Opening a new coffee shop

[villagejoe]

Hey everyone! I''m new to the forum - I''ve perused some of the postings for the past couple of weeks and decided it''s time to contribute my own.

I''m in the process of opening up a new coffee shop in Georgia... the unique thing is that this shop is part of a new non-profit organization that''s focused on community and global initiatives. The shop will be a source of funding for the organization and will function just like a for-profit coffee shop would. I''m the point man for getting the coffee shop off the ground and running.

Here''s the rundown so far:
- We''re awaiting final approval of non-profit status
- We''ve negotiated a lease on a 1,300 sq. ft, 100 year old house and are gearing up for the huge task of renovating it and converting into the coffee house
- I''ve got a business plan that still needs tweaking
- I''m attempting to work up rough plans for cafe and bar layout and design
- I''m looking into getting the right equipment at reasonable prices
- We hopefully would like to open by the end of the summer, if possible
- Money for startup for the shop will come primarily from charitable contributions

Just to give a little background info... I''ve been working at Starbucks since last year and have been doing a lot of coffee research on the side - even started roasting with a Gene Cafe home roaster in January. A couple of the guys involved have already started three companies, contributing that business experience to this endeavor.

That''s the basic story at the moment. What I''d love to hear feedback on is:
Advice about doing sufficient design and layout without forking out the big bucks to a consulting company? How to go about choosing the right equipment suppliers? Random wisdom for this stage of the process?

I''d be happy to share more info if anyone has any specific questions.

Thanks ahead of time guys!

 

[CCafe]

Quick question, how much do you think your initial investment will be to get your door open for business?

How soon are planning on being profitable after you open?

 

[villagejoe]

Well I'm still crunching numbers... Initial estimates for coffee bar and kitchen equipment run just over $20,000. The house we're going to renovate needs a lot of work, and that'll be a huge expense - the owner is putting up $5,000, but that probably won't cover half of what needs to be done. Our lease is just $500 a month, with payments going towards an eventual buy of the house.

A rough estimate on startup costs... $75,000 or so. Since we're a non-profit organization money's tight to begin with, but the great thing is that we are expecting the vast majority - if not all - of our initial financing to come through charitable donations. We'll also be eligible for grants, assuming we can do the necessary grant writing. I'm not even putting up any money myself. Because of all this, we should be profitable right off the bat as long as we're operating effeciently.

This is definitely a unique position to be in for me... I'm allowed complete creative control in starting the coffee shop just as if I were doing this all on my own, but without the financial risk. The flip side of that is there won't be a big financial return for me even if the shop is successful - all revenue goes toward the non-profit organization.

 

[cherylann324]

Hi villagejoe!

I am wondering, you do know that salaries are not a part of revenue (profit margin) correct? You should always include adequate salaries for everyone involved in a business, non-profit or profit. The success of the business actually depends on it. And they should be included in the business plan.

Every member of a successful business is a happy, productive member which makes the business a success in turn generating larger profits to give to the non-profit end of the business!!

All the vital (read - couldn't operate without) members of your business should defintely be compensated accordingly, not only for the success of the business, but also should they have to be replaced. Even you!!

Of course, you could easily plan for volunteers to supplement the regular staff, and I think that would not only be a great idea, but could be used in your advertising and promotions!!

If you approach this business as a for profit business and operate it just like you would in that case, then maybe you will have a real contribution left for your non-profit agency. If you don't, you run the risk of not only not having any profit, but seeing funds go down the drain that the agency could have used.

I am certain that I would go to a coffee shop that was non-profit. I am not certain that I would go back if the location was not clean and comfortable (read - staff) the offerings were not well rounded (inventory) and the service was slow (understaffed.) I would of course allow some short comings, even expect them. But the fewer, the better.

I really hope your business is a success!! It sounds like such a GREAT idea!!

Keep us posted!!

 

[villagejoe]

cherylann,

Thanks for the reply! I'm definitely aware of the need to factor in salaries in the business plan. By no means will we be deficient in compensating employees, least of all myself! The other guys involved and I have talked about financial stuff extensively, and we are unwavering in our pursuit of making this coffee house successful, just as if it were a separate for-profit business. We will make sound decisions and approach every aspect of the business with that type of mindset.

Rest assured that we will be operating a clean and comfortable environment, offer an enticing menu, and have top-notch service... On a service note, I'm going to be attending CoffeeFest in Atlanta in June, and I'm going to attend some quality barista training (probably correcting some bad habits I've picked up at Starbucks), and I'll pass that on to others working in my shop. I also hope to incorporate latte art into presentation of drinks, since everything will be served in ceramic mugs by default. We really want our shop to be a place that's known for quality coffee and quality service with a great purpose.

Anyone's thoughts on incorporating in-house roasting into a coffee shop after first starting without and then working it in later?

 

[cafemakers]

cherylann,

Anyone's thoughts on incorporating in-house roasting into a coffee shop after first starting without and then working it in later?

