Need Advise: Trying to Forecast Roasting Business Sales for the First Three Years

[Breifne]

Hello, good folks.

I'll be sallying forth with a new full-on roastery this autumn after some time spent working as a barista several years ago and avid home roasting over the past year. I've lived in Ireland for the past 4+ years, but I'll be moving back home to the USA in about six months.

I'm drawing up my business plan as we speak, and of course the financial projections present the biggest challenge. I'm hoping at least a few of you who have been in the biz for a few years can give me an idea of what you did in sales for years one through three. I fully realize there are a multitude of factors that make it anything but a "one size fits all" scenario, but I'd feel fairly confident that I could arrive at some ballpark projections if I could see what you experienced in terms of sales over the first three years.

Thanks!

~ Ryan

 

[Breifne]

Anyone? I should have stated in my original post that if you don't feel comfortable putting those figures out here on a public comment, please send me a private message here.

Here is what I have projected based on the advice of one person I know who has run his own café:

Year One Sales: $40,000
Year Two Sales: $70,000
Year Three Sales: $95,000
Year Four Sales: $130,000
Year Five Sales: $175,000

Now, as I said above, I fully realize there are a host of factors and variables that make every situation different. But that's why I need a bit of guidance from those of you who have been in the roasting biz for a few years. Are these figures reasonable? Too high? Too low?

 

[PinkRose]

Hello "Breifne" (Ryan),

Welcome to the Coffee Forums website.

I edited the title of this thread to help get people's attention.

We have a lot of people on this Forum who have roasting businesses. As you will soon find out for yourself, they are very busy people! They visit the Forum and participate when they have time. I'm sure you'll get a response to your questions soon.

Rose

 

[Breifne]

Thanks, Rose!

 

[John P]

One thing I would factor in is knowing is potential accounts that fit your positioning and/or philosophy, who currently has those accounts, and what can you provide in terms of quality and service that their current roaster cannot. This is all part of - based on market size, what is my potential for growth in this town, city, state, etc.

I would think if you are targeting a particular place in the US, then you should be familiar with what is there now and already have a strong belief that you can provide something better.

 

[peterjschmidt]

It may be business-owning members are busy; I'd guess it's more that they realize there is no direct correlation between what they did and what the OP should expect to do. Absolutely none.

 

[Breifne]

It may be business-owning members are busy; I'd guess it's more that they realize there is no direct correlation between what they did and what the OP should expect to do. Absolutely none.

With respect, Peter, I'd feel confident about a *BALLPARK PROJECTION* if I had several examples of what roasting businesses had done. Does it mean my ballpark projection would be spot-on? Of course not. But it certainly would help me determine if the numbers my friend gave me are on the right track.

 

[JohnD18]

Are you citing those numbers as revenues or gross profits?
Where are you planning on starting this business?

Anyone? I should have stated in my original post that if you don't feel comfortable putting those figures out here on a public comment, please send me a private message here.

Here is what I have projected based on the advice of one person I know who has run his own café:

Year One Sales: $40,000
Year Two Sales: $70,000
Year Three Sales: $95,000
Year Four Sales: $130,000
Year Five Sales: $175,000

Now, as I said above, I fully realize there are a host of factors and variables that make every situation different. But that's why I need a bit of guidance from those of you who have been in the roasting biz for a few years. Are these figures reasonable? Too high? Too low?

 

[Breifne]

Are you citing those numbers as revenues or gross profits?
Where are you planning on starting this business?

Hi, John.

Those numbers represent projected revenues, not gross profits.

The business will be located in Virginia.

 

[JohnD18]

I am going through the same process you are, but in NY, and according to most of my research in my own market, those numbers, as revenues, are low. Here's how I see it:

The average café (busy, but average) will go through about 90-100 lbs of coffee/week. So lets use 95 lbs a week or roughly 380 lbs/mo.
Depending on your coffee (assuming its delicious) and your customers, it will sell for anywhere between $8- $13/lb. Lets use 10.50 as an average.

10.50 x 380 = 3990/mo in revenue.
3990 x 12 = 47880/yr in revenue.
Expect the GPs to be at least 50% of that.

So, if you aim for at least one average café as a customer for the first year, I'd say you could easily meet your $40,000 revenue goal. Assuming you hold on to your accounts.
There are also other sales channels which you should pursue other than the obvious café.


BTW if any veteran roasters out there see a flaw in this please correct it as I am still in start-up mode as well.

 

[Breifne]

Thank you so much for that breakdown, John. This is the sort of info I was hoping to receive.

And yes, any veteran roasters out there who have further insight on these projections ... please chime in when you have a moment.

 

[JohnD18]

Also, remember to factor into your COGS on each product the bean shrink at about 18%. Just determine what the pounds are that you roasted, break out 18% of that and add it into the costs. It adds up and if you don't account for it you'll be far off in any projections you have.

 

[7over]

Our first full year in business we did $150,000 in revenue. That was nearly 100% to individual consumers and nothing at all to cafés. In our first year there is no way a café would take the risk of switching from a vendor they knew well to us, an unknown.
Our second year we did $250,000 in total revenue. (plus a little bit). We picked up one café and two grocery stores that year. 80% of our revenue came from individual consumers.
Our third year we did $334,000 in total revenue. We got into 6 grocery stores and picked up another café and some other local businesses. By this time 60% of our revenue came from individual consumers.

Your mileage will vary dramatically. Much depends on the quality of your offering, how it differs from your competition, what your pricing is, what the population density of your market is and how much coffee you can actually produce and deliver while you take care of selling and marketing etc.
And a whole lot more.

 

[CoffeeJunky]

It really depends on what your marketing plan. Are you planning on doing any whole sale? Or direct website sales or simple store front sale. Are you planning on doing any farmers markets, local events, or even have sales staff.
You can sell about 50k dollars worth of coffee per month if you are going to do some wholesale. If you are planning on opening up the door and expect people to come into your store to buy coffee, that might be more challenging.

 

[JohnD18]

Just curious, when you say nearly 100% was sold to individual customers, what was that through. Internet sales? Farmers markets? Are you strictly a wholesaler or do you have a cafe as well?

Our first full year in business we did $150,000 in revenue. That was nearly 100% to individual consumers and nothing at all to cafés. In our first year there is no way a café would take the risk of switching from a vendor they knew well to us, an unknown.
Our second year we did $250,000 in total revenue. (plus a little bit). We picked up one café and two grocery stores that year. 80% of our revenue came from individual consumers.
Our third year we did $334,000 in total revenue. We got into 6 grocery stores and picked up another café and some other local businesses. By this time 60% of our revenue came from individual consumers.

Your mileage will vary dramatically. Much depends on the quality of your offering, how it differs from your competition, what your pricing is, what the population density of your market is and how much coffee you can actually produce and deliver while you take care of selling and marketing etc.
And a whole lot more.