What Do CoffeeShoprs Say?
We asked some of the most successful business owners: “Is location really that important for a coffee business and how did you choose yours?” Here are their answers:
1. Before Deciding Where Your Coffeehouse Will Be, First Decide Who Your Customer Is And Who You Are
Mike from Batdorf & Bronson Coffee Roasters (Atlanta, GA)
As a coffee roaster and a coffee retailer we deal with the question of location constantly. We talk to people every day who are opening coffeehouses or looking to improve business at existing coffeehouses. Location is the first thing we look at when evaluating their potential and how we can help them. When we open one of our own Dancing Goat coffeehouses, finding the right location takes longer than any other part of the process. We are unreasonably picky, infuriatingly picky about location. But our coffeehouses perform far above the U.S. average in terms of revenue. There are several reasons for this and picking the right location is one of the most important.
Having been a coffee retailer for 30 years we have a clear advantage when it comes to the most important questions about location, questions a prospective business may not know how to answer: “Who is your customer and who are you?” People get excited about finding a location because it is such a concrete action, it’s doing something instead of just thinking about doing something, which they may have been doing for years already. Too often, people start looking for a location before they have a clear picture of who their customer will be and how they want to operate. Before looking for a location you must commit to paper a detailed profile of what you want your business to look like, physically and operationally. Imagine standing in the middle of your coffeehouse. Who are your customers? What are they doing while visiting your coffeehouse? Did most of them drive or walk? What’s on the walls and what do the walls look like? What time did you open and what time will you close? Finding a location that serves your vision is hard and takes time but it is immeasurably better than being saddled with a location that is ultimately incompatible with how you want to do business.
Those are some of the intrinsic issues around location, but the extrinsic issues are just as important. It doesn’t matter if 400 cars drive passed every 10 minutes if you only have five parking spaces, or if most of those cars need to make a left hand turn against traffic to reach you, or if they can’t see you are a coffeehouse until they are almost in front of you. You’re counting on foot traffic? Great. How many people can walk to your location in less than 10 minutes and what are their demographics? In Atlanta we have two coffeehouses only 4 miles apart but the customers are dramatically different and if we picked these two stores up and switched them neither would be as successful as they are now.
Sometimes it’s difficult to convince people to imagine what they want their lives and their business to look like five years after they open and fully conceive their brand before they start thinking about, let alone looking for, a location; but we have been selling coffee to coffeehouses for a long time. Again and again we see people struggle when they’ve decide where their coffeehouse will be before they decide what it will be, who they will serve and how.
2. Or Do Just The Opposite — Find A Great Place, And Then Develop Your Concept
Sara from The Coffee Alley (Chicago, IL)
Location is very important for a coffee shop, because coffee business is mainly walking traffic, as parking is usually hard, and you won’t get as many customers as those that pass in front of your store.
We chose our location by thinking first where we wanted to open a business — not too far from home. It took us more than a year to find the right place. Some people don’t have as much time to plan, but this part is so important for the success for the business.
We developed a concept after we found the right place. Of course, we planned ahead funding for the business, so important also. Many businesses can not make it to the open the doors, because they do not plan enough, it takes about a third more time and money by the time you are ready to open your business.
My tip — find a place and look at the surrounding, the people walking by, and develop the concept and the idea according to the needs of the place, not backwards.
3. Talk To Or Partner With A Real Estate Expert
Nick from Bluestone Lane (New York, NY)
Having the right real estate is absolutely imperative when developing or operating a coffee business in New York. So much so, it’s in fact a little bit disheartening as real estate is the biggest barrier of entry in New York and can also be the element that has the greatest impact on success or failure.
There are so many food & beverage retail businesses that have had wonderful products and value propositions, but they fail because their location and the terms are not commensurate with what their business model. Too much rent or too little rent meaning they are not attracting enough customers and traffic.
It also does have one positive in New York, it weeds out, quite brutally, mediocrity. If you don’t really know what your business is and what you’re offering customers, then the high fixed costs associated with real estate can very efficiently put extreme pressure on the business viability.
In planning Bluestone Lane I had identified the need to bring into the team an experienced local NY retail real estate partner (Jon Krieger). Jon has been indispensable in finding the right locations for Bluestone Lane in our short history.
4. Look For The Place That Feels Right For Your Business
Brandon from Overflow Coffee Bar (Chicago, IL)
You can have the best concept, but the location and cost of the location are super important things to consider. I’ve also learned that no location will have everything.
