New Shop need advice

[imgregrice]

First off I have been reading this forum for quite some time and I love this site!! However this is my first post I finally have a reason to post!!!

I have been wanting to open a shop for years and I am finally getting close to a position to where I can make it happen. I visit coffee shopts quite alot and I have become very good friends with one of the owners. We where in negotiations to open a shop in a very historic area. ( this would have been his second shop) My part of the company was going to be an art gallery. Sadly for me funding fell threw and I was lucky to realize I couldnt make any money on art alone To make a long story short I am getting close to a place whre I can open my own shop. I moved to s small town of about 8,000 as someone used for description in another thread it is a super wal-mart town. I spoke with my friend who runs the other 2 shops asking for advice and he offered to be a consultent on opening a shop. He also offerd for me to use his shop name he has assured me it would be MY shop. we would just share hte name and I would lease rights to the logo, name. In doing so I would get special priceing from vendors even some equipment. the price he proposed is 6000 for the consulting 3000 up front, and 3000 at time of open. The fee for the logo, name rights is about 3600 for the year ( comes out to 300 a month) What do you guys think of this pricing? to me what makes the pricing decent is he is basicly going to hand me his biz plan. help me get things up and running and help train staff, workflow ext.


On another note If there is any information you all could give me to aid in opening and running a shop it would be very helpful!
Thanks in advance and I look forward to becoming a big part of this community!

 

[Jackson]

If your friend's name is "Howard Schultz", GO FOR IT. Otherwize, check the numbers again, and talk yourself out of it!!!
Unless you are dealing with a national chain with recognition, there is little value in coffee shop names. Even the top chains have a check average of three dollars or less, so why spend extra money to carry someone else's name???
If you have a true passion for coffee, name your own business, if you are wanting to make a quick buck, look elsewhere.

 

[imgregrice]

The main reason is he is willing to basicly hand me a prepackaged biz plan that has been proven to work. I will post more later I only have a short time to post right now. Thanks for the advice more info later

 

[dant]

I am sure there are situations where it might make sense to make a deal like this. However, if it were me, I don't think I would pay for either the consulting or naming rights. Here's why:

When I consider non-cogs costs I don't look at the real cost but instead I consider how much in sales I have to do in order to make enough profit to cover the cost. Since our profit margin is around 10% I multiple the cost by 10. For example, if I want a new computer printer for the back office and I'm looking at something that will cost $100, I consider that I'll have to do $1000 in sales to cover the cost of the printer.

So you're looking to spend $10K for a business plan and naming rights in your first year--do you really want to give up $100,000 in sales to cover this cost?

To open our shops we learned a lot by visiting dozens of cafess and taking notes about what we liked and didn't like. There are also a number of good "how to start an espress bar" books out there providing a basic business plan for less than 20 bucks. I think there was also a good publication on this topic put out by one of the coffee trade magazines. Finally, you can get really good advice about most anything (coffee related, anyway) on this form and it's FREE!

One other thing: part of the fun of operating a cafe is to put your own personality and identity into the shop, and for me this includes the name.

Just some food for thought. Good luck with your venture!

-Dan

 

[imgregrice]

Dan,

Thanks for the great advice that is a very good way to look at the cost I never thought of things that way. Sadly once again I am in a bit of a rush but I do wish to make a quick post in reguards to the shop, naming, consulting.
Not only would I be getting the biz plan ( which am aware of how to write however the one I will be getting is Proven to be a formula for success. With the Naming licence I could get not only his vendor list ( which I may or may not use ALL of the same vendors.) I also will get prefered pricing from said vendors because the name has 3 stores associated with it. ( I could be wrong thats just what he and I talked about in casual conversation)

on a side note I do agree dan naming is 1/2 the fun and I have a name I really like so by all means that is not out of the question. You are correct about learning alot from the forums and visiting other shops) Sadly I can say I would be called a regular at 5 out of 10 shops in all of the surrounding areas. I have been to all the shops in a 200 mile radius many of them more than once. I have lots of ideas in my head that I am just unsure how to make practical in a shop. When I get home tonight I will post more questions and browse the forum a bit more to start taking some notes and soak up some knowledge. Thanks for all the help everyone I look forward to learning alot !!!!


Greg

 

[kimbica]

name, vendor deal

Hi Greg,

I agree with the other posters that this purchase seems unwise. You will have many other expenses to contend with and a name means precious little unless it is really large and/or backed by a regional or national ad campaign. Your potential business consultant may be trying to convince you that you will get special pricing on supplies by throwing a familiar name in, but I would be cautious - it seems to me that "preferred" pricing never extends to new contracts with different owners, and even if you can get some items a little cheaper, it would take a long time for it to add up to substantial enough savings to repay the cost of your "deal", and the vendors might not develop as friendly a relationship with you. Consulting is often actually worth paying for, but names and "connections" are another story. You can certainly contact any and all of the vendors he is using. You cannot assume that his business plan will work equally well for you - these plans are very individualized and their success has as much to do with implementation as it does with design.

