long time. You are very right not to rush in to the cafe. take the time to know what you are getting into. You could even rent out the store for a year to bring in some income. It seems to me slow and steady wins the race.
With 2500 folks the cafe will have to become a local spot. A small roaster would help alot. RUBY'S HOUSE OF FRESH ROASTED COFFEE And TEA! Don't forget the loose tea!
Peter

 

[ElPugDiablo]

Ruby, what about neighboring towns? How close are they? Is your town a destination for the surrounding area? If it isn't, search for the hippest and most happening city or town in your area, find the busiest location with high foot traffic and have some busy and well established retail shops. Ideally you should have some outdoor seating and parking spaces, plop your shop there, and you will have a fighting chance.

Coffee house is long hours and hard work, no matter how Phoebe, Russ and Chandler romanticized it, is a business investment. The first rule of investment is don't lose money. You have to turn some kind of profit in order to sustain it not to mention maintain your sanity. If you going into this venture thinking I don't care if I make money, I promise you, it is not going to work. Search this forum, in the last 5 years there are at least 3 or 4 people came here, did their research, asked questions, opened and failed within 1 or 2 years.

 

[OldSalt]

Ruby, I'm intrigued by your notion and possibilities. I appreciate the pragmatists here, and it is true you should never get into a business venture with capital you may need in the next three years. I like that you could do this, opening up a world of possibilities, close to within your present budget - but don't discount moving costs... Meanwhile, may I encourage the optimist in you?

I just missed "the" front-and-center wedge-shaped building with lots of open sidewalk space in my economically-challenged home town. It went for a song, but had zero kitchen amenities so startup would have been formidable. For normal humans, anyway. I have been relatively successful in finding things below market and the current economy affords more opportunities than ever in my lifetime to capitalize on weak markets. Your hubby being gainfully employed means you can start modestly and work up to big impressive modern/new gear if and where your market bears growth. It sounds like the bones are there, and you would need a big percolator (normally available online), some comfortable seating and lots of advertising. A very modest espresso machine or two would probably serve until you develop a market who may support a bigger rig.

There are a number of commercial kitchen equipment jobbers, and you may find one in a city near you, who can provide insight as to what is being done and what is possible in your area. If they are doing their job right, they want you to succeed (they'll benefit from your success) and will provide you options and advice for your specific market better than all of us would-be gurus online with our colloquial experiences.

If you're not afraid of used, and can either do electromechanical and plumbing work yourself or budget for the added cost of adapting or repairing used equipment, try Craigslist (Try crazedlist.org : search craigslist like a madman to search all or any number of CLs at once. There is an unobtrusive browser adjustment to run the application - explained when you bring it up - that I've done on a dozen machines with never a hitch.) Today, I found this listing for a great machine - probably even a bit beyond your immediate need, but a great buy - "LaPavoni P1V2 Commercial Espresso Machine & Grinder - $1499 (Lake Havasu City)" in the Mohave, AZ CraigsList.

The wonder of capitalism is that the bottom of the market is the time to buy and build.

 

[Ruby]

OldSalt, thanks for the encouragement. I'm going to a free workshop later this week on starting up your own business through the community college and SBA.gov. They said after I take that class I can get some free one on one business counseling if I want to keep pursuing this. Judging from the amount of people I see go into the 2 fast food joints in town and the gas station I think I have a decent chance when you consider I will essentially have no rent to pay and my start up costs although not small are about as small as you can get with all that is included in the building.

People in town seem to think we have a community that it would survive in. A couple people told me about a former coffee/donut shop that used to be in our town and did well til the owner closed it for personal reasons. Although I also get the feeling that everyone has as someone else noted "romanticized" the idea in their head.

 

[OldSalt]

The coffee shop

I've seen 'em from the interior jungles of Minnesota where I grew up, in Big Sur, in the Mexican desert, on the Gulf Coast, on the Eastern Shore, and in the Maine woods, and all places in between - and not a few in Italy, Spain, Malta, France, Germany, Russia, Ukraine, Turkey, and Great Britain - and even in my homey little-big town in Michigan. The coffee is usually good, but the company is what makes 'em work. A rack of fresh pastries makes 'em better, but even they are not why folks come. Cribbage, chess, and backgammon boards - some even built into or painted onto the tables - help with slow times. An internet connection makes a great inexpensive draw, especially if you can do your own machine maintenance. A newspaper or morning news show on television will hold folks' attention for a moment. From a hole in a Gibraltar parapet wall to the general store in Youbetcha, Wisconsin, I always knew which coffee shop to go to because people gathered there.

What draws people is people. Even if it is stopping on the way to the office or stealing a moment from the morning's co-op run for chicken feed, people like to hear what is going on in the community and be a part of it. Better if they can do that in a friendly atmosphere with a good cup of coffee.

You could even be a goose hunter, deploying decoys... Consider investing in a couple or even a few manikins, to dress up kinda retro-fashionably and move about the place. One day they stand at the counter. The next they puzzle over a game of chess. Yet another day they stand discussing the day's paper or look out the window. But always with a coffee cup...

 

[Ruby]

Manikins??? LOL. We were planning on having a few computer stations set up for people to check their email/facebook/etc. The building also already has a couple big televisions up so we can show the morning news to the morning crowd. We would make the screens double as computer monitors and play viral youtube clips to the after school teen crowd.