With that said, I kind of feel our location found us. We knew we wanted to be in the South Loop of Chicago. We also knew that it would be an uphill battle choosing this neighborhood, because it is not built up yet and it is in the process of huge growth. There are lots of people and development, but not many businesses last more then a few years, unless they have huge financial backing.
First off we wanted to be more then a coffee shop; we wanted to build a community. A new friend at the time had an idea of a community center with a coffee shop in the center. The Daystar Center is a not for profit community center where we have classes such as piano and Zumba as well as an event space where we can hold larger events for the community. We thought that would really fit what we were going for. However, we are not close to any transit or have the density that the North Side of Chicago has. We decided to do it anyway because it aligned so well with what we hoped to accomplish.
We are now 4 years in and both groups are maturing and growing, and as people come to yoga they get a coffee or the other way around. We have been able to hold small conferences and other cool stuff because of our location, but the trade off of the slow growth can be difficult. My big piece of advice is look for the place that feels right for your business, and with every location there will be trade offs and sacrifices you have to make.
5. Follow A Simple Rule — Pick Spots Near Both Residents And Offices With Good Visibility
Bobby from Demitasse Cafe (Los Angeles & Santa Monica, CA)
We definitely think location is that important. While people may drive for amazing coffee once in a while, the kind of volume a small coffee shop needs to survive relies on regular, repeat customers. If you’re not in a good location for a decent number of people, you have no chance.
We tried to pick spots that were near both residents and offices that had good visibility. It was really as simple as that.
6. Sometimes It’s A Matter Of Pure Luck
Anya & Matt from Café de Leche (Los Angeles, CA)
Image of Anya & Matt by Andrew Gotch
If your product is good enough I do think that people will find you, but a good location can really make it a lot easier for people to find you.
For us, finding a location was a process that took many months and took many turns that at first appeared to be problematic, but ultimately turned out to be the best thing we could have asked for. We attempted and failed to lock down two other locations before finally finding our current space – a perfect, high-ceilinged, brick, 1920’s, corner spot on one of the main drags in our neighborhood. In retrospect, the other spaces didn’t come close.
I’d love to say it was my sharp eye that made us keep looking until the right space came along, but in retrospect I’d say it was dumb luck. Really, really good dumb luck.
7. Finally, Remember That Even Though Location Matters, Quality Of Service Sets Precedence
Orgena from Kaffeine (Houston, TX)
Location, Location, Location… is what I was told years ago when I decided to open my first American traditional restaurant. However today, location may not be so important for coffee shops. Highly populated areas such as malls and shopping centers are too costly and crowded. Inflated rent and taxes warrants permanent book ends to your business.
I focused on the neighborhood I grew up in, which happens to be minutes from downtown Houston and nestled in the heart of the Museum District at Museum Park. A fusion of urban living and commercial real estate quickly populated this area with professionals, stay at home moms, artsy and mufti-cultured individuals. A perfect blend for Kaffeine!
Although location matters, I feel your services and quality of your product is just as important and will create a memorable experience.
On any given day, we all are blocks or minutes away from getting a cup of coffee… But it’s when we make the decision to drive pass all the others to arrive at “our favorite” spot for our favorite “cup of Joe.” That’s when location plunges and quality of service sets precedence.
Key Considerations For A Successful Location
It has been said that retail stores and restaurants rely on three critical factors for their success: LOCATION, LOCATION, LOCATION! However if you think about it, location is really customer convenience. In the espresso industry, your concept, your personality, your communication skills, and your ability to offer consistent high quality products are the keys to your success. The importance of securing a great location goes without saying, however if you don’t consistently serve a great product, your success is questionable. Even in a modest to poor location, if you maintain consistent high quality standards you can produce some pretty amazing numbers.
It would be nice if there was one neat clean description for what constitutes a good location, unfortunately, there is no such thing. The espresso business is a very personal, hands-on type of business. By exploring each of these areas, you should be able to narrow your search to the type of location and the general area to begin your search.
There are three major aspects to consider in choosing the right location for your espresso bar or cart: personal, physical, and financial.
Strengths And Interests
The first thing to consider in your location search is you! It is a time to ask some tough questions that deal with you as a person and how you want to reflect your personality through your business. Many carts and bars are successful because the owner/operators tied their personalities and interests and, in some cases, previous professions to their concepts. It is important to ask yourself, “What strengths and interests do I want to build upon in my business?” So, the question becomes, “What kind of espresso operation do you want to open?”
