looking for experienced advice - will pay $$

susansaddiction

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Jun 29, 2004
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I have been working for several months at buying an existing coffee shop (inside a hospital) and am seeking unbiased experience for advice on the value of the biz. I understand that your time is valuable and am willing to pay for your time. Please email me with a contact number if you are interested in helping me.
Thanks!
Susan
 

Rowley

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Mar 7, 2003
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California
why don't you just ask your questions here?

there are plenty of professionals that enjoy sharing their experiences just to help the community.
 
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susansaddiction

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Thanks - I appreciate that!

Rowley
Thanks for that - I was just a bit hesitant to impose on people as I know we are all very busy...but I will go ahead and see who has time to respond....

shop has been open since April - owner recently moved to another state
annual net sales are projected at $150,000 (based on the first 6 months)
rent is a percentage of sales - about $750 per month - no utilites
cost of sales are running about 38%-42% - a bit high I think
payroll is high also- about 48% with payroll taxes (open 20 hr/day 6 days)
assets are low - POS valued at $3500, and other equipment at $4000
fixtures at about $3000 (coffee bar, etc)
I will need to purchase an espresso machine - can get a great used 3 group for about $4000
Also, I can get a new lease for 3 year term with first right of renewal.

By adding a badge reader so that hospital staff can pay right from their paycheck, I think I can increase sales by about 10%-20%. Also, I will be working 10-20 hours per week myself, plus I have an employee who'd like to be a 20% partner - and I'd love to have her mainly to have someone else on board who has a vested interest - and more time available that I do.

The guy originally wanted a ridiculuos amount, but after I offered him $25,000, he came back and said he'd take $40,000. My hesitation is that there's a bunch of blue sky in that price. But I see great potential by making some minor changes and adding food to the night shift (the cafeteria closes at 10:00 and there's no where but vending machines for the staff to get food). Simple items that I offer at my existing shop.

So, any takers onn advice? My gut tells me to go for it, but I'd love to have some experienced advice. Thanks in advance for your time!
Susan
 

topher

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Aug 14, 2003
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Boca Raton
How big is the Hospital? Is there other things around the hospital that might bring in business? Is this a kiosk/cart..or is it a room does it have a cold and dry display case? Is there plenty seating? Just a few questions...
 
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susansaddiction

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questions answered

The hospital is quite large (the largest employer in town) and the only in the region - a major medical center serving a 3-4 state region. There are roughly 2000 employees on staff in a typial day and I'd say that 65-75% of sales are staff.
The area is a "permanent" coffee bar and the hospital has supplied great seating - though the times I've been there to observe, very few people use the seating - they typically get their order and go back to work or to a patient's room.
There are no display cases, as part of the lease states that no food can be sold during the hours that the cafeteria is open - so that pretty much leaves the night shift for food sales - which I think could add a fair amount to the bottom line...
Thanks for the questions and taking the time to respond!
Susan
 
We just opened a kiosk in a hospital with 600 beds. We also have the coffee in the cafeterias, doctors lounges, admin offices, wards, nurses stations and the tray line for in-room. Sounds like a similar situation to your kiosk.

The kiosk stands out because it is the only place to get an espresso based drink. The others are much more volume and convenience oriented -- 6 gallon urns in the cafeteria, 3 liter airpots in the lounges and offices, etc.

You can do a decent business if you have a good location (ours is near the main bank of elevators near the gift shop) and something the others do not. It might take a while to get off the ground, but if you have a good, differentiated product and friendly service you should be ok. Be careful on your labor costs - one of the better ways to manage that is to keep your volume steady.

Many people going up to rooms will bring espresso based drinks up to patient rooms. When my wife was in labor, she would have killed for a decaf latte.

If the in-room coffee is crap - most is because it tray lines usually use liquid coffee - you could do a good busienss in room. Nurses in the wards could do referrals for you. Maybe you could give them some cards they have patients bring back to you and when patients bring 10 cards to you, the nurse gets a free drink. Clever marketing inside hospital rules can do a great job to keep your labor productive and not idle.

Best of luck.
 
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susansaddiction

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hospital Upate and staffing question...

Thanks to all who helped me and were so kind to answer my request for help. We closed on the deal on the 20th of Jan, closed it for the rest of the weekend to clean, rearrange and reprogram the POS. We opened the a.m. of the 23rd and OMG has it been awesome! We put the badge reader in 1 week later and it has increased sales by 25-30%. We are steady almost all day long and now my main dilemna is that I feel I need more staff at certain times of the day. Nearly every day from 7:30 - 9:30 we have 12-15 people in line - and then again from 2-4. I've inherited most of the staff and except for 2, they are very slow. I've spent time with each one to teach them a true process and speed up the service. I was hoping to keep payroll cost down by working at least 3-4 shifts myself each week, but now it looks as if we really need 2 on - so the 2nd will more than likely be me. Any other ideas are greatly appreciated.
Susan
 
One thing about lines and labor. A long line may be a tempting reason to hire more, but a strange thing - your line is your sign. Many people are more likely to get into a line than walk up to an empty counter.

As long as people waiting are still in a good mood when they get to the counter, you might hold off a bit on adding payroll costs until you get lucky and find someone who works just the shift you need.

You can also look at increasing your thoughput - the number of drinks per employee per hour. If you can increase that, you'll make a lot more than by adding people.

Take a look at how long it takes for ordering, cash handling, drink making, etc. and look for two things. Length of time and variability. It may sound strange, but variability is probably your biggest enemy in terms of throughput. If it takes someone 15 seconds to order and the next person 45 seconds, then that ripples through the entire system.

If you find some customers take time at the register to make up their minds, you might put up some posters next the line to help people understand their choices and get what they want quickly.

You might look at either breaking down tasks like ordering, cash handling and drink making or combining them for greater efficienty - a lot will depend on the layout of your space.

Then you can look at the capacity of the individual stations and accelerating those. Better grinder, bigger capacity machine, dedicated milk steaming machine, etc.

Glad to hear you're off to a roaring start. Congratulations.
 
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