Sorry if this sounds cynical, but with the basic information you provided it looks to me like you are not getting the best end of the deal. If there are other details that make it attractive to you, feel free to post them, and we can offer you our opinions. All of us on this forum are interested in starting or running profitable businesses and in helping each other for free here. Please know that this is just my opinion and I am by no means an expert. However, I have learned already that there are lots of people looking to sell coffeehouse owners a multitude of things, whether we need them or not. Don't get overly excited and make a decision too fast. Get details and get it in writing to look over first. Good luck!

Kim

 

[topher]

First thing..the name..come on you can come up with something..if not come to the forum..we love that kind of stuff! Vendors...save your $300 a month and invest in attending a trade show. Go to this guys shop...taste what he has and bring in better product. You need a chocolate source? Ask us..its free...I am sure between everyone here that we could come up with a better vendor list than this guy! Price break?? Trust me the person who will see a bigger savings is the guy you will be competing...weird thing is you would have the same name. Go out on your own...you will be much happier. What is the name of the shop if you don't mind saying? I like the name of a shop I ran about 12 years ago..its gone so the name can be used. Johann Sebastian Bach used to drink 60 to 80 cups of coffee a day. He wrote the Coffee Contata...I think that name kicks ass! Oh well anything we can do to help just holler!
Good luck!

 

[imgregrice]

top I LOVE that name... I have a good name picked out myself but I wanted to use "Esspress Yourself" The name of the shop I was thinking about doing with the consultant is "Picassos Coffee House". Tradeshows are a GREAT idea do any of you know of a place I can get a local listing of tradeshows?

 

[javaluva]

I'm not trying to sound mean, but do you really think you are ready to get into the coffee business? From just reading what you have written, it doesn't seem like you know much about coffee. You've got to do homework! First of all, I wouldn't give anyone a dime to use their name. Seriously. In the coffee business, the first thing is to be an individualist. Then have a passion. I eat, sleep and live coffee. I think you have some ideas, obiviously you're here on coffee forums, you found this out SOMEHOW! Google everything "coffee". I noticed you don't have much time, who does? In this business you will have even less time! Spend more time learning everything you can on the subject of coffee. There wasn't a coffeehouse in a 90 mile radius when I started. Don't give that consultant your hard earned money. 6 months after I opened, a guy opened a coffeehouse 25 miles away. The guy sat in my shop from day one, and when I went to check out his shop, he apologized for not having the time to research the coffee business, when I walked in, it was MY SHOP! That's insane. Maybe in the end he won anyway, because after 3 yrs, he wasn't making any money and SOLD it to some sap. All of my ideas, down to the color scheme, and my drink names. My point is, people would come in and ask me "so, does the guy in *town own this too? That's crap. You're going to want to take credit for what you have. Not give it to someone else. I know of a coffee roaster in Michigan, and they are pretty reputable. Email me, he's probably using them, and they will give you training also. I hope I didn't hit a nerve. I am just trying to help. In the midwest coffee owners don't get it as well as westerners.
Also look up Coffeefest. You can find all kinds of stuff out there, and I agree with another poster, sometimes people will give you stuff you don't really need. What works for one, won't possibly work for another.

 

[imgregrice]

Java,
No offence taken at all.... you bring up some really good points... first off I am short on time right now because my dayjobs fairly demanding last few months 60-70 hour weeks however thats not the norm and it should slow down soon. You are correct I am NOT ready to open a shop quite yet which is why I am posting here and other places doing research. I am interested in your roaster you mentioned I know chris ( the other coffee shop owner uses a good reasonable roaster in our area. Eventually if things go well I would like to roast my own but from everything i have read its not wise to open a shop and learn to roast all @ once so I am going to move into that area slowly. One of my goals today is to spend 3 hours researching for the shop. The first thing I am going to look up today is Coffeefest you mentioned!!!
You all have been very helpful and I belive I am gearing away from paying him as a consultant and use my own name.... so far I have Coffee Contata ( thanks to topher) and the one I came up with a while ago was "Esspress Yourself"... SO now while I am at it I wouldnt mind hearing some names if you guys feel like throwing some my way??? Also if anyone knows of any good books on starting a coffee shop I would love some names and or websites with usefull info...

 

[imgregrice]

also if anyone cares here is the link to his web site its mediocre at best but I assure you his shop is top notch http://picassoscoffeehouse.com/index.html

 

[topher]

I don't understand his pricing of coffee..how is it that almost all his coffees are $9 a lb. Sorry I am assuming its a pound..doesn't specify. Flavored coffee is the same price as his fair trade..the only coffee over $9 is Jamaican Blue...and that is why I am not sure it is a lb...he is charging $38 for "one" I haven't seen Jamaican at that price in forever...just wonndering...

 

[imgregrice]

honestly I am unsure... I will find out and post it though

 

[morrisn]

It shows his pricing is on 12 oz bags

 

[imgregrice]

you are correct I just read that myself