What does it take for a coffee shop or café startup to survive in a crowded marketplace?
John Cheng, a part-time account manager at Orinoco Coffee & Tea, has a pretty good idea.
Over the years he’s helped launch three different cafes in the Baltimore area. His latest endeavor – Aveley Farms Coffee Roasters – leans into the roasting side of the business, while still providing customers with a unique atmosphere in which to enjoy their brew.
“We make good coffee and we know how to do it right,” John says. “And we casually educate the community that we serve.”
Lessons to be learned include coffee origins – where it’s sourced, and who the farmers, producers, and middle-men are – as well as wage conditions, fair trade, and much more.
Orinoco recently turned to the coffee entrepreneur to tell us the best ways cafes can remain relevant in a crowded coffee shop marketplace.
He gave us four.
1. Find Your Niche
One of the biggest factors – if not the biggest – is finding your niche, says John.
“What’s your customer base? Are you a neighborhood coffee shop? A roastery? A cool hipster spot?”
Before anything else – beyond the basic logistics such as location and logo and paint schemes and ordering coffee stirrers – café and coffee shop startups must first determine their target market.
“You want to home in on that [niche] and what you can do to get your customer base in and out every single day,” Johns says. “It’s about trying to identify your target, and even before that – your mission. Why do you want to do this?
Many businesses fall flat on their faces because they don’t have a well-defined mission, he says. They leap before they look, thinking a coffee shop or a café could be a cash cow, when nothing could be farther from the truth.
“It is so tough to make money in the craft services industry, and hard to make a good living,” John exclaims. That being said, a café can be lucrative when all other needs are met. However, John says, if you’re going into such an enterprise convinced it’s going to be a money maker, you’re going into it for the wrong reasons.
2. Stand Out
When coffee shops are a dime a dozen, startups need to figure out how to give customers more bang for their buck.
“[Another] thing that I see a lot of in businesses that achieve success is, after they’ve asked themselves ‘why’ and developed a target market, they find their gimmick. They find something that sets them apart from the competition.”
Some entrepreneurs open hybrid shops – marrying their passion for coffee with other interests, from books to bikes to music. This not only increases the workspace, but it provides a second revenue stream.
3. Be Good to Your Baristas (And Everyone Else, Too)
After deciding on a coffee distributor– or setting up to roast your own – ensuring that your staff is paid and treated well is possibly the best thing any owner can do.
“And it’s one of the most overlooked things ever,” says John.
He cites Seattle’s Slate Coffee Roasters, which recently made headlines for underpaying their staff. The problem is not exclusive to Washington State, however. Pay problems run rampant in our neck of the woods, as well.
“So many business owners think that their staff is expendable and choose not to pay them a good, livable wage,” he says. These employers don’t pour money into benefits and believe it’s impossible to pay their staff a decent wage while remaining successful.
Not only is it possible, John says – it’s critical.
“You can pay your baristas and your kitchen staff, and others, a very livable wage and still serve good products, and still make a profit. Maybe not within the first year, but it’s a [forward-moving investment],” he says.
When seeking new hires, John says look for the prospect who is both eager and a quick study.
“It’s nice to have experience, but I’ve also seen a lot of egos come into play,” he says. “You want someone who’s humble enough to say, “I know this much, but I don’t know everything.’”
“I’ve seen employees who have 10-15 years of experience, but it doesn’t really translate into good work.”
4. Make Good Coffee (But Realize It Won’t Outweigh a Bad Experience)
Obviously, the quality of your coffee is important, as is efficient, working equipment. But many owners make the mistake of buying the best of the best, while failing to take the experience at large into consideration.
“The quality of your coffee is very important, but it can also be ruined by the quality of your staff,” John says. “Those two things go hand in hand… If you have high-quality coffee, but a poor staff … you might as well be serving Folgers. It is so easy to mess up a good product.”
Don’t buy the most expensive things in the interest of status, he adds.
“I’ve seen companies that start out only using the finest milk, and in the first quarter they wonder why it’s hard for them to make any money.”
If you cannot afford organic, sustainable milk at the start, don’t go for it, he says.
“These things will fall in line and you can upgrade once you begin make a little more money.”
Finding ways cafes can remain relevant, John says, really circles back to the “why” of it all.
“Try to understand your own mission first and then see where everything else fits in,” he says. “Do your due diligence… Try to find out what benefits a wholesale partner can offer you. With Orinoco, a customer can receive quarterly preventative maintenance, training for their staff, and a bunch of other things that are really client and customer focused. There are not a whole lot of other companies who will do that.”
And remember: You can’t make coffee without people.
“I’ve worked in this industry for a while and it’s very important for business owners to know how to properly treat their staff,” he says. “Employees are [so often] overlooked and underappreciated. Invest in good people. They will make you your money.”