So you want to open a coffee shop? That’s great news. Coffee is a fantastic business to be in (we’d have to say that – but it really is true!).  According to Allegra, the total coffee shop market is estimated at over 18,000 outlets and £7.2 billion turnover (2014). That’s a 10.7% growth in turnover and 7.8% in outlets in the last year. This growth is expected to continue in the next 5 years, making the coffee business a highly attractive one.

But as the market grows, so too does the competition - and you’ll want to be sure that it’s your business that comes out on top.  If you’re up to your eyes in research and business plans, perhaps we can help you out a little, with a few hints and tips gathered from many years of working with a wide variety of coffee businesses. It’s by no means an exhaustive list, but hopefully you’ll find it useful.  And if still want to know more, we offer free consultations. Simply contact us to arrange a chat.

Set clear USPs

1. Establish Clear USPs

OK, so it’s an obvious one – but in this crowded market place you really do need to find a way to stand out from the competition and attract customers with Unique Selling Propositions (USPs). Maybe you are a coffee connoisseur and want to establish the first real artisanal outlet in your neighbourhood, or maybe your exceptional baking skills mean people will travel for miles to sample your cakes. Perhaps you have bagged the prime retail spot in a busy business hub and possess the business acumen to simply run the fastest, most efficient coffee shop in the area.

In short, know your strengths and apply them effectively.

Here are a few coffee businesses that have set themselves apart from the competition:

Customer Needs

2. Understand Your Customers’ Needs

Whether you’re relying on passing traffic or creating a destination concept, be sure to research your available/target audience. Whilst you may have strong personal preferences, the look & feel of your business, the facilities, the menu & pricing, the services, opening hours and the promotional initiatives all need tailored to suit the customer first and foremost. Students, office workers, mums with babies, retirees – every demographic needs careful consideration throughout the planning process. And you’ll need to decide if you want to be all things to all people or highly targeted with a specific audience in mind.

For example, students might expect fast takeaway service, an exciting and evolving menu, quirky interior design, a lively atmosphere, free wifi, affordable prices and ethical messaging; in contrast, a group of wealthy mums may be willing to pay more for table service, upmarket fittings, child-friendly, spacious facilities, and a more family-oriented menu.

Put your personal preferences on hold and look at it from the perspective of your target audiences.

Get to know coffee

3. Get To Know Coffee

Artisan café culture is fast becoming the norm: a new breed of specialist independent coffee shops and micro-roasteries is raising the bar for other coffee providers. Branded chains are in on the act too and you’ll notice them widening their coffee credentials over the next few years. And the conscientious consumer is demanding more social responsibility and traceability. Now is the time to really get to know coffee!

Here are just a few of the latest coffee blogs to inspire and inform:

Know your competitors

4. Research Your Competitors

Competitor research is critical - ask yourself questions like

  • Is there room for more players in your market?
  • What competing business are successful and why?
  • What more can you offer?
  • Who has recently gone out of business and why?

You need to get out in the market and continue stay abreast of competitor activity over time - the coffee sector is fast-paced and things can change in an instant, so be sure you're ready.

suppliers

5. Choose Your Suppliers Carefully

You’ll come to rely upon your suppliers to keep the business going. You need to know they’ll deliver what you want when you want it, so you never run out or fall short on quality. Some people prefer to take the time to source everything carefully from individual suppliers, while others like the convenience of dealing with just a few sources.

If you’re lucky, you’ll find a handful of great suppliers that meet all of your needs. Good suppliers will often go the extra mile to help you develop your business too, for example sharing knowledge and insights and proving promotional tools to help grow your business.

When it comes to coffee, for example, quality (ie taste and freshness) is the key consumption driver. Coffee consumers are becoming more and more quality-conscious and you’ll want to be sure you have the very best beans, machines and training in place to satisfy them.

There are plenty of great coffee suppliers out there (as well as plenty of not so great ones too!) but the choice can seem overwhelming. At Matthew Algie, you can choose from over 20 espresso and filter beans and receive free training on how to make the perfect latte or flat white.

You might also find a company like Espresso Warehouse useful for finding a number of ancillary products all in one place – from syrups, teas, drinking chocolates and snacks - to barista kit and coffee bar essentials.

equipment

6. Plan Your Equipment – Rent Or Buy?

Investing in all the necessary equipment can be a hugely daunting task, especially when you don’t know exactly how the business will evolve over time. Some people prefer to won their equipment as a capital expense, others meanwhile prefer the flexibility and support of service rental.

