if any, equity creation as the business grows (unlike the types of coffee bars listed above).
5.7 Teahouses
There is a recent fad for teahouses as an offshoot of the coffee business. Do keep in mind that while tea is a popular drink, it typically represents only 3 percent to 7 percent of the total gourmet beverage market. This means you will need to be five times better than the norm to do even 20 percent of what a coffee bar will do.
5.8 Roaster/retailers
As the name suggests, roaster/retailing contains two key elements:
(a) On-site roasting of green coffee beans
(b) Retailing of coffee and coffee products
We believe that roaster/retailers are the wave of the future. They offer you a number of advantages that spell out strong bottom-line profit.
5.8a Lower food cost = Profit
Roasters typically mark up green coffee $2 to $4 per pound. The money you save by roasting your own coffee directly converts to lower food cost in your operation.
5.8b Savings = Profit
If your coffee business goes through 100 pounds of roasted coffee per week, you are spending at least an extra $200 per week, or $10,000 per year, because of the mark-up from roasters. Think of how many trips to Hawaii you could take with that money!
5.8c Meeting customer needs for freshness = Profit
Today’s consumer wants the best. You’ll be left behind by your competition if you don’t give customers the freshness they are demanding. Coffee loses about half of its flavor within the first 14 days after it is roasted. It is tough to meet customer freshness demands if you’re not doing your own roasting.
5.8d Competitive edge = Profit
In-store roasting gives you a unique element that gives you a huge edge over your competitors. How could you compete if the coffee bar down the street offered its customers beans to take home still hot out of the roaster?
5.8e An additional revenue stream = Profit
In-store roasting means you are adding an additional profit center to your coffee bar: wholesale. Because you aren’t paying someone else to roast your coffee for you and you are paying only $3 or $4 per pound (including shipping, handling, brokerage, and exchange rates), you can afford to offer discounts competitive with other coffee roasters to wholesale customers.
You can supply wholesale coffee from your business to:
• Bars serving coffee
• Businesses serving coffee
• Cafés and restaurants
• Car repair shops serving coffee
• Coffee bars
• Coffee shops
• Corner stores
• Gas stations serving coffee
• Hairdressers serving coffee
• Hotels and motels
• Offices
• Supermarkets
5.8f Long-term appeal = Profit down the road
While it is our opinion that in-store roasting will be with us well into the foreseeable future, if we had to predict the next “hot” trend after in-store roasting, we would say “in-home” roasting. Should this trend develop in the years to come, roaster/retailers will be well protected because people will still need to buy the green beans. If you have been successful at building a solid roasted-bean business, it is simply a matter of transforming your roasted-bean customers into green-bean customers. (We design all our coffee bars to take this into account so that this conversion, should it ever be necessary in future, will be simple and inexpensive.)
Contrary to what many roast masters of the world may tell you, today’s technology makes roasting beans easy. Many roasters require as few as five simple steps: checking the roaster temperature (done by the touch of a button), weighing your beans, setting an automatic timer, comparing roasted samples to a color chart to determine roasted level once the timer rings, and then allowing the beans to cool in a cooling bin.
The real art of roasting is in determining which bean is better at which roast and in blending different beans together to produce a roast with the results you want. See Chapter 9 for more on roasting.
For the remainder of the book, we will refer to all coffee bar concepts as a “coffee bar” for simplicity’s sake.
6. Choosing Your Products and Services
What products will appeal to your customers? Will you offer beans for home use? Food and baked goods? Gourmet teas? Coffee-related gift items? Brewing equipment? Below are some of the basic products and services most successful coffee bars offer.
6.1 Products
6.1a Gourmet coffees
Gourmet coffees are the liquid coffees you will serve on a daily basis. We recommend featuring the following “daily roasts”:
• A signature medium-roast house blend
• A dark roast
• At least one flavored coffee
• Decaffeinated coffee (if the demand is high)
6.1b Flavored coffees
Flavored coffees represent up to 40 percent of the liquid coffee market. By offering at least one flavor a day, you are satisfying the needs of a large percentage of a market you might otherwise not capture. Flavored bean sales are also a great suggestive sell to flavored-coffee lovers.
6.1c Specialty and iced coffees
Specialty coffees include the espresso-based drinks such as cappuccinos, lattes, and mochas, served hot or cold.
6.1d Other coffee products
Other coffee products may include items such as coffee-flavored chocolate bars or espresso-flavored ice cream. A great favorite among North American customers is chocolate-covered espresso beans.
6.1e Baked goods
Baked goods include muffins, scones, cakes, biscotti, cookies, and squares. The key here is to provide a wide enough range of baked goods to appeal to your traffic flow while still maintaining a clear focus on your product line.
6.1f Coffee-related gift items
Gift items include mugs, coffee plungers, other coffee makers, and espresso equipment.
6.1g Breakfasts, lunches, and other foods
These products include quiches, soups, salads, sandwiches, paninis and wraps.
6.1h Whole bean coffee — retail and wholesale
Plan for a huge focus on retail and wholesale bean business. Your bean sales volume can quickly grow to a steady, long-term revenue stream made up of a loyal clientele (especially if you are doing in-store roasting). We recommend setting a first-stage goal of being able to pay your rent from wholesale bean volume alone.
6.1i