Examples of incorporating your interests into a profitable business are shown in the table below.
- Philosophy Major ……… Espresso cart located on college campus
- Sports Buff ……… Mobile cart focusing on sports events (tailgate parties)
- Financial Wizard ……… Espresso bar in financial-district high rise
- Marketing/Advertising ……… Retail specialty coffee/espresso store
The examples in the table are exaggerated and oversimplified. However, many of the more successful owners of carts and bars operating today developed their concept and selected their locations based on their personal interests.
Defining Your Style, Ambiance And Customer Base
When researching possible sites, you need to ask yourself, Does this location fit with my personality? Would I enjoy coming to work every day, seeing many of the same people, hearing and giving many of the same lines day after day? Is this the type of location where I wake up every morning excited about my business and the new people I’m going to meet?
By knowing the type of people you enjoy most and the ambiance/style you want to create, you have narrowed down considerably your search for the perfect location and increased your chances for success.
Other Factors You May Want To Consider
- Inside/outside location: Both offer their own pluses and minuses. Initially, your financial situation may determine this question for you.
- How far are you willing to commute daily? This should not be the major factor when selecting a location, but at least a consideration. If your concept and location are solid, your success can outweigh the time spent in the commute.
- How many days per week are you willing to work? Mall locations and tourist areas require seven days per week, while metropolitan buildings require only five days per week.
- Hours of operation. Are you a morning person? Can you get up every day at 4 a.m., or is mid-morning to evening your best time of the day? Remember, long after the store is closed, you still have to do the books, pick up supplies, etc.
- Are you willing to move if necessary? Although this is a tough question, the rewards and satisfaction of owning your own business can justify such a move.
- If you are planning to sell novelty items (cups, mugs, grinders, home machines, etc.), most suburban locations are averaging 40 percent higher sales in this area than downtown locations. This is probably due to the fact that most consumers shop close to home, rather than at work.
Red Tape First: Permits, Zoning, and Planning
Permits, zoning, and health department considerations may preclude many locations from even being considered. This section provides a basic starting point to rule out any such problems and save you time and energy.
Your local and county zoning commissions can provide you with the latest “mapping” of the location and the surrounding area that you are considering. They will be happy to provide you with information concerning restrictions that may limit or impede your operation, provide long-range planning information about street closures or scheduled construction, and inform you of proposed new construction and growth patterns in the area.
Health department regulations vary greatly from state to state and, in many cases, from city to city within a given state. Mobile operations (carts) may not be allowed in your particular area. Or, you may choose to work extensively with your local department to be the first. At any rate, be sure to be in contact with your local health department early in the process to determine exactly what your options are. All states will require a health permit complete with facility inspection. It is imperative the you know the specifics of your local health department before you undertake the arduous task of equipment selection. Very specific equipment and cart requirements may be required.
Many fire departments require that you obtain a permit before opening for business. Others may not require a permit; instead, periodic inspections will be conducted to see if you are conforming to regulations.
Sign ordinances have been recently instituted in many cities and suburbs that restrict the size, location, and sometimes the lighting and type of signs allowed. Landlords may also have specific requirements limiting or restricting the use of “A” boards or banners for street-side advertising, etc. Make sure you determine the specifics of your potential site to see if there will be any adverse effects to your marketing and advertising efforts.
Other permits and licenses
County governments may require essentially the same permits and licenses that cities require. If you are considering a location outside the city limits, you will want to familiarize yourself with the specifics.
Note: County regulations often are less strict than those of cities.
Physical Site Considerations
A good location may allow a struggling business to survive, while a bad location can mean failure for even a well-run company. Before starting your search, try to define the perfect site, then figure out how close you can come to it.
Selecting the general area
Locate your business in an area where the economic base is strong enough to support your business. Your local chamber of commerce can be an invaluable source of information. Their areas of expertise can include:
- Knowledge of specific locations that might be perfect for your
- The economic health of the area you are
- Business contacts and networking with other local
The Department of Construction and Land Use can also provide valuable information, such as long-range information for the community; i.e., new construction, demolition of buildings, etc.
Be sure to talk to the local business people. They will have insights and suggestions on possible locations, why businesses in the community have succeeded, and why others have failed. Your business success in the community benefits everyone, so in most cases community business people will want you to succeed and help where they can.
It is important, when choosing a site, not to overlook the obvious; all aspects must be considered. The perfect location could be right at your back door.