I wrote an article about it for Tea & Coffee Trade Journal last year, which you may read here: http://www.cafemakers.com/retailer-roaster.html

In summary, we find that it is not practical for the average single location retailer to take on both roasting and retailing at the same time; roasting is a completely separate and very resource intensive discipline -- any cost benefits of roasting yourself are normally lost to poor roasting quality. There are many outstanding professional roasting businesses around the country that have personnel trained to source quality green coffee and roast it to perfection; unless roasting is a significant portion of your business model, let them do what they do well and you focus on building your retail brand.

Best of success,

Andrew

 

[BaristaTrainer]

I and our consulting team at Bellissimo would agree with Andrew's comments. It is very rare that a newbie retailer/newbie roaster is successful starting out roasting for themselves, along with opening a retail store, if they do not have prior experience.

They are two different businesses, and I have heard from many roasters, that unless you have 2 or 3 high volume locations, it financially does not make sense.

Roasting coffee is a mix of science and art, and takes serious focus and dedication to perfect the craft. One batch of burnt beans will greatly reduce your profit margins ...

What Andrew says about keeping your focus on building your retail brand is also accurate.

- Matt

 

[cherylann324]

Hi VillageJoe,

Just another little thought after reading recent posts and replies.

I don't think roasting and a retail coffee shop go together. The investment is the major concern, but your intent is also another. Roasting is expensive and demanding as previous posts have alluded to. You can sell many of the roasters coffee under your tradename without being the actual roaster. I think roasting is BEST left to the highly trained professionals that are already established in the business and can be your best friends!

How are things going? Well, I hope. Let us know where you are.

Cheryl Ann

 

[villagejoe]

Thanks everyone for the input on roasting! That does give me a good perspective on things.

Right now we're set to start doing basic structural renovations to the building... We're meeting with a house inspector first to assess possible asbestos problems, but then we'll be ripping out all the plaster from the walls. From there we'll do some restructuring of walls, updating the electrical, fixing the roof, and putting in heating and air. It looks like we'll be getting a lot of donated services through some contractors who want to help us out, so we'll be saving a bundle!

What's the best way to go about securing a coffee supplier? There's a local roaster in town not too far away, and I thought of them as a possibility, but I'm not sure about how reliable it is to go with a small shop like theirs. However, supporting a local business (and otherwise would-be competitor), and having the possibility of personal contact with them appealed to me. And if I were to go with an coffee supplier outside of our area, are there certain things I should look out for? What are the most reputable companies?

 

[cherylann324]

Hi VillageJoe!

Just a quick note on suppliers. Use the local roaster for some of your needs, but also contact other roasters and buy from at least one national known roaster to establish a relationship with them. They will have services that the local roaster may not have and be a backup just in case. We all know about just-in-case scenarios.

Sounds like you are moving forward in a very reasonable and timely way and maybe someone in this forum will give you a supplier close to your area that you can rely on (besides your local roaster.)

Hope you keep having the success that you seem to be online with. Keep us posted, check back with updates as they occur and more ideas. I love the idea of a non-profit coffee shop!

 

[villagejoe]

layout

Hey everyone! Here are some updates on my endeavor...

We got non-profit organizational status approved! We're Tangible Impact, Inc. Unfortunately, we have to wait a bit for tax-exempt status... we're hoping it'll kick in within the next 6 months. We'll start fundraising right now though, and tell people they can back-date tax deductions once everything's settled. (Anyone interested in helping out?)

Here's a floorplan for our house/building:

Dimensions:
Living Room - 16' x 23'
Dining Room - 15.4' x 11.75'
Kitchen - 13.3' x 9.7'
Bedroom 1 - 13.4' x 16'
Bathroom - 8' x 8.9'
Bedroom 2 - 20.6' x 10.8'
Office - 14.6' x 9.8'
Back Entry Room - 8' x 9.7'


Okay, here's what I want to do...
- Definitely knock out the wall between the living room and bedroom 1. Replace with appropriate supporting columns.
- Split bathroom into two bathrooms, with one being handicap accessible.
- Create a door in the outer wall of bedroom 2, to serve as a new main entrance.

Possible: knock out all walls between living room, dining room, and bedroom 2

Question: What's the best position and dimensions for the bar? Should it mainly occupy the space of the dining room, facing the main entrance, or should it be someplace else?

Determining bar position, dimensions, and layout is my main concern right now, because that would affect what we do to certain walls and other construction issues as well. Your comments are much appreciated!

I'll add actual pictures of the house later.

 

[coffeemaven]

Even Newer Non-Profit Coffee Owner- Where Do I Start

I've been spending the whole day going to non-profit coffeehouse and shops websites. I find it all fascinating. I live in Seattle and we have a few of our own..not a big surprise there being the Starbucks capital.....but is there a to do manual that can help a newbie like me get started in planning. Also, I'm assuming a non-profit needs a board and a purpose. My main focus will be on the Jewish community....I have to do more digging to see what is fundable because I think I could get some grants.

Thank you!

 

[aurohyd123]

Hey best of luck