pre-fab or new construction on drive-thru?

[Ellie]

Hello all,

What a great forum! I am thinking about opening either a coffee bar or a drive-thru espresso business, and have gotten tons of great advice from reading the posts. I wonder if some of you would like to comment on the pros and cons of buying a pre-fab unit such as one that Java-Grande sells. Anyone with direct experience with one of theirs?

Another issue I am trying to decide on is location. I live in a city of about 35,000 (50,000 in the whole county), with a college (10,000 students) in one side of town, and Interstate 75 (which runs from Florida on thru Atlanta and Tennessee) and the mall on the other side of town. Rent is sky-high ($12/sf) for space near the mall and I-75 (main shopping area), but the college area is full of commercial sites that have become stigmatized (a word??) after so many business have fizzled out in them. We also have an older downtown that is slowly becoming rejuvenated, has a few nice restaurants, but is not really a shopping or college hang-out destination.

I would really appreciate some thoughts from y'all who have had some experience in choosing a location.

Thanks,
Ellie

 

[espressomaniac]

location

I can't help with the prefab systems on drive thru's out there but can with the location.

You should be focusing upon where the college kids do hang out and finding a location there, at campus, they must have had some major losers in there, it's almost impossible to fail at a college, you have a captive audience. Do the math, you are looking for volume of walk as well as drive up traffic verses a small percentile of them being actual buyers, you'll be adjusting the percentile based upon the average disposable income as well as general espresso eduction of the average individual in the area and it can fluctuate dramatically based upon those factors.

 

[ElPugDiablo]

Ellie,

Check your PM.

 

[Ellie]

Oops, found out we're bigger than I thought. We have 45,000 in the city and 95,000 in the "greater metro" area.

 

[meli]

I am also now exploring this route for a future shop. Does anyone have any clever ideas about financing such a venture? Can the drive-thru building itself be the collateral for the loan? Am I dreaming?

If anyone has used the JAva-Grande units and wouldn't mind sending a few emails about their experience, I would greatly appreciate it. Just PM me


Thanks

 

[Ellie]

Meli,

I don't think too many bankers would lend you more than 50% of your needed capital, even with the building as colleral. If you fail, and they end up with the building, they are concerned with unloading the building quickly, and it wouldn't have too many alternative uses. The SBA does guarantee loans, so that is something to look into, if you have not already. Again, tho, I don't think that even with an SBA loan you can borrow a large percentage of what you need. The bank is looking for you to have some equity in the venture.

You might try looking for some equity investors. Check with a local Merrill Lynch or other financial advisor to start - they may know of some folks who are interested in investing in a local business. Also, family members (??) The downside is that you have to share the profits with the equity investors. Let's say your capital requirement to start up was $100,000, and you found an investor willing to invest $25,000, that investor now owns 25% of your business, and has a right to 25% of your profits. You can plan to buy them out later. You must have a great business plan, tho, to attract investors.

Good luck,
Ellie

 

[Marotti]

huts

I am working on opening up a hut in the ATL area. We are going with a pre-fab. I think it is the best way to go. I may change my mind but for now...
Good luck with yours. It's a great idea.
Try the SBA for a loan.
From what I have found from banks is that the hut is not collateral.

 

[espressomaniac]

SBA

One of my clients is a wiz at the SBA thing, we actually may be even working together to assemble her own side business running that end for those interested in getting involved in the espresso gig and need help with a custom finance game plan. My viewpoint, you take an objective, costs, currently "owned" collateral, credit and of course the background, and you have quite a few options, it may end up where your loyal bank will give you a better rate then the SBA, then there are grants if you can place it in an area and/or add additional amendments to the business objectives to show it's contributing to the community. My clients url is http://blendeddesires.com in case you wanted to get in touch with her about it, I've already discussed just sending people to her that need help in this area and she's hip to it all. As last I discussed, she's made her rates more then affordable, you'll spend more in the asprin bill alone without someone like this helping

 

[meli]

Thanks! I have sent her an email this afternoon to see how she can help me. I am VERY grateful for the tip.

 

[Cre8ive_being]

Espressomaniac,
I am thinking about opening an espresso drive-thru and I would be very interested in talking to your client. Do you think they would mind if I e-mailed them as well?