START & RUN A COFFEE BAR
Tom Matzen and Marybeth Harrison
Self-Counsel Press
(a division of)
International Self-Counsel Press Ltd.
USA Canada
Copyright © 2012
International Self-Counsel Press
All rights reserved.
Preface
It’s a funny thing about life; if you refuse to accept anything but the best, you very often get it.
— Somerset Maugham
Hello, fellow coffee lover, and congratulations on taking a major step toward success in the coffee industry! If you are like us, you are probably drawn to the coffee business for many reasons ... your love of exotic coffees from far-off regions of the planet, the idea of the hustle and bustle of a busy coffee bar, or seeing the looks of appreciation on the faces of your happy customers. Yes, owning your own coffee bar can be fun, challenging, and very rewarding!
But like any business there are many risks involved: economic conditions can change, global coffee prices can fluctuate, and pressure from competition can increase. In fact, more than 50 percent of new businesses fail within the first five years so before you start your new coffee bar venture (or buy an existing one), we hope that you will evaluate the risks carefully. Take your time, do your research, and try to stay objective.
We hope that this book will be a valuable resource to you in your journey. The information we present is based on our many years of owning and franchising our own businesses including coffee bars. The hands-on techniques you will learn have been designed and tested to produce real-world results. You will get a comprehensive overview of what you can expect in owning and operating your own coffee business; or, if you are already in the industry, this book will help you build your existing sales and increase your profit.
We also hope that, as a business owner, you will take a leadership role in being a positive force for good in the world. We encourage you to do what you can to recycle, support local growers, and buy fair trade, organic coffees. We hope you will encourage your employees to walk or cycle to work, and educate your customers on environmental issues facing us today. We hope you will be a leader, do what you can and help make the world a better place for our children.
Good luck, have fun, and maybe we will stop by for a cup of java one day!
- Tom & Marybeth
Introduction
The Coffee Bar Business — What’s In It For You?
Coffee is the world’s most popular beverage with only water being consumed in larger quantities!
— McCoy and Walker
1. Coffee Worldview
The coffee business is an exciting industry, far-reaching in its economic impact and rich in history.
It is the world’s most popular beverage with over 500 billion cups consumed each year. It is produced in 70 countries with the top three producers being Brazil, Vietnam, and Indonesia. In 2010, the global coffee market was worth upwards of $80 billion USD with 25 million small producers relying on coffee for a living.
Coffee is indigenous to Ethiopia and was most likely discovered as a food before it became a drink. The most popular legend of how coffee was discovered involves an Abyssinian goat herder named Kaldi. Kaldi awoke one night to find his goats dancing around a tree speckled with red cherries. When he tasted one of the cherries, he too started dancing with his goats.
As interesting as this story may be, it is more likely that coffee was used as a food supplement by wandering Ethiopian tribesmen. The tribesmen are said to have squashed the coffee cherries and carried them on long journeys, eating them for nourishment as needed.
Later, the coffee cherries were soaked in water, possibly to make wine, but some historians say it was not until 1000 ad, when the Arabs discovered how to boil water, that coffee was served hot.
Coffee was also believed to have medicinal properties. Avicenna, an Islamic physician and philosopher of the eleventh century, said of coffee: “It fortifies the members, it cleans the skin and dries up the humidities that are under it, and gives an excellent smell to all the body.”
2. The North American Coffee Market
In North America, coffee was a $41 billion USD industry in 2009 and, despite the global recession, the market is expected to grow 14 percent in volume over the next ten years to $47 billion USD. The increase in volume reflects the growing preference for specialty or premium coffee including not only higher quality beans but also organic, Fair Trade and unique origin coffees.
In the United States, over half the population above the age of 18 are daily coffee drinkers with an additional 30 percent who drink coffee on an occasional basis. On average, Americans consume 3.2 cups of coffee per day with approximately 30 million Americans drinking specialty beverages on a regular basis.
In Canada, approximately 63 percent of Canadians drink coffee on a daily basis with Quebec having the highest percentage (70 percent) and the Atlantic region having the lowest (53 percent). The average number of cups consumed by Canadians per day is 2.6.
3. Coffee Trends
While coffee consumption worldwide is actually declining slightly, the market for two types of coffee — specialty or gourmet and organic — continues to rise. Specialty coffee represents approximately $14 billion USD in sales with organic coffee representing almost $1.5 billion USD in sales. The specialty market continues to grow due to a number of factors including an increase in home coffee consumption, new coffee venues and new coffee products aimed towards young people.
Organic coffee has seen the largest growth in recent years with an impressive rate of 21 percent in annual growth from 2004 to 2009. By 2010 the organic coffee industry was growing at approximately four times that of the conventional coffee industry.
By positioning your business to take advantage of the current trends in coffee, you help ensure that it will not only survive but flourish in the years to come.
3.1 Gourmet coffee
Gourmet coffee is made up of the arabicas, or high-grade coffee beans. Arabicas are much more flavorful and typically have less than half the caffeine of the robustas.
The term “gourmet coffee” refers to both the high-grade beans themselves (arabica beans) and the liquid coffee made from those beans. The low-grade robustas are used for blending (to help offset the higher cost of arabicas) and for instant coffees and mass-market drip coffees.
Part of the growth in gourmet coffee sales can be attributed to a general trend toward quality. Futurist Faith Popcorn has indicated that consumers are increasingly demanding higher quality products. She also notes additional trends in her best-selling book The Popcorn Report that help explain the move to gourmet coffee:
(a) Cocooning. People are spending more time entertaining at home and serving gourmet coffees.
(b) Small indulgences. This trend describes the movement away from