 

[JAVACULTUREROASTINGCO]

Ruby,

I want to encourage you. We started our company in 2004, in a small place. People encouraged us not to do it but we did. In a short period of time we did more business then the larger chains. Go with your gut!!! Also as far as the equipment goes, I dont want to sound like a sales person but we could but you a package together that could save you big. To give you and idea. Two nice grinders with 3lb-5lb hoppers, 2 group semi auto espresso machine with all the bells on it, pour over coffee brewer, two blenders with sound enclosures dual board manufactured specifically for our company for a total of $4400+250 delivery. Also, we are roasters and distributors and can give you the best prices on all the other goods delivered prices. Again not trying to be a salesman but I have been there and would love to help you out.

 

[shadow745]

Ruby,

I want to encourage you. We started our company in 2004, in a small place. People encouraged us not to do it but we did. In a short period of time we did more business then the larger chains. Go with your gut!!! Also as far as the equipment goes, I dont want to sound like a sales person but we could but you a package together that could save you big. To give you and idea. Two nice grinders with 3lb-5lb hoppers, 2 group semi auto espresso machine with all the bells on it, pour over coffee brewer, two blenders with sound enclosures dual board manufactured specifically for our company for a total of $4400+250 delivery. Also, we are roasters and distributors and can give you the best prices on all the other goods delivered prices. Again not trying to be a salesman but I have been there and would love to help you out.

IMHSO large bean hoppers are a waste as lbs. of beans should never be introduced to air just sitting around waiting to be used. Thanks for not pushing your brand on us...

 

[shadow745]

Ruby, will reply/quote more as I have time to read through all the posts made thusfar. I will tell you based on experience (mobile espresso operation) that great business isn't always about the numbers. Whether you have 2,500 or 25,000 people, what matters most is whether these people will "get it" or not... meaning your concept. For example, you could end up with 100 people daily with the majority of them wanting "just plain ole'" drip coffee or you could have 50-75 wanting higher end items such as espresso based drinks, chai or fruit smoothies. Profit margins certainly matter, but high ticket items are what pay the bills at the end of the day....

 

[caffeinatechicago]

Markets are almost always dictated by supply vs. demand. Either go with Randy's suggestion or start hitting the pavement and poll the 2500 citizens and ask important questions. You'd have to calculate the average bill times frequency. Because if you cannot sell coffee at a high enough price and frequency, it won't add up to much. Also, survery the landscape and see if there are any other espresso shops in your area that have done well.

 

[Ruby]

caffinatechicago- the closest coffeeshop is a little over 30 minutes away in a town of 7000. I think its been there for a while. Not sure how much profit it is making but its staying afloat dispite paying 1300 a month in rent from what I hear. I know that town probably averages a little bit higher income than my area. On the flip side my town has pretty much zero competition. I have highschool kids that I know would come and hang out at my place after school and on weekends and buy the smoothies and sugary coffee drinks. I'm not as confident about getting a decent morning crowd though. I'm not sure how to do market analysis when there is not much history to analyze. Will farmers and town people who have been used to drinking coffee from the gas station want to spend a little more for a little better quality? Will they want to pick my place over the gas station because I have a place to sit and their fox news playing on a big screen for them to discuss the morning news? Can I get the senior citizen crowd to start meeting for coffee at my place in the morning? I really don't know how to figure that out without opening.

 

[John P]

Ruby,

In general, I believe it's possible to have a phenomenal coffee shop anywhere... but in a town of 2,500 that's a pretty tall order. Whether restaurant, coffeeshop, bar, would any of those do well in that location? The most important question to answer is, "Can I create a great business here?"

There are some problems I have with your situation.

1) Falling in love with a location -- this is not good. Every city, town, etc. has multiple locations that will work for a business. If you hinge everything on a particular location AND the owner/landlord knows it, you have lost all leverage in negotiation, and you are most likely missing something if you are convinced it will only work at that spot.

2) It's a numbers game. The percentages (on average) of coffee drinkers who will be regulars is not much different there than anywhere else. I am not certain the numbers are there. It takes time to build a business. There are two schools of thought, one is to have enough additional capital to cover your operational costs for a minimum of six months. The other thought is that you should create a business that is capable of being profitable from the first month, if you can't do that, it's probably not wise to open.

[Side note: You can't take a poll or survey about how people will respond to something that doesn't exist. If a "yes" or "no" is contingent upon what people say, you are doomed before you even start. Either YOU know or you don't.]

I'm not saying don't do it. But if I were being paid for consultation, I would give you this advice:

If you are really passionate and serious about this as a business, it is not something to rush into. Take a minimum of a year or two to learn business fundamentals, the craft of coffee & espresso, customer psychology, marketing dynamics, etc. BEFORE you even consider signing a lease or purchasing a space.

The streets are full of the empty spaces and broken dreams of those owners who have said "I don't have that much time" or "I don't have the money to travel and see other shops and attend conferences, and take workshops...", etc. Lack of preparation -- in terms of knowledge is the single greatest reason for failure in this business.

Remember: Encouragement might look great when you read it, but remember it's your money, and your livelihood at risk. Risk is great, uneducated risk is idiotic. Educate yourself, become dispassionate about your assessment, and move forward with a prepared mind.