Location Synopsis - Give me your Feedback

UtopiaCafe

New member
Aug 30, 2005
3
0
Wise, VA
Hello everyone! Basically what I'm wanting to do is give a run down of my town/location and see if any of you experienced businessmen/women have any feedback.

I will be located in a small town in Southwestern Virginia with a population of 3,600 as of the 2000 census. There is one established coffee shop in the town that operates from the hours of 8:30am-5:00pm -- they do not advertise heavily or do a lot business; the woman who runs the location has stated that it's simply "something for her to do".

The town is a budding college town that has the only branch of the University of Virginia that is not located on the main UVA campus. The college is constantly expanding and recently purchased an additional 500 acres to future development. They have also recently built a large football stadium and are expected to compete in NCAA Division II in the next few years. There were more students enrolled this year (1,900) than the college has ever had.

The patch of road I am looking to locate on is the main entrance into the town as well as the route that most people will take commuting to campus. According to the Department of Transportation there are an average of 16,000 cars that pass by this road each day.

The estimated rent for the location that I'm looking at is approximately $900 a month. I will be operating from 7am-7pm Monday through Saturday.

- - - - - -

Any feedback and/or concerns you have about a coffee shop being able to make it please let me know. I'm very optimistic that if I get started now I will be able to saturate the market before the town really picks up it's feet.
 

BaristaTrainer

New member
Oct 18, 2004
192
0
Portland, OR
Hi Utopia,

It will be important for you to understand what you will need to make daily to break even. In a very small town I imagine you will have a lot of repeat business, but not a big transient customer base. It sounds like you have done some research on key groups to target, i.e. the college and expanding areas, with the right marketing you could very well be able to make it work.

Often traffic counts are based on a daily amount (24 hrs). it would be good try to do your own counts during the times you expect the most business (the mornings, lunchtime, early evenings).

Being open until 7pm makes me think that it will be imprtant to incorporate some different profit centers into your menu other than coffee, to draw people in during off-peak hours. A quick lunch menu consisting panini and salads could be a good place to start since they require very minimal equipment and overhead to serve, and are quick for students and people on the go. You may also consider offering gelato.

Also, here is a thread on another forum that might have some good info in regards to a proposed location.

http://specialty-coffee.com/forum/topic ... s=location

You may also try doing a search on this forum for "Location".

Anyway, good luck and keep researching every aspect.

- Matt
 

cafemakers

New member
Nov 3, 2004
576
0
In this situation, I would ask myself is the possible income of a shop in such a small market worth all of effort that will be required to get that business up and running?

My concern here is that with such a small potential customer population, you will need to bring a substantial percentage of the entire town and/or school through your doors each day in order to repay yourself for all of your hard work. Everyone's income expectations are different and there probably are some creative strategies that you could employ to make yourself a local fixture with the college scene; however, given your astute observations of your competitor's mindset, I suspect that you want more than "something to do."

With a lot of best guess work on what may be reasonable approximations of costs (product, labor, utilities, other expenses) and reasonable profit margins on your beverage sales, you'll probably need to draw 5% of the entire population of your town and your school each day in order to clear $100k in annual profit. Although this may be possible for a brand such as McDonald's, that has been drilled into every human's brain since (or before) birth and a sells a product that more people use than coffee, it is an overly optimistic goal for a new company in a single location with an unknown brand. (unless selling a much more addictive product; such a product would likely be prohibited by law) :D

Unfortunately, adding a variety of other menu items will likely only decrease the profitability of each transaction and thereby require a higher volume of traffic to reach your goals; traffic is just not available in this market. The "be all things to all people and they will come" philosophy of retailing only weakens your brand message ("I sell coffee" becomes "I sell all this stuff and coffee"). New menu items should be applied only as necessary to sell more of your most profitable product - in this case, coffee.

The sad truth is that even with what would otherwise be considered an "aggressive" posture of drawing 2.5% of the inhabitants immediately surrounding your business, you'll probably be barely a little ahead of breaking even at the end of the year. That's a lot of work to be not much better off than you would have otherwise been - probably a better return on your investment from a passive investment like real estate (and you get to sleep in).

If I was interested in this site as an investment, I would definately pass; however, I would still consider the location if there was something else I was looking to gain (like having "something to do).

You're on the right path. Keep up the good work.

