Wholesale Roaster

[Kbeans]

I am in the process of starting a roasting business. I have a couple questions regarding the wholesale side of business.
1. What is an average price per lb. for wholesale accounts?
2. Do you typically provide any equipment, like brewers or grinders?
3. Are there usually contracts involved?
4. Are prices discounted more for higher quantities?

Thank you,
Cameron

 

[Cafeciteaux]

Wow, I'm surprised no one has commented. Well then, Ill give you the scoop. For wholesale you're looking at 30-35% discount from your retail price. Grocery stores generally like to make a min of 30% and you can negotiate a little. If you are going to have a grinder in the store then yes you will have to supply and maintain that machine. If you are in the restaurant and hotel business you will have to supply the machines and maintain them. Just a work of warning in that business, the workers are extremely hard on the equipment and you will find yourself spending more time on maintenance and equipment replacement than you might make off the sale. I wouldn't have a sales contract unless you asked by the purchaser. And finally, if you are selling a ton of coffee through a grocery, its time to renegotiate a lower off the top percentage like 20-25% discount. They are obviously expecting to sell a lot if they are make a large order. You never want to drop your prices when you are selling more. Don't fall into the walmart trap.

 

[eldub]

We supply high end restaurants and don't provide machines. I'm guessing it depends on the local market.

 

[Cafeciteaux]

Yeah, It depends on the market. The big regional roaster here is really the one who solidified the practice. We try not to do many restaurants for that reason.

 

[Kbeans]

My assumption was that a lot of restaurants that are in business already serve coffee and probably have at least brewing equipment. Would this be a wrong assumption? I understand maybe a new restaurant might not but that surprises me that they would expect that from their coffee supplier.

 

[Kbeans]

Also, you say NOT to have a sales contract...why is that?

 

[eldub]

We don't have any sales contracts with wholesale clients. Who knows how much they are going to sell or if they are going to want to continue using our product? (Or if we want to keep them as clients, as far as that goes.)

 

[Cafeciteaux]

Personally, I find the contracts to be restrictive placing a lot of pressure on both parties to conform to the parameters. I believe you should form relationships with your buyers that go where they need to go and aren't limited to anything written. That is my philosophy and it has worked out well for us so far. Also, we deal with a lot of family owned stores which have been handed down through the last two or three generations. A firm handshake and a verbal agreement are how it is done.

 

[redlandroaster]

Restaurants are out to save money anyway they can. I used to roast for a couple of cafes in the Portland, Or area. I supplied all the equipment as the large roasters in the area can afford to supply everything. It was the only way to get the account. Many roasters offer the equipment free, but the client must sign a contract to buy their coffee exclusively.

If the restauranture can afford to own his own equipment, then they can get the best price on coffee, but then their is maintenance on the equipment. I had extra brewers so that I could rotate one out for cleaning regularly. The waiters/waitresses were famous for not rinsing out the carafes properly. Since I used pour over brewers, I had plenty of cleanup to do.

If you are considering the restaurant business, you will have to train the waiters. When they get slow, they love to pre grind the coffee and stack it up in the paper filters. It's hard to explain to them that coffee starts to go stale immediately if you leave it out like that.

 

[Kbeans]

That all makes sense. If you don't have any type of written agreement, do you you give them an invoice or collect at the time of purchase?

 

[topher]

I collect payment of first delivery. I then give them 15 days terms.

 

[eldub]

We have accounts who write checks upon delivery of beans and others who pay every 30 days.

 

[sae]

It depends on the type of business. Where I live coffee shops will pay in advance but restaurants will take 30 days

 

[Kbeans]

Thank you for the helpful info everybody!