The first step
Assuming that trends, economic levels, availability of supplies, and the potential community are favorable, the next thing you will want to look at is choosing a specific area.
First, find eight to ten possible locations that meet your requirements. Do not worry if they are not available. At this stage, you are simply narrowing down your options.
Site history and appearance
Many questions about the site history and appearance can be answered by talking to the owner/manager of other retail outlets in the immediate area, with the landlord or property manager, and, in some locations, with a representative of the merchants’ associations.
- In the general area, what types and how many new businesses have opened in the last three years?
- How many business have been in this specific location you are considering? Why did they leave?
- What types of business were at this site?
- How many business at this site have failed?
- What is the overall appearance of the site? Are the parking lots clean and in good repair?
- How many vacancies are there in the complex? In the immediate area?
- Are there funds available for ongoing building and grounds maintenance?
- How many days a week/hours per day are the principal businesses around your location open?
- How is their business: steady, increasing, decreasing?
Interviewing property managers
Your landlord can make or break you. His or her views on tenants can be very revealing. Talk to other retailers in the building.
- Does the landlord view retailers as value-added amenities, or simply as money-makers?
- Will the landlord be helpful in times of trouble?
- Does the landlord return calls in a timely manner?
- Occupancy rates.
- Maintenance philosophy.
- If the location you are considering has a merchants’ association, how effective is it?
- Future plans.
Examine other businesses that you perceive as successful and determine what it is about that business that makes you want to be there (convenience, atmosphere, price, etc.).
Analyze the competition
Evaluate your competition before you sign a lease.
- You need to ask yourself, “Why will a customer switch to me (other than lower prices)?” Some good reasons may include: better product, service, and location.
- What is the proximity of your proposed location to your five nearest competitors?
- Evaluate the quantity and quality of the operations of your nearby competitors.
- Are the operations of your competitors similar to the one you are planning? Are your hours of operation scheduled to be the same?
- Are the competitors part of a national company or are they franchises? Both can be tough competition in the areas of price, marketing, and name recognition. The advantage is that national companies can educate and build community awareness; you get to reap the spill-over.
Is there any animosity toward your type of business in the community? (Micro-roasters with locations in residential areas sometimes are confronted with complaints because of the smell of fresh roasted coffee). Why we’ll never know!
Maybe one of your competitors grew up in the area; chances are good that the people in the neighborhood may never patronize an outsider.
- For interior locations, make sure there is good visibility. You will need a large visual impact for a successful If you do end up tucked into a corner, remember that you will require additional marketing efforts.
- Will you have permission to use “A” boards or banners for street-side advertising?
- Will your business be on the correct side of the road in terms of the commute? Generally, for the espresso industry, you will want to be on the “going to work” side of the street.
- Operating hours of adjacent businesses. How many days per week/hours are the principal businesses around your location open? Will these hours benefit or conflict with your hours?
General condition of the area
- Is the community prestigious, middle class, low income?
- Where is the community going economically? Is vandalism apparent?
- What is the vacancy rate? Consider businesses, homes, and apartments.
The bottom line is that you have enough problems starting a new business; you don’t need to tackle the problems of the community.
Demographics and Other Considerations
Many retail owners believe that knowing the demographics of a location (people information: their age, occupation, marital status, income, etc.), the traffic patterns, and the competition in an area they are considering is enough. The numbers below reflect the minimums we feel are needed for a successful operation in the Northwest, where consumption of specialty coffee and espresso is at its peak. Your success in another part of the country may initially require larger numbers.
Inside location: Minimum of 800 employees in building, with other traffic into the building at 1,200 people per day.
Outside location: Foot traffic in excess of 2,500 people per day, preferably in the morning. Let’s face it, most coffee beverages are consumed before noon.
Who are the consumers?
Overall 22.1 percent of all American purchased specialty coffee, with gourmet coffee consumers in the Pacific Northwest, Middle Atlantic and New England states consuming well-above the industry average. According to a recent report by NASFT on the specialty food consumer, most specialty coffee consumers live and/or work in large urban communities. However their most significant characteristic is education level.
Specialty coffee consumers are educated, and affluent. Persons with some college education are 11 percent above the national average in their consumption of coffee. Those that have finished college are 49 percent above average and those that have post graduate educations are 71 percent above the national average in specialty coffee consumption.
In addition, as the average annual salary of consumers increase, so does their purchases of specialty coffee.
- Single parent households are 10 percent above the average.
- Working parent households are 28 percent above the average.
