On the other hand, starting from scratch means you don’t get the benefits or support a franchise can offer, or those that come with a successful, established business.
One of the most important factors in any business is a marketable location. If the location of an existing business isn’t suitable, or the franchisor is not able to find you a good site, you’ll end up paying the price for a poor location. Finding a good location and beginning from scratch can sometimes be the best option.
Do as much research as you can to explore these three alternatives. A good business consultant will also be able to help you determine the best option for your situation.
4. Customer Profiles: Finding Your Target Market
In the past, the coffee market was flooded with inferior, blended-type coffees packaged in instant coffee cans. As a result, coffee drinkers didn’t have much to compare their morning cup of coffee to. Today, however, coffee lovers have become much more sophisticated. As consumers become better educated about the coffee choices they have, they gravitate toward better taste, flavor, and aroma.
According to a report by the Small Business Development Center (www.sbdcnet.org), coffee bar patrons are younger, more affluent and educated, and are 22 percent more likely to be aged 18–24. They are also 65 percent more likely to have an annual household income of $100,000 and above. Coffee shop patrons are 28 percent more likely than the average American adult to be single and 70 percent more likely to have a post graduate degree. The average age of specialty coffee drinkers is 43. Occasional latte drinkers are in the higher average income of $76,000, and similarly, cappuccino and espresso drinkers reflect an average income of $60,000.
According to the National Coffee Association, seniors drink more coffee away from home while 18- to 24-year-olds drink more coffee at home. Seniors are discovering gourmet coffee more and more as the overall percentage of coffee drinkers over the age of 60 jumped from nine percent in 2003 to 13 percent in 2004. Adults aged 55–64 are 28 percent more likely than young adults to consume coffee away from home. Overall, at home consumption has risen from 44 percent in 2002 to 60 percent in 2004 which may be a result of the slowing US economy.
Over 60 percent of coffee is consumed at breakfast in the United States. Eleven percent of adults who drink coffee away from home say that they only purchase coffee in a coffeehouse, while 66 percent of adults who drink coffee away from home say they usually purchase it at a coffeehouse. Forty-two percent of adults aged 18–34 purchases their coffee at a coffee bar.
From 2000 to 2005, the 55–64 age group will grow 24 percent which is nearly twice the amount the 45–54 age group will grow. The population of 25–45 year-olds is declining; so coffee drinking will be currently common among the elderly with some participation from the next generation.
It is also important to recognize the importance of the younger crowd. Major coffee chains have added products with more flavors, sugars and creams to make their drink selections more appealing to the younger generation. As that younger crowd grows up, their love of coffee and habit of visiting the local coffee bar moves along with them.
In terms of motivators, studies have shown that women indicate that drinking coffee is a good way to relax whereas men indicate that coffee helps them “get the job done.”
Knowing your customer profile will help you better meet your customers’ needs. For example, if your typical customer visits after dinner for a latte and slice of cheesecake, you will want to ensure that you have a wide selection of appealing desserts. If you are near a high school and your typical customers consist of students visiting after school, you will want to ensure that you have smaller, lower-priced snack items that help fill that post-learning need for calories!
But how do you determine your customer profile? You already know who the typical coffee customer is. The next step is to fine-tune this knowledge through the research you do in the area you plan to open up shop.
Is your location near an office tower? If so, your customers will probably be mid-life professionals looking for a jump start to their day and a grab-and-go breakfast. Is the coffee bar in a residential area? You will probably see more parents with children stopping in during the day to purchase beans for home use. Are you near a fitness facility? Your customer profile will be partly made up of health-conscious, possibly weight-conscious people looking for an after-workout caffeine boost or a low-fat carbohydrate replacement.
Make sure you spend the time now getting to know who your customers are going to be, and incorporate this information into your business plan (whether you plan to present your business plan to a private investor or financial institution or not.) The more detailed your customer profile, the more successful you will be. Let’s look at an example.
Assume you are near a college in an environmentally conscious community. You know that your customer profile will be made up partly of young students who will want to relax and also spend time studying in your coffee bar. Based on your general knowledge of post-secondary curriculums, you realize that because of the diverse schedules of the students, you will likely have a constant flow throughout the day.
Armed with this information, you will be able to make decisions about your coffee bar’s atmosphere and design elements. Given that your community cares about the environment, you may want to display a line of informative posters about current environmental topics. You are in a better position to make decisions about everything in your coffee bar, from the staff uniform to your product lines. And, of course, because you know who your target market is, you can create and implement effective, sales-building marketing campaigns.
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