Profitability in Roasting

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RoastOnCoast

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Hi Musicphan,

We imagine 1.5 years has created a fresh cup of perspective! We will have a two person shop, so yes, definitely a small roastery to start. Our cash flow projections are based on market analysis and pricing variables/medians across all channels, meaning from commodity (see burned coffee) to specialty coffee offerings in our market. If we look at the total population base and extract the percentage of possible adopters of our brand, we feel our numbers skew slightly conservative, but realistically reflect the time it will take to create brand awareness and acceptance as a replacement to the current utilized brands. This analysis has also informed our price point, but we may revisit that based on previous comments. While delivery won't be required, a means of transportation will be.

We have been able to find an RO filter system at a comfortable $200 price point. This will serve two purposes. For our cupping sessions, we will have the ability to compare a clean cup to cups brewed with "local" unfiltered water, and also, to provide a clean cup for sampling to potential clients. We agree, not necessary, but we think it will give us a step up in understanding our cupping analysis and offerings.

Zojirushi water pots are fantastic, have a good price point and, minus continuous refilling, look futuristic! "Plumbed in" is not something we're considering right now, but that may change based on our final buildout expenses...if we have some money left over, we may plumb for those all important late night roasting coffee boosts!

Ahh, refractometers...why are you so cool and yet, not as useful as you should be?!? The idea behind this was exactly what you stated, to dial in our brewing recipes to make sure we're providing the best recipe possible. Reading what you wrote, maybe that cost will be better spent on the Tonio. While not inexpensive, we can see why color may be a more important metric in our lab. We inadvertently left the moisture meter off our included list above, but based on our location, we will be utilizing one a lot. Your story was really interesting and confirms our impetus to include this purchase on the front end of our startup.

We've looked at numerous packaging options, learned the difference between "compostable" and "biodegradable" along the way (as a side note, we are not pleased by the misleading terms manufacturers use...if the public could trust the transparency of what they read on labeling, the food manufacturing industry's bottom line would benefit greatly). We have found that a compostable bag aligns with our company's initiatives , and heat sealing will be the best way to enclose the beans in a stable environment. We were looking at a basic hand sealer, but imagine after four hundred bags, the time it takes will add too much to labor costs.

As we continue to add up our costs, why not throw in another $2-$3,000:/ We thought we may be able to wait on purchasing an espresso machine, but, as most clients will use one, we will probably have to revisit our decision. Necessary? Maybe not initially. Mandatory eventually? Absolutely.

Thanks again for your thoughts!

---ROC
 

trk_koa

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Reno, NV
With regard to the hand sealer. It's not just the time and labor costs. Maybe we weren't doing it right, but it doesn't take that many bags for your hands to hurt. We have a foot pedal sealer and wouldn't recommend using a hand sealer.
 

Jayzoll

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i do not think a refractometer is necessary - but to me, the refractometers value is greater than the color meter. tonino tell you the color and over time ability to reproduce that color. personally i want to know both whole bean and ground colors. that is the main reason i have not purchased a tonino yet. but i will buy one when i have the extra cash, because i like analyzing things.

once you have a roast recipe that tastes good, you can always send occasional coffees (fairly inexpensively) to a coffee lab for whole bean and ground color analysis.

you can roast coffee consistently to color and regularly over/under extract.

does color matter if your consistently yielding TDS of 1.25 or 1.35 @ 19.5% when brewing a v60 at grind setting 6? if those variables remain consistent, how much can color vary among roasts?


the refractometer could be used to help clients dial in their brewing methods onsite. this might be one way to swing not having an espresso machine. 'my recipe doesnt matter on my machine with my water.'. lets dial it in on your machine and your water.

refractometers can be used to identify dulling burrs. they can also be used as a control to roast development when certain variables remain the same (i.e cupping/brewing process)

plus you could offer some fun extraction sessions for people (or cafes) i have done a few sessions at cafes as training sessions - different brew methods, espresso consistency, etc. ok, one instance my motive was to identify inconsistent baristi techniques. call me a jerk, but they did benefit by implementing better controls to to improve consistency among staff.

the biggest benefit ive seen since purchasing a refractometer 3yrs ago - calibrating my palette. this provided me with much more confidence when analyzing brewed beverages. tasting the same coffee brewed all throughout the 'recommended' extraction range has advanced my palette more than anything else. even though a coffee tastes 'great' at 18.5%, but what does 20% taste like? can i push it to 21%?? maybe better, maybe worse. how bout the same extractions at different water:coffee ratios? its that micro fine tuning that i have been able to get the absolute most out of my coffees.

is it the refractometer or is it the thousands of brewed cups that helped calibrate my palette? after all, it is just a reference point and we still need to taste. but this is coming from someone that owns a refractometer.


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RoastOnCoast

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Hello JohnD18,

Ha! Yes, it is not our intention to set ourselves up for failure with negative thoughts! All that to say, we do believe in exit strategies during all benchmarks of business, so we have tried to identify those benchmarks, ask "what if's" and then plan accordingly. In our minds, we're already selling 40,000 Kgs of coffee per year and have opened a custom built manufacturing plant;)

Your adjustments to our list are most appreciated! We don't have any options with a vehicle due to our location. We have built in costs for our stack, as well as Health Dept. requirements. We're putting together our own cupping supplies (those kits are CRAZY priced!).

