To open the shop or not?

[jpr_chua]

Hi All,

I would like to ask for your opinion and hear your thoughts.

We are planning to start up our french dessert cafe here in the Philippines. Most of the things are pretty much set (we have the supplier for all equipments on standby), we have spoken to the interior designer and construction workers for the fit-out, design is ready as well, construction ca start anytime.

We have secured a 78sqm location which is on the mezzanine of a 34 floor call centre and offices with about 5000 pax. The location is somewhat challenging as it is on the mezzanine floor. (which we were told we will be the only coffee shop in the building)

But just when we were about to sign the lease we found out that there will be another coffee shop in the ground floor, just below us. with 230sqm floor area.

Question is, should we pursue and get the space or move away and find another location?

Based on my Business plan, we should sell (150 coffee and 30 cakes a day) and will get the ROI in 3 years. do you guys think this number of sales will still be feasible if there is a bigger and branded (franchised from Australia) coffee shop below

Please advise.

Thanks

Best Regards,
John Chua

 

[ensoluna]

hello John, welcome to the forum. to answer your question, whether to open your shop or not, that would depends on the quality of cake and coffee that you will be serving at your new shop, along with your service and atmosphere of the shop. The bigger and branded coffee shop will probably provide with more varieties of cakes and coffee with rather consistent quality, and probably lower pricing than yours. however, since they are a franchise company, unlike private shop, they won't be able to change their menu, quality or strategies according to what you do in your shop.

I believe that "food" business is one of the few business that can really compete with huge chain stores. and even sometimes benefit from them.

Since the other bigger shop is a franchise store, it will be easy for you to find out their menu on cakes and coffee along with quality & aesthetic & pricing of the cakes.
What you need to do is to develop coffee & cakes are different than theirs with better quality. Offer something unique of your own with amazing quality and service.

If you can do that, having the chain store below you will be an advantage.

 

[jpr_chua]

Hi Ensoluna,

Thank you very much for your swift reply and advised.

I have mentioned in my BP that as a private owned shop we can change the menu, prices, quality and strategy.

I am very confident with the cakes we will be serving, but will need to re-think about the coffee as we went to one of their shops and they're coffee was good.
We are planning to use La Cimbali espresso machine. But I am sure big factor is the coffee and milk.

It just suddenly changes the whole operation from having 100% customer to 50% that's mainly our doubts and hesitation.
Any idea where to get good coffee in the Philippines?

Thanks

 

[ensoluna]

I am very confident with the cakes we will be serving, but will need to re-think about the coffee as we went to one of their shops and they're coffee was good. We are planning to use La Cimbali espresso machine. But I am sure big factor is the coffee and milk.

It just suddenly changes the whole operation from having 100% customer to 50% that's mainly our doubts and hesitation.
Any idea where to get good coffee in the Philippines? Thanks

Hi John. my name is Alex. ensoluna is my company name is Guatemala and user name for this forum. I do not know where to get good coffee in the Philippines. sorry. but look for local roasters who uses only high quality Arabica coffees (since Philippine is closed to Vietnam, Indonesia, there might be a lot of low quality Robusta coffees there, I am just assuming)

Arabicas from Ethiopia, yemen, most of Central American countries are very good. Even Indonesia has some great coffees from Sumatra and Sulawesi. Please make it sure to ask the roaster about the coffees they are roasting. Buy fresh roasted coffees as often as possible.

Also, one of the most important thing about serving a great coffee to your customers is having a good barista. Barista makes a lot of difference. also, i have been to philippine few times and it is very humid, so please make it sure to store all the coffees in dark & dry place (between 60 to 70F).

by the way, I am not so sure what you are trying to say : It just suddenly changes the whole operation from having 100% customer to 50% that's mainly our doubts and hesitation.

when i have more clear idea on this, I will also advise you. thanks John

 

[jpr_chua]

Hi Alex,

Thank you for the advise and tips. Will look for local roasters.