When it comes to your hot beverage equipment - of you wish to remain flexible for the future, you may wish to consider service rental from a partner like Matthew Algie. You can choose from the widest range of rental coffee machines on the market and feel secure in the knowledge that they will be fully maintained and serviced for you. You’ll never need to worry about expensive repair bills, down time or obsolescence.

Menu

7. Refine Your Coffee Menu

You’ll probably have longstanding best-sellers (if it ain't broke why fix it!), but don’t forget to introduce new options too, or you could risk your customers being poached by the competition.

The Basics
Most demographics expect to see espressos, lattes, cappuccinos and Americanos on the menu - and the flat white is now fast becoming a menu staple. You shouldn’t overlook the resurgence of filter coffee either. Even if you’re not a specialist coffee outlet, a good old French press or pourover filter coffee option is a safe bet. And don’t forget – the average consumer is ever more knowledgeable about traceability and ethics– so be sure to highlight your coffee origins and/or certifications at the point of sale too.

Specialist & Seasonal Offerings
This is where you need to know your audience. If you’re targeting coffee connoisseurs, you’ll know all about single serve filter coffees like AeroPress, Filter Cone (or V60), Chemex and Syphon – and you’ll serve a choice of coffees, changing with the seasons, of which you’ll know every sourcing detail and taste note. If you target audience is students or younger demographics however, you’re more likely to need a wide range of syrups and toppings for indulgent sounding ‘salted caramel lattes’ and seasonal specials such as cinnamon crunch cappuccinos. Either way, analyse what’s selling (and what's not), stay abreast of competitor menus and market developments, seek customer feedback- and adjust as necessary.

Keep It Manageable
Whatever the audience, make sure you meet their needs with high quality, efficiently made drinks. Too much choice not only slows customers down, it also makes for operational chaos. Why give yourself training, service, storage and shelf-life headaches when 95% of your sales are from 3 types of drink?

Training

8. Train Your Staff

People can make or break a service business, so getting this right is critical. Not only must service staff be personable and efficient, they must also be fully up to scratch when it comes to quality of service. For coffee this means:

The Essentials
Being able to use the equipment to produce quality drinks is a no-brainer. But quality drinks take a lot more skill than many consumer realises. The cleaning, grinding, dosing, tamping, espresso extraction, milk preparation and serve all impact the finished drink. Customers have increasingly high expectations and will easily spot burnt milk or acidic extraction. Get your staff enrolled on specialist training and maintain these standards over time. This needn’t be a costly process as good coffee and/or machine suppliers will offer this as part of the deal. For inspiration see our Barista Training resources.

Specialist Skills
If you want to stand out in a crowded market, take it a step further with specialist skills such as latte art, brew skills and trainer training.  Again, any good coffee supplier will be able to point you in the right direction. Find out more about coffee training.

point of sale

9. Drive Footfall, Upsells & Repeat Purchases

Keeping your customers happy is key to growing sales. Good merchandising outside your café to draw people in is a great way of gaining incremental business. Strong, delicious looking visuals are great for influencing those wavering customers walking past. Ask your suppliers if they can help.

Once you have the customers inside your café, letting them know about what's on offer or what deals you have is a great way to upsell or trade up. This is particularly true of key trading times or seasons. During the summer months make sure you have your blended drinks front and centre to increase your margins. Take a look at some seasonal point of sale ideas.

Finally, great drinks, a great experience and friendly staff will keep customers coming back for more. One of the best ways to drive loyalty is through high quality drinks, which means well trained, knowledgeable baristas using good fresh coffee on high quality machines. It keeps you one step ahead of the competition and more likely to succeed.

Review & Evolve

10. Review & Evolve

Savvy business owners know they can never stand still. Trends change, populations evolve and competitors up their game.

Stay abreast of your sales performance and margins - taking immediate action there are any signs of a downturn in customer numbers, average spend or profitability. The sooner you act the better.

Understand what’s selling and what’s not– there’s no point in stocking 100 types of tea if only 3 are chosen by 95% of customers. Smart till systems will be able to generate reports to help you review sales statistics.

Understand why things are selling or not - seek feedback from customers – talk to them, use feedback cards, monitor social media and listen to bloggers and reviewers.

Finally, stay on top of market insights – from what you’re competitors are doing, to emerging trends in products and services.