The storage is interesting. If our volumetric maths are correct, we will require rubbermaid Brutes for our storage. They are expensive, but well constructed, food safe, and we like the idea of opening 60Kg bags and having the ability to store them in one bin. The theory behind this is stabilization of moisture during storage to achieve consistency in our profiles throughout the use of the green.

Oh, poor refractometer, you are such a fancy looking, "sciencey" component for analysis and yet, so lonely in your use amongst the community!---Yes, we will put this on the side and put the price cost towards Tonio.

The kettlle idea is a quick way to shed an expense. We will look at this and see which is more cost effective.

We have priced out stamps. We like the look and, based on printed bag prices, will use one or the other of these methods.

Pressure pots, or press pots. Not the ideal, but some of our on site sampling will not have electricity, so we will use these to hold hot water for sampling to customers. It will hold the water at a warmer temperature so we can quickly heat it up on a gas plate.

We will look into the 3M and compare the pricing...great suggestion.

POS is for ease of use and accounting/data/sales analysis. This may or may not be a front-end purchase.

Your additions are noted and were included in our cash flow, but great to be reiterated: sinks, licensure, effluent license, etc. are all the expenses we often don't think about in the beginning of the planning process. It all adds up so quickly and has been exciting in a "#@!$%$, we need that too?!?" kind of way! All necessary for the business side and to provide the best product possible. However, this is what lead us to the start of this thread. A roaster invests $25,000-$100,000 just to open the doors and then works for, what appears to be a very long time, to realize a return. This is the intimidating part of beginning any business of course, but that is what creates the hustle in us all, right!

Thanks again JohnD18!!

---ROC
 

Jayzoll

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Jan 15, 2017
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forgot to mention. i really like the grainpro zipper bags when stored in rubbermaid brute garbage cans! fairly cheap and reusable for a long time!


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RoastOnCoast

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A hearty cup of hello trk_koa,

This was our thought as well. Our model is to sell small bags of 250g rather than larger bags. After 100 seals, we envision not being too thrilled about having to do it by hand. All that to say, we have also explored various methods of supplying repeat customers with different sorts of reusable packaging for their coffee. We will see where that brainstorm leads us!

Thanks for your thoughts!

---RoastOnCoast (ROC)
 
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RoastOnCoast

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Hello Jayzoll,

That's a great suggestion! We had lost track of those in our planning process. Thanks much for remembering to add it to help us, er, remember it!

Out of curiosity, do you have any issues with moisture/condensation when they are sealed? Or a better question would be: Do you store your beans in a climate controlled environment? We have looked at the real possibility of requiring a dehumidifier for our storage area due to our location. We would be curious what you have experienced!

---RoastOnCoast (ROC)
 

Jayzoll

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Hello Jayzoll,

That's a great suggestion! We had lost track of those in our planning process. Thanks much for remembering to add it to help us, er, remember it!

Out of curiosity, do you have any issues with moisture/condensation when they are sealed? Or a better question would be: Do you store your beans in a climate controlled environment? We have looked at the real possibility of requiring a dehumidifier for our storage area due to our location. We would be curious what you have experienced!

---RoastOnCoast (ROC)

we live near pittsburgh pa and store our coffee in the basement (roast out of attached garage the next room over.) we have a wide variety of humidity throughout the year with 4 seasons. pretty cold and dry in the winter, wet and mild in the spring and fall, to warm and humid in the summer. the basement is usually very stable year round between 55-65 and relative humidity fluctuates widely (more stable in the basement)

the grainpro REALLY help keep our coffee stable. we did a few months our first winter without grainpro - i think the coffee dried out within a month and certainly roasted faster after 2-3wks. prob by mid feb we had zipper grainpro bags lol.

we tend not to buy any more than 2-3mos worth of coffee. thats just how we roll, though i suspect the coffee would stay for 6mos no problem. even though we are in and out of the 50lb bags many times, the coffee is fine when we get to the end of it. we do squeeze out as much air as we can each time we seal it up.




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RoastOnCoast

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Hi Jayzoll,

Thanks for the storage info...very helpful indeed. We wish we had access to a basement facility, but they simply don't exist at our location. However, based on our research, and what you have written, we will definitely follow through with the grainpro zipper bags. We can only assume you haven't noticed any off flavors leeching into the green during storage, or else you wouldn't recommend them. This was a concern for us.

As the thread has taken a few wonderful turns and twists, to return to the initial title...what are the specific margins you have experienced? In other words, after inputs of production, labor, fuel, packaging, shrinkage, etc, what are the percentages/margins you have experienced in a typical month/year? 20%, 30%? Clearly, this is business model sensitive, so we are looking for a number of responses to find a median percentage upon which we may base our figures and cash flow projections.

Thanks to you and all who continue to participate in our discussion!

---RoastOnCoast (ROC)
 
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