Wanting to open a cafe! Go figure! :)

[Cobby]

I'm doing a lot of research to try and open up a cafe in my local neighborhood. The neighborhood is located in St. Louis and is a lot like a small town of its own within the city. People in it are very friendly and everybody knows everybody in the neighborhood. I think a cafe would be a fantastic fit, because there is a diverse demographic of families, elderly couples, and young students in the area. The problem I'm having is trying to find a basis for forecasting and calculating sales for my business plan. The location is within the city so there is a lot of people in the area. In addition the building I want is within the neighborhood, and not on any major city street. However, it is also located next to a high volume restaurant that is very popular in the St. Louis area, so we can generate a lot of traffic from the local businesses, as well as from the neighborhood itself. There is also a church and a small grade school right down the street from it. The city zoo and major city park are also very close as well. Were going to be offering food like baked goods, pastries, breakfast, and possibly even ice cream and desserts. So my question is... where do I begin? I'm on a limited budget, and I'm also a do it yourself kind of person, so i don't want to hire a marketing/start-up company to do this work for me. I used the U.S. government interactive census map and found that there's about 4000 people aged 20-50 within the immediate area. I've also created an online marketing survey to try and measure demand in the area. Ive gotten only about 90 responses with about 50% of them living within 3 miles of the neighborhood. Unfortunately I cannot post the link to it on this post to get suggestions from you all.

I figure average sale will be around $3-4 per customer visit. Do you think that is high? The tricky part is estimating the number of visits per day. How does one go about estimating this? Any help would be greatly appreciated.


Yours truly,
Future Coffee Connoisseur

Cobby

 

[Cobby]

Update: I'm up to 120 responses on my survey now. I've been handing out paper surveys to people in the area and local businesses and then manually entering them online. I've got a list of local suppliers/roasters , that I'm going to contact after the weekend. One of the suppliers I've got, used to provide coffee to a cafe that was in our neighborhood that recently closed down because they were bought out. (That cafe was mismanaged, and I always hear customers complain about their inconsistency and unfriendliness.) Do you think the supplier would provide me with some historical information for that cafe? If so, I could get a get a general idea of the volumes I would have, becasue I'm sure those who frequented that cafe, would come to mine.

 

[Biznerdjm]

Hey Cobby, I would definitely not forget about the importance of social media! Since you'r'e opening a new coffee shop, there should be a nice huge buzz build online so that when you launch you've got people going crazy to get into your newly opened shop. Do you have a website, fb fan page, twitter? You'd be surprised at how many you thought wouldn't have a social media account actually do. Let me know if you need any help with this, I code sites and offer online mrktg services. We can get your pages jumping jumping! haha peace

 

[Cobby]

Thanks Bizner. I plan on creating a Facebook page soon to get the buzz going. I'm not sure about twitter. I don't know much about it but I'm going to check it out. I'm currently working on a startup costs worksheet, to determine what kinda of capital I'll need to get this rolling. I've been working on an equipment list, and here's a rough draft of what we will need as far as kitchen and general equipment we may need. Let me know what you guys think or if I'm missing anything.

Coffee brewing system (in-line vs. pour over?)
Thermal carafes
Espresso machine
Grinders
Filters
Scale
Refridgerator (upright, and under counter)
Freezer
Ice maker
Oven
Microwave (maybe?)
Flat top grill of some sort
Dishwasher
Blender/ smoothie maker
Food display case
Shelves and racks
Storage containers
Small wares (mugs, dispensers, barista spoons, steam pitchers, plates, silverware, thermometers, etc)
Disposable wares (cups, silverware, storage for food to go)
Cash registering systems (whats ones are best?)
Chairs & tables (indoor and outdoor)
Decorations

 

[Mr Shave]

Flat top grill of some sort
Decorations

It sounds like you are in the very early stages of planning this out.
Are you getting an empty shell or taking over a place?
If you are not taking over a restaurant, do not count build out $ in your budget, you will most likely front.

Point is HVCA and grease trap are $.

What other components do you have in your budget? I think equipment is always the most examined expense, but in the beginning the least important.

Best of luck on your endeavor.

