The global coffee shop market is set to soar to $237.6 billion by 2025, proving our love for coffee culture is stronger than ever. So why do 75% of coffee shops fail in their first year? Here’s the mistakes they make and the ways you can avoid it. Strap in and put on our 10 minute playlist and read on.
Don’t (medium) blend in, stand out
- Convenience alone won’t cut it. Even if your customers are just dropping by to grab-and-go, your establishment should still feel like a destination. Cultivate a welcoming atmosphere, even for those who only spend a few minutes with you. Pay attention to your layout to ensure it sets the right tone. For example, consider how people will queue without obstructing sit-in patrons. Provide amenities like self-serve water for those in line. Avoid a stark, silent environment dominated by the sound of the coffee machine. Create a vibrant vibe, and the customers will keep coming back
- Don’t leave a bad taste. This might sound like a no brainer but great coffee gets the people going - in more ways than one. From bean to cup, if you f**k up, word is going to spread. Test out roasters at your local coffee festivals and network with vendors to find the best beans at a price that makes sense to your business model. Secondly, take the time to find experienced baristas who can train employees. This might be more expensive at the off, but pays dividends in the long-run.
- Coffee's more than a beverage, it’s a lifestyle. OK, this might sound a little hyperbolic but you’re doing so much more than giving people their caffeine fix. You want to live rent-free in your customers’ minds, so start thinking like a brand. Replace the default black/white takeaway cups with your brand colours - maybe that means blue cups and a white logo. Play killer tunes that match your store’s vibe that people are humming hours, even days later. Create a gameified tipping jar whilst commuters wait on their order. Call out people’s orders by shouting their favourite TV show character. In simple terms, create a lasting impression.
Location, location, location….location
Where you setup your shop, is more than just finding a high-traffic area. Consider the specifics, like which side of the street you're on; aim to be on the side commuters use on their way to work. Evaluate the offerings, prices, and reputation of other coffee shops nearby, and think about how to outshine them. Economists and this TED-Ed video advise that nearby competition is actually a good thing.
Ensure your location is accessible by public transport, car, and foot. Being near a high-traffic street is great, but do people actually turn onto your street? Even well-known brands near London’s Oxford Street have closed because they relied on the area's fame and foot traffic without proper research.
You also need to consider if your location has a high residential or commercial density. The real secret in all of this comes back to groundwork. Understand the characteristics of your location and play to its strengths, keeping in mind the size and layout of your unit, your menu and projected turnover.
Your vibe is your tribe - employee culture is everything
"Buy cheap, buy twice" applies to recruitment too. If you hire the first available rookie, you'll likely end up re-hiring soon and incurring financial losses. Hiring anyone without proper vetting risks poor performance at best and fosters a toxic culture spreading through other employees at worst.
Once you’ve found the right team, it’s important to retain them. If your employees are unhappy, this reflects in how customers are then treated and how they perceive your coffee shop. Consider staff training for all elements of your business so they understand the ‘why’ as well as the ‘how’. Think about offering a profit-share incentive for employees so they’re working to make your business a success too - because it’s partly theirs. Make their working environment a pleasure to be in with plenty of room to manoeuvre at the coffee station, music to soundtrack their day (without the resident EDM fan hijacking the stereo) and your employees will want to help you grow.
Your finances should look like your espresso, in the black
Navigating the financial landscape of a coffee shop is about tackling a smorgasbord of considerations. Start with a rock-solid business plan, understand your projected traffic and average order value (AOV) to ensure profitability, and meticulously track your profit and loss (P&L). Plan realistic projections for when you'll break even and push into profitability. With hefty upfront costs—rent, insurance, fittings, branding, payroll, and marketing—it might take time to shift from red to black. That's perfectly fine, as long as you have a clear roadmap in place with your investors, financiers and/or stakeholders.
Many venues overlook a crucial factor in their initial budgeting: a substantial buffer for unforeseen hurdles like power outages that halt trade or replacing faulty machines. While it might temper your initial enthusiasm, talking to other coffee shop owners and suppliers to understand potential unexpected expenses before you're profitable is like having health insurance. It's not glamorous, but you'll be incredibly grateful if you ever need it.
Make marketing that works - for you
Social media has been a marketing buzzword for over a decade, and many of your favourite accounts rely on agency talent and strategy to achieve world-renowned status. Whilst it's tempting to be on every platform, you’re better to master one channel first and build from there. Focus on who and how you can manage that channel effectively, and use other targeted routes to ensure your coffee shop gets noticed by the right audience.
- Signage. Eye-catching signage grabs the attention and draws in footfall whilst establishing your identity from the offset. Your brand name should be clearly visible from across the street and, set the tone to make your coffee shop more inviting and memorable.
- Google reviews - building trust and credibility is key to a long-term growth strategy for your business. Prompt reviews simply by asking customers at counter or through digital means, with each email you send, add on a link to submit a review or add a QR code at counter to spread the word
- Spotify ads. Cheaper than commercial radio and less saturated than TikTok, Instagram and Facebook - Spotify is great platform to distribute geo-targeted ads that will reach your audiences. Pair up with your Vellar Sound sample playlists for a robust audio profile that customers can enjoy outside of your coffee shop
- Leverage influencers. Whilst managing and maintaining several social media platforms can take out more resource and investment than you have, you can still have a strong social media presence by leveraging influencers to visit and review your coffee shop and share with their in-built audiences. Bring them in at the opening, provide local influencers with a loyalty programme, give them an offer to share with their followers. There are so many ways to gain your share of voice on social media through authentic relationships that don’t rely on your own teams churning out content.