- Dual income-no-children consumption is particularly high, 45 percent above the average.
- Those individuals earning in excess of $50,000 annually are 64 percent above the average for purchases of specialty coffee.
Singles are another strong area of potential growth. Overall, singles are 18 percent above the national average; in affluent single households, consumers are 39 percent above the national average in the consumption of specialty coffee.
First of all, be sure that you need a traffic analysis. This process is very time-consuming. If your proposed location does not meet all of the above requirements, this can be a waste of time.
Know who and what you’re looking for. Then see if they are really there.
To determine what proportion of the passing traffic represents your potential customers, interview some of the pedestrians. This information can be an invaluable tool in determining your customer base and the demographics of an area.
- Is there ample parking available?
- Easy street access.
- Great visibility.
- How much space will you require for each: retail, storage, and commissary?
- Will your insurance be prohibitively expensive based on this location?
- Is the market area heavily dependent on seasonal business?
- Climate conditions (wind, rain, sun, ). What provisions are in place for the comforts of your customers and staff? Are they going to be exposed to the elements? Are awnings or windscreens needed? Will you need to provide them or is there an option available when negotiating your lease for landlord assistance?
- Is there a commissary available? The definition of a commissary varies between states, counties, and cities. The listing below conforms to requirements outlined for mobile food service carts in Washington state:
- Commercial dish-washing facilities, three-compartment sink, or commercial dish machine.
- Fresh water.
- Mop sinks.
- Storage (this includes space for supplies and your cart).
- Many states and counties require that a bathroom for staff members be located at a distance of no more than 150 feet from the site.
- Storage requirements. Your proposed menu can relate directly to the amount of retail and storage space you will require. Know up-front the square footage you will require for retail displays and storage; don’t pay for space you can’t use.
All businesses must grow to stay profitable. When conducting your research, evaluate locations for their future growth potential. Some areas for consideration should be:
- Is the space you’re considering large enough when the time comes to enlarge the size of your present cart? If additional retail or storage space is available, can these areas be converted easily, and at what cost?
- If one of the locations you are considering is outside, can you relocate inside at a future date and time?
You will also want to consider the possibility of having to relocate to expand. Are there site options in the immediate area? You will have worked hard to establish your customer base. By properly planning for future growth, it’s possible to relocate without losing your loyal customers and friends.
This section is intended to give you a glimpse of the potential costs involved in starting your own espresso operation. Costs are based on actual locations. Your costs may vary depending on location, lease agreements, particulars of tenant improvements, etc. Your startup capital, financial capabilities, etc. will dictate the kind of operation you begin with.
- Cart …………………………………………………….. $18,000-$25,000+
- Indoor kiosk …………………………………………… $30,000-$50,000+
- Espresso bar ……………………………………………………… $50,000+
- Drive-through …………………………………………………….. $75,000+
- Specialty coffee/espresso store ………………………….. $100,000+
- Franchise …………………………………………… $125,000-$275,000+
The potential for success and profits is excellent in the espresso/coffee industry, but don’t be fooled. It takes money, research, and commitment to succeed. Beware! Many have discovered that cost estimates are usually low, and your time budget should probably be doubled.
- Find a location or space that is or could be ideal for your kind of business. Existing plumbing, electrical, sinks, etc. can equate into major savings.
- Most leases provide only the bare space; you must “finish it out” at your own expense to suit your needs. However, an innovation called “tenant improvement allowances” is becoming more common whereby the landlord provides a percentage of money to assist in completing the space.
- Sell the idea and benefits of your business to the landlord or a shop owner. The high traffic volumes you will be generating will attract potential customers to their businesses as well.
Terms of the lease
The terms of your lease can sometimes be the determining factor in your site choice. Occasionally, a site that is otherwise ideal may have to be ruled out because the leasing terms were not right. Remember that terms are negotiable and the time to negotiate is before you sign.
Once you have secured a location, you need to take the steps necessary to receive the best possible barista training. Consistently high quality products and service are the keys to your success. Research has shown that one regular customer is worth an average of $160 per month. Simple mathematics will show you it doesn’t take long for those numbers to create significant cash flow. A good location is something you build one customer at a time.
Product knowledge, a quality product and pride in your business, combined with great customer service are just as important as location.
Choosing a location is a very risky proposition. The selection requires time, consideration, patience, and as much assistance as you can get. Don’t make your decision based on a loan application approval or pressure from a partner or financial backer. A delay of a few months is minor compared to the problems of trying to survive in a poor location.