 

[Cobby]

We would be taking over a place. Its not a restaurant. The largest cost of build out would be putting in a small kitchen. Everything else in the place looks great and is remodeled to a style that we like, and with a few small changes that we ourselves can do, it will look great. Yes I'm in the early stages of planning at the moment, but you make a great point. I'll put more focus on the costs of remodeling and rewiring to put the kitchen in, considering that will be our greatest cost. I do still need to figure out if we need to do any electrical work in the place for the espresso machine. Ive been contacting utility companies, so I have a general idea of the cost for gas, electric, trash pickup, water, internet and sewage for the place. I still need to get a liability insurance quote and figure out costs for licensing & permit fees etc... Thanks for the input! Hope your mobile bar is doing well over there!

 

[sidg]

If you haven't already it would be good to talk to both the fire and health department about the location. We were fortunate in going into a space that had served coffee/food before but one of the inspectors had said that if the space hadn't been grandfathered in we would have had to do a number of things that would have added extra cost.
Of course your local ordinances and mileage may very.

 

[Cobby]

If you haven't already it would be good to talk to both the fire and health department about the location. We were fortunate in going into a space that had served coffee/food before but one of the inspectors had said that if the space hadn't been grandfathered in we would have had to do a number of things that would have added extra cost.
Of course your local ordinances and mileage may very.

Great idea. It was once a coffee shop many many years ago, so I'm not sure if the laws have changed and/or if it can still be grandfathered in. I'll look into it. I'm really appreciating everyone's input. This is very helpful.

 

[Mr Shave]

I still need to get a liability insurance quote and figure out costs for licensing & permit fees etc... Thanks for the input! Hope your mobile bar is doing well over there!

Coby - following and community is growing. Thanks for the comments.

Everything I read both here and in business books was about not being under capitalized, over estimating initial sales, and under estimating expenses. My comments are just based off of my experiences. My equipment was pretty straight forward from what I had budgeted and planned. A couple things I returned and got hit with a restocking fee or didn't consolidate orders and got hit with separate shipping (HI problems).

What I didn't plan enough for was first month lessons, haha. In my situation this looks like buying another generator, picking bad events, getting a handle on ordering / spoilage (COGS). For a retail store they are going to be different then a mobile operation. I assure you, they will come up. Perhaps some of the veteran, or new, store owners can chime in on some of the first years "learning expenses."

Best of luck

S

 

[Cobby]

What I didn't plan enough for was first month lessons, haha. In my situation this looks like buying another generator, picking bad events, getting a handle on ordering / spoilage (COGS). For a retail store they are going to be different then a mobile operation. I assure you, they will come up. Perhaps some of the veteran, or new, store owners can chime in on some of the first years "learning expenses."

Best of luck

S

Yeah, I remember reading earlier in your posts about your generator breaking down, and you couldn't easily remove it because it was basically embedded in the truck. Glad to see you recovered. That's not really something you can plan for except include costs for repairs in your budget. COGS will be tough to handle, especially in the early phase, because its hard to determine how much you need, when you don't have a history of sales to base your orders on. Apparently, St. Louis City has a division that assists small businesses with starting up. After a few phone calls, I've now got a general idea of how I'm going to start projecting sales and how the projections work. I've got to study up on financials, so I know what in the heck I'm reading. HAHA.

 

[Cobby]

I talked with the former owner of the coffee house that used to be in my neighborhood. I learned a lot and got some good tips and positive feedback on what I'm planning to do. I also got advice on some of the local suppliers, costs, and sales forecasting. We discussed some espresso machine models, and he gave me three that he recommended buying, depending on the type of machine I want. They are the following:

Super Automatic- Franke- evolution model

Traditional- La Marzocco OR
Nuevo Simonelli

Due to the fact I'm new to the business, he was leaning towards the super automatic as the best bet for me, because it will give me the ability to produce a consistent shot and it allows you to multitask a lot better. However, he said in the long run, the Simonelli might be a better choice. I don't know much about espresso machines. What do you guys think?

