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Permalink Reply by Troy J Mallett on April 7, 2011 at 9:58pm

I would pay very close attention to the supermarket and the clientèle that are currently buying what you will be selling. Consider the demographic that you are trying to capture from the supermarket, what are they buying, why are they buying it from a supermarket, and what reason can you give them to get it from your business instead.

 

For example. Most supermarkets are primarily focused on their retail business, and offer food-service to keep the customers in the store for a little bit longer without much extra effort. There is a certain demographic that tend to spend longer times in supermarkets, typically the elderly. Will you be trying to get that market share? If you are, why are they currently going to the supermarket? Probably, because they are frugal and don't want to spend much money on a coffee (vs. $4.50 cappuccino), also that they enjoy being out in the world and not have to worry about loitering. If you wanted to get that demographic, you will have to offer them all the reasons why they are going to the supermarket, as well as something extra for the move to your place. It will be the same for any demographic.

 

Consider your strengths. What can you do better than the supermarket? Obviously coffee. If you are planning on offering food, be warned that supermarkets can operate with substantially higher food costs than you will be able to! Focus on your own strengths and capitalize on the supermarkets weaknesses.

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Permalink Reply by BUNA on April 8, 2011 at 9:19am

Thank you guys for your feedback.

@TORY, as I said ealier that the demographic is almost all young with no children (25-40 years old) and they use the supermarket food services regularly for after work dinner and they buy the coffee drinks mainly morning going to work, lunch hour and weekends. Their coffee drinks are priced the same level as any other coffee shops and the clientele don't look frugal as well.

 

@Andrew, I think you have answered one of my question that is if you have good coffee , they customers will come to you for the drink and get their food from the supermarket.

 

But my primary concern is that if you are competitive on quality of drink and service, some how it would be difficult to compete against it on food selection and price, therefore how sustainable is it to have a coffee shop business with only coffee based drinks ?

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Permalink Reply by John P on April 8, 2011 at 3:36pm

It depends on what you are doing, but in general, I would never advise anyone locating in a market area, unless it is a high end specialty market. Plaza and strip mall goers are only looking for and only expecting a certain level of coffee. Either the 1973 pot o' regular and pot o' decaf joint, or a Starbuckian multiple flavored latte and blended drink place.. but with cheaper prices --- cause you can't out Starbucks Starbucks.

 

So it