Andrew
 

mikefly

New member
Jul 22, 2005
35
0
alright i have been a professional chef for 13 years in 7 different states,
that?s my resume and I?m danm good at it!

Cafemakers said ?Unfortunately, adding a variety of other menu items will likely only decrease the profitability of each transaction and thereby require a higher volume of traffic to reach your goals;?

Not true at all!!!! If you figure your food costs down to the proper percentages and you do a lot of in house prep ie slice your own meats and bake off your own pastries, then you should put the same amount of money in the bank from a gum ball as you do a coffee drink or a sandwich.
In fact adding a selection of pannini and fresh baked pastries will increase your average ticket per customer and again if your prices are set right you will put more in the bank.

KEEP YOUR LABOR COST DOWN?sorry bro but your gonna have to work the place all by your self for a while, unless your married or can take on a partner.

If you need any help or have any questions on how to price your items let me know!!!!
 

BaristaTrainer

New member
Oct 18, 2004
192
0
Portland, OR
I have to agree with Mike. I have managed multiple coffeehouses from start up and have found that in the last two where I had the ability to introduce a progressive yet selective food menu our profits only increased. You do not want to offer to many items that directly compete with your coffee beverages, but if you can raise your ticket average from $2.85 up to $4.75 by offering other items that compliment your coffee menu, you will have a much better chance of meeting your P&L goals, especially in an area with less traffic and is un-saturated/un-sophisticated in regards to specialty coffee.

We have had clients that have started out with panini with some hesitance but have brought sales up to over 100 panini a day, and at $5 or $6 a piece that can greatly add to your income.

Interesting too that Starbucks is now re-introducing hot sandwiches in many locations ...

Utopia, I think that you will face many challenges that you most likely already see with this location. It will take a lot of research to find out if your business will be accepted and patronized to the level you will need to be successful. See if there is a business class or instructor at the University who would like to make this a project for a class? How to determine if a business can be successful in a small town. Just a thought.

- Matt
 

cafemakers

New member
Nov 3, 2004
576
0
mikefly said:
alright i have been a professional chef for 13 years in 7 different states,

Not true at all!!!! If you figure your food costs down to the proper percentages and you do a lot of in house prep ie slice your own meats and bake off your own pastries, then you should put the same amount of money in the bank from a gum ball as you do a coffee drink or a sandwich.
In fact adding a selection of pannini and fresh baked pastries will increase your average ticket per customer and again if your prices are set right you will put more in the bank.

KEEP YOUR LABOR COST DOWN?sorry bro but your gonna have to work the place all by your self for a while, unless your married or can take on a partner.

If you need any help or have any questions on how to price your items let me know!!!!

Whereas the traveling chef's credentials are surely impeccable, we cannot endorse these ideas - this is not good business sense. The majority of successful coffee shop locations are designed to be just that, coffee shops, and are not intended to be wholesale bakeries or delicatessens.

Although it is often advisable to offer baked goods and a small selection of food products that will compliment your coffee sales, it is not practical to assume that all coffee shops are suitable to maintain a wholesale bakery or full kitchen on-site (particularly a combination coffee shop and bakery staffed by one (1) employee!). With an gross margin of 70-75% on specialty coffee products sold, it is unrealistic to expect that you can maintain the same profit margin from a muffin or other pastry provided by an outside supplier.

...this is before we even ask what happens to the business when the lone owner/operator falls ill, wishes to take a day off or needs to go to the bathroom during the work day. Placing such demands on oneself is prohibitive to the growth of your business; if you are solely dedicated to the task of operating your business, you can never improve that business location, let alone have the time to expand to new locations.

The larger remaining issue is still the traffic volume that is simply not available to support this business to any reasonable level of profitability.

You are welcome to take the advice of the meals-on-wheels fellow, but we still believe that the venture will be a poor investment.
 

BaristaTrainer

New member
Oct 18, 2004
192
0
Portland, OR
Utopia,

You may also want to conder a kiosk or cart operation, or possibly a drive-thru unit, with a much lower overhead, either on the campus or in a high traffic area. I will agree that if you are running this operation on your own a full menu including food could be too much to handle alone. If you plan to have employees it is a whole different story, similar to my earlier comments.

It sounds like your town has plans to expand and at a later date you may be able to justify a sit-down location. It might work to get your foot in the door with a scaled down coffee operation with future plans to expand. Is there any locations in your town that you think this could work? Does the campus have a coffee stand?

- Matt
 

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