Need Advice- Stupid to compete with Starbucks?

[Blue Monkey]

I am in the early stages of opening a small coffee shop at a major university in Ohio. The location is outstanding(corner store surrounded by dorms and campus housing). My two biggest obstacles are lack of business experience and Starbucks right down the street. What I am hoping will set me apart from Starbucks is the exclusive dealing in fair trade coffees. With the right marketing of this concept, lower prices than Starbucks, and quality product, do you feel I have a chance? Most people are unaware of how corrupt the the coffee industry is, and I feel there are alot of customers to be stolen from starbucks if they discover the truth.

 

[Chris Kay]

If you know what youre doing youll be feeding off Starbucks.Just do everything well and the rest will happen for you.
I dont think youre stupid.
Just let your place be the anti starbucks and youll make a fortune.
Unbelievably every starbucks thats opened in Melb Australia is suffering.
Theyre always empty because they serve trash.

 

[Alun_evans]

I am of the opinion that you do not need to offer cheaper prices to compete with companie such as Starbucks. If you are presenting a range of fairtrade coffees, you should keep the prices where you are making comfortable margins. If you select your coffees correctly- have well trained, knowledgeable staff- why position yourself as being cheap when you perhaps should be a little more expensive than SB's? I know the price equation- offering cheaper drinks is tempting...but at the end of the day what happens if someone other independent opens next door to you, looks at your prices and then lops 5% off so he can be cheaper than you? I think the best stance for a new cafe to take, especially one that is trying to project quality and coffee sauve/knowledge, is to price up not down.

Chris's comments re Starbucks in Australia (well..Melbourne) are quite correct. Sometimes posters from the USA do not realise that Starbucks really is struggling in markets they have entered that have a cafe culture already established. Us guys from downunder have seen they are indeed vulnerable in Australia and New Zealand...in both these countries it is not at all uncommon for the local opperators to be pricing themselves above starbucks and doing it for a reason....that being they ARE better than Strabucks. Anyway...goodluck with the new venture.

 

[ElPugDiablo]

When you say you lack business experience, do you mean coffee experience or business knowhow to run a business? If you mean coffee experience, you best get a lot and fast. If you mean general business knowlegde, I would not be too concern. Just do the logical things, and be on time with your government filings and taxes, you can pick things up along the way - like most entrepreneurs do.

It is not hard to compete against Starbucks, in fact a lot of people purposely select location close to Starbucks. Read the article from the link below.

As far as fair trade, if that is your conviction, then by all means sell only fair trade coffees. However if you are doing it for marketing reasons, unless your entire market is totally politcally correct, which I doubt, you are focusing on a subset of all coffee consumers. I will leave the merits of free trade/organic/shade grown coffees to others. I can only say from experience, most people buy coffee base on what the coffee taste and smell like. For me, at least, quality is more important than political statement. Set yourself apart by having better products, knowledgeble staff, friendlier services, and a cleaner place, you will be surprise how easy it is to compete against Starbucks. If you have good coffees but still want a marketing scheme, do latte art presentation.

Good luck.


http://www.lucidcafe.com/cafeforum/schomertable28.html

 

[cafemakers]

You can absolutely compete and thrive in direct competition with *$, just as good independent restaurants can thrive in direct competition to a McDonald's.

What you need to remember is that there are competitive success stores like the one mentioned in Melbourne because of what local shops there are doing that U.S. chains do not, namely, serve a good (and consistently good) product. I had the pleasure of visiting Melbourne last year to see this first-hand; the coffee culture in Melbourne is among the most developed I have experienced anywhere in the world. It was difficult to find a bad espresso or "flat white" in any local shop that we visited.

The fair trade concept is a great idea and a good theme for your business, but despite the best moral intentions of your customers, ultimately they will choose you only because of what you can do for them - specifically, serve them a consistently good cup coffee, in a clean, convenient environment. Use the moral corruption angle as a tool to differentiate your business, but first be sure that you have the fundamentals in place.

With respect to pricing, be at least inline with Starbucks or any competitor in your immediate vicinity, ideally just slightly more. New customers will act on the preconceived notion that if your prices are positioned lower than a chain shop, your coffee will be not as good. Picture two hotel rooms: one for $20 a night, the other at $150 - which would you rather stay in? What if I told you both hotels are next to each other and the $20 a night hotel is a Four Seasons and the $150 a Super 8? Start high and develop your brand to match - but you've got to deliver for Four Seasons experience.

The coffee shops that we see achieve the greatest success are those that position themselves as the local fine coffee experience alternative to chain shop fast food coffee. Ok, so you don't have to have a black tie Maître d' seating your guests -- but think of your favorite restaurant in town and what they do for YOU. Capture that same experience (regardless of format) for your customers and you're on your way. Support that experience by educating your customers as to WHY there is a difference in the taste and your approach to business and they'll never be caught dead in a chain shop again.

Now you just have to do it. :wink:

 

[Chris Kay]

starbucks has dome all your ground work , its done all the research.
Like a cappuccino its all froth and no substance.

All you need to do is add the substance.
Quality coffee is a start for a coffee shop, but dont stop there the quality must be consistent and the service A1.
There are alot of things you can do to capitalise on Starbucks.