I agree, As I worked in starbucks as barista before, lots of people comes to the store not because of the coffee but because of the barista.

What I mean with the 100% down to 50% is instead of us having the whole market (whole building) suddenly it is cut to half because there is a direct competitor down below.
so there will be option for the customer.

Thanks

 

[CoffeeJunky]

We are going away from the subject but there are tons of great coffee beans are produced in Asian region. Indonesia, papa new guinea, bali, and also Vietnam. But you can also get tons of coffee from other region.
I am sure there are tons of whole sale people out in our country.

To give good advise on your situation, we have to know your market. I know one of my close friend owns coffee shop in Japan. He is in the ground floor of the large building with 3 other coffee shops within walking distance. But his shop is going strong because his reputation of the coffee. It really depends on your market. If there are enough business to go around, why not open but if you have to constantly fight for small amount of business, it would not make sense to invest. I am sure you know the answer to this and I would follow your head not your heart on this..... Good Luck

 

[CoffeeJunky]

also 150 cups of coffee won't be nearly enough to sustain your business here in US.

 

[coffeeventure]

Hello.

I am currently working on my business plan.

Have yet to find the average proffit margin for coffe stores which should influence my growth rate.

So far I have this parameters:

Estimated Sales: 60.000$ month
Store cost: All included (250.000$)
Type: Mall location
Cost of coffee 10$ lb.
Food and pastries cost: 50% of retail price.
Royalty fee 7%
Advertaisement fee: 2%
Payroll:
1 General Manager (avg salary for a manager in charge of 3 stores?)
1 Store Manager (avg salary for in store manager?)
5 Baristas (8.33$ full time good?)

Rent: contract 13% of sales
avg costs:
insurance: ?
Utilities: ?
Cleaning: ?
Office supplies: ?
legal and accounting: ?
Technical service and repairs: ?
Shipping: ?
Maintenance: ?
Traveling costs: ? (all 4 stores in same city)
contigency: ?

avg. growth rate per year???

I am wondering what an average proffit margin would be and what info you guys might give me. I would realy appreciate it.

Thank.

 

[CoffeeJunky]

60,000 dollars per month is around 12,-15,000 per week or 1500-2150 per day sales.
For based on 2000 dollars per day sales, you would need to serve 450-600 each day.
That would mean you need have one sale per every minute from open to close based on opening 8-10 hours per day.

 

[PinkRose]

Coffeeventure,

It looks like you're attempting to hijack this thread.

You should have started your own thread.

Rose

 

[coffeeventure]

sorry for total ignorance.

How do i start a new thread?

 

[PinkRose]

sorry for total ignorance.

How do i start a new thread?

It sometimes takes a while to figure out how things work around the Coffee Forums website.

Assuming that you want to post a new thread in this Forum area, go to this page, and then click on the orange box on the top left of the screen that says post new thread. Coffee Shops, Espresso Bars & Cafes

Rose

 

[jpr_chua]

We are going away from the subject but there are tons of great coffee beans are produced in Asian region. Indonesia, papa new guinea, bali, and also Vietnam. But you can also get tons of coffee from other region.
I am sure there are tons of whole sale people out in our country.

To give good advise on your situation, we have to know your market. I know one of my close friend owns coffee shop in Japan. He is in the ground floor of the large building with 3 other coffee shops within walking distance. But his shop is going strong because his reputation of the coffee. It really depends on your market. If there are enough business to go around, why not open but if you have to constantly fight for small amount of business, it would not make sense to invest. I am sure you know the answer to this and I would follow your head not your heart on this..... Good Luck

Hi Thanks for this.
We followed our brain on this one, we were about to sign the contract then found out that there will be one more coffee shop just below us (230sqm), then we were considering and had another meeting with the lease management, but then found out there will be another one coffee shop behind us (90sqm) our shop (78sqm).

We have given up the space, lost the reservation fee but still better than to risk it with a huge capital on lease and interior.