Start & Run a Coffee Bar. Tom Matzen

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      5. What Type of Coffee Bar Is Best?

      Keeping in mind your knowledge of the typical coffee drinker, you now need to determine which coffee bar concept will best meet your target market’s needs. Listed below is a brief description of the main types of coffee bars and the strengths and weaknesses of each. While a focus will be one of the keys to your success, it is possible to successfully combine two or three concepts, if they are done properly and if your marketing strategies take each into account.

      5.1 Cafés

      Cafés are the European model of coffee bars. They typically focus on liquid coffees (not bean sales) and often serve both lunch and dinner items. Sometimes they are licensed and, in fact, could be considered restaurants. As such, they are a concept outside the scope of this book.

      5.2 Coffee bars

      Coffee bars are typically high-traffic locations that focus on liquid coffees. Product lines often include gourmet and specialty coffees, and baked goods. These operations can be very profitable with low risk if done well.

      5.3 Coffeehouses

      A flashback to the Haight-Ashbury district of San Francisco, coffeehouses typically have dim lighting, comfy sofas, and poetry nights. They attract a younger crowd and focus on long visits and lots of conversation over steaming hot cups of java.

      5.4 Retail coffee shops

      Retail coffee shops typically focus on bean, tea, and giftware sales. They may or may not offer liquid coffee sales and are often found in mall locations or gift districts.

      5.5 Drive thrus

      Drive thrus can work well on the right site. The most successful locations are those with high volume on the going-to-work side of the street. Drive thrus focus primarily on liquid coffees and baked goods.

      5.6 Carts

      These “mini-stores” focus almost solely on liquid coffees. They can work well in high-traffic areas, but are challenged by difficulties in building customer loyalty. Because they are mobile, there is little, if any, equity creation as the business grows (unlike the types of coffee bars listed above).

      5.7 Teahouses

      There is a recent fad for teahouses as an offshoot of the coffee business. Do keep in mind that while tea is a popular drink, it typically represents only 3 percent to 7 percent of the total gourmet beverage market. This means you will need to be five times better than the norm to do even 20 percent of what a coffee bar will do.

      5.8 Roaster/retailers

      As the name suggests, roaster/retailing contains two key elements:

      (a) On-site roasting of green coffee beans

      (b) Retailing of coffee and coffee products

      We believe that roaster/retailers are the wave of the future. They offer you a number of advantages that spell out strong bottom-line profit.

      5.8a Lower food cost = Profit

      Roasters typically mark up green coffee $2 to $4 per pound. The money you save by roasting your own coffee directly converts to lower food cost in your operation.

      5.8b Savings = Profit

      If your coffee business goes through 100 pounds of roasted coffee per week, you are spending at least an extra $200 per week, or $10,000 per year, because of the mark-up from roasters. Think of how many trips to Hawaii you could take with that money!

      5.8c Meeting customer needs for freshness = Profit

      Today’s consumer wants the best. You’ll be left behind by your competition if you don’t give customers the freshness they are demanding. Coffee loses about half of its flavor within the first 14 days after it is roasted. It is tough to meet customer freshness demands if you’re not doing your own roasting.

      5.8d Competitive edge = Profit

      In-store roasting gives you a unique element that gives you a huge edge over your competitors. How could you compete if the coffee bar down the street offered its customers beans to take home still hot out of the roaster?

      5.8e An additional revenue stream = Profit

      In-store roasting means you are adding an additional profit center to your coffee bar: wholesale. Because you aren’t paying someone else to roast your coffee for you and you are paying only $3 or $4 per pound (including shipping, handling, brokerage, and exchange rates), you can afford to offer discounts competitive with other coffee roasters to wholesale customers.

      You can supply wholesale coffee from your business to:

      • Bars serving coffee

      • Businesses serving coffee

      • Cafés and restaurants

      • Car repair shops serving coffee

      • Coffee bars

      • Coffee shops

      • Corner stores

      • Gas stations serving coffee

      • Hairdressers serving coffee

      • Hotels and motels

      • Offices

      • Supermarkets

      5.8f Long-term appeal = Profit down the road

      While it is our opinion that in-store roasting will be with us well into the foreseeable future, if we had to predict the next “hot” trend after in-store roasting, we would say “in-home” roasting. Should this trend develop in the years to come, roaster/retailers will be well protected because people will still need to buy the green beans. If you have been successful at building a solid roasted-bean business, it is simply a matter of transforming your roasted-bean customers into green-bean customers. (We design all our coffee bars to take this into account so that this conversion, should it ever be necessary in future, will be simple and inexpensive.)

      Contrary to what many roast masters of the world may tell you, today’s technology makes roasting beans easy. Many roasters require as few as five simple steps: checking the roaster temperature (done by the touch of a button), weighing your beans, setting an automatic timer, comparing roasted samples to a color chart to determine roasted level once the timer rings, and then allowing the beans to cool in a cooling bin.

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