 

[JavaQueen]

You can surely compete with Starbies on coffee freshness and baked goods. If you get in excellent coffee and fresh baked goods, you will already have a leg up on them.
Quality and consistency are key, not just to compete with starbucks, but to succeed in general.

 

[Coffee Guy]

Hey Blue Monkey:

I have to agree with mostly everyone's comments on this subject. My question to you is why do you wish to only serve these types of coffees? Not to say that's wrong, but I will say let your customers decide what they want. I might suggest that you do a little market research in the general area where you plan to open at least several weeks out so you can get an idea what your customers' tastes are. This way you can take some of the risks away prior to your opening. After all if they don't like what you have to offer, they'll just continue their old habits. By the way Starbucks has already established themselves, they key is to establish yourself and co-exist in a market they've already developed. Just a few thoughts

 

[Alun_evans]

Slightly off subject here- I note that Starbucks is offering a aged Sumatran as one of their "Black Apron" coffees. Being interested in teh Indo angle, I went to the link and read the following-

Batch #4 – Aged Sumatra Lot 523, Crop Year 1998 As the name suggests, our signature label represents the best of the very best in a lineup of already outstanding coffees. Our tasters go to the ends of the earth, literally, in search of a bean whose profound flavors and unique characteristics earn them the highest honor we can bestow.

A Sumatra like no other A staple in the Starbucks line-up of coffees, our single origin Sumatra has enjoyed a loyal following. As one of only a few coffees perfectly suited for the aging process, we think you’ll find a whole new appreciation for this classic flavor profile. Try the Black Apron Exclusives™ Aged Sumatra Lot 523 with a variety of aged cheeses, each of which brings out new characteristics in this truly complex coffee

Here in Indonesia the selection of coffees offered by Starbucks is very limited (ie...no 'black aprons'!), but would be very interested to hear from one of you US based posters to see if you have tried this coffee.

From my experience, I would be very, very surprised if this Sumatran was really up to much- anywhere near the hype being given to it. Firstly I note that Starbucks does not say what region this Sumatran is from...which is a little odd. Secondly I would dispute till teh ends of the earth the "this is one of the few coffees perfectly suited for the aging process". Most Sumatran Lintong or Mandehlings do not age well at all. Often, after as little as 12-14 months, the bean develops a taste that is reminiscent of the smell of my socks...if I had worn them for a week! Even an exceptional Sumatran Mandehling or Lintong would lose most of the positive quantities gained from aging (mellowness, deep earthiness) after a maximum of 3-5 years. Different from some of the Java Arabicas that do indeed age well. This brings me to my final concern..... I note this is crop 1998- which is a bit vague but I would asume it was picked in the 1998-1999 season....which would make it 7 years old. Knowing that back then many brokers were feeling the currency pinch from the 1998 meltdown of the economy in Indonesia...then I would assume any decent Sumatran would have been sold straight away not held in some warehouse for 7 years. Of course Starbucks may have brought this 7 years ago and tried to age it in the US...but I doubt it. My suspicions on this coffee are...better kept to myself :wink:
....however as always, I am willing to be proven wrong.

 

[Chris Kay]

They found an old batch in the shed that they forgot about Alun.
It was sitting there for a few years till someone stumbled upon it.

Starbucks bloke 1:"What is it?"

Starbucks bloke 2::"Its Sumatra or something... the bag says"

Starbucks bloke 1:"How long has it been here?"

Starbucks bloke 2 : "Its hard to read the bag because its falling apart but i think its 1997... hold on it might be 1991!!"


Starbucks bloke 1: "Take it up stairs to the roaster, roast it super dark and call it 'Aged Sumatra'. Noone would know. Everything tastes the same at that colour....burnt... uhem... double roasted."

 

[visorclown]

I have to admit that I am a fan of starbucks coffee. I like it a lot. I enjoy sumatra a lot as well. However, I will say this, Aged sumatra, black apron, tastes like, well, exactly what it says, old. Aged is a fancy way of putting it. I didn't like it at all. I did like the three year aged sumatra they offered several years ago.

 

[Alun_evans]

Chris...I told you I didn't want to voice my suspicions on this coffee...how come you read my mind and did it on behalf :grin: .

Visorclown...yes- a 3 year aged Sumatra is most definatley got a heck of a better chance of tasting better than one that has been...aged...7 years!! Although aging fullstop is no guarantee as a bad Mandehling or Lintong is not going to get any better being tucked away in a warehouse somewhere!

 

[visorclown]

I guess it's one of those things that requires an aquired taste. I know plenty of people that love it. To each his own, I guess. I think people also try to like it because it sound exclusive and like a high commodity so therefore they should like. One of those things where it's more in your head than anything else.

 

[Coffee Guy]

I find this subject interesting. But I have to ask the question, was this 7 year old Sumatra kept in cold storage, giant vats of water, in a suspended state or what? Because anything sitting around for several years has be be drier than cow chips left in the desert. :twisted: I know these beans had to be pretty hard, almost petrefied before they roasted em. Although I could be wrong... 8)

 

[visorclown]

Good question... I don't think we really wanna know do we? I'm sure Starbucks doesn't want any one to know, that is, if they even know where it was stored...