 

[Mr Shave]

I talked with the former owner of the coffee house that used to be in my neighborhood. I learned a lot and got some good tips and positive feedback on what I'm planning to do. I also got advice on some of the local suppliers, costs, and sales forecasting. We discussed some espresso machine models, and he gave me three that he recommended buying, depending on the type of machine I want. They are the following:

Super Automatic- Franke- evolution model

Traditional- La Marzocco OR
Nuevo Simonelli

Due to the fact I'm new to the business, he was leaning towards the super automatic as the best bet for me, because it will give me the ability to produce a consistent shot and it allows you to multitask a lot better. However, he said in the long run, the Simonelli might be a better choice. I don't know much about espresso machines. What do you guys think?

Cobby - this question is fairly common when people are in the process of opening a cafe. What it comes down to is what you want your cafe to be known for. Simonelli and Marzocco are both top of the line. Others will argue that there are other machines that are just as good, with out the premium. Couple of key things to consider: 1: How does the service / support network look for the machine you will ultimately choose? 2. do you want to be a cafe that is regarded in the specialty coffee industry bringing education and quality to your community or do you just want to make money?

It is possible to have a successful cafe with ANY machine out there. An experienced barista will be able to produce a better product on a manual machine. In my experiences, it is easier for me to compete on quality and service versus price. For example I sell a 16 oz. cold brewed ice coffee or hot 12 oz. for $2.86, this works for me. I would not be able to, nor would I want to, compete with the 7-11 McDs Burger Kings of the world at their price points.

Your espresso machine is going to be the single most expensive piece of equipment you buy... do your research.
I have also seen a lot of really nice machines getting dumped off on ebay / cl lately. There are some good deals to be had if you are patient and know what you want

Based off your questions a barista school or class would probably be highly valuable for you.


As for me, I'm a Marzocco fan boy

 

[Cobby]

Cobby - this question is fairly common when people are in the process of opening a cafe. What it comes down to is what you want your cafe to be known for. Simonelli and Marzocco are both top of the line. Others will argue that there are other machines that are just as good, with out the premium. Couple of key things to consider: 1: How does the service / support network look for the machine you will ultimately choose? 2. do you want to be a cafe that is regarded in the specialty coffee industry bringing education and quality to your community or do you just want to make money?

It is possible to have a successful cafe with ANY machine out there. An experienced barista will be able to produce a better product on a manual machine. In my experiences, it is easier for me to compete on quality and service versus price. For example I sell a 16 oz. cold brewed ice coffee or hot 12 oz. for $2.86, this works for me. I would not be able to, nor would I want to, compete with the 7-11 McDs Burger Kings of the world at their price points.

Your espresso machine is going to be the single most expensive piece of equipment you buy... do your research.
I have also seen a lot of really nice machines getting dumped off on ebay / cl lately. There are some good deals to be had if you are patient and know what you want

Based off your questions a barista school or class would probably be highly valuable for you.


As for me, I'm a Marzocco fan boy

I see what you're saying. I understand the importance of quality and service in the operations of a coffee shop. I did a survey of residents in the neighborhood, and those were the two highest ranked choices they picked in what influences their choice of coffee shop. I know it sounds bizarre, but I'm not sure this is a neighborhood that wants to be educated on coffee and what makes it taste so great. I grew up here and I think whats more important is that its just a place where they know they can get a good product, where the staff is friendly, and the environment is welcoming. Think of it this way, this neighborhood in relation to other ones, is what like the bar Cheers is to other bars. And I'm serious about this, everybody knows everybody's name. Its just a close knit community, that people who don't even live in it have even come to love and enjoy. So this cafe, won't be like a turn em' and burn em' operation. (Except for the morning rush for people going to work, etc..) I'm not in it expecting to make hundreds of thousands of dollars (that would be nice though). I just want to make a living, and be able to provide my community a place to get together and have a nice cup' o joe and some breakfast or dessert. As for training, Ive got a knowledgeable barista whom I can consult with, and will help educate me. I do plan on taking some classes in the near future, and I do feel as if am lacking on my knowledge of coffee and the industry. However this forum has helped a bit.

 

[Cobby]

So I'm meeting this weekend with a contractor at the location I want, to get a bid on how much it will cost to put a kitchen into the place. Things are slowly coming together. I still need to figure out a few other costs like insurance and professional fees. You guys have any tips on what to look for when buying used equipment, like espresso machines? What kind of things do you need to look for that might be broken or overly worn?

 

[pebelanger]

Best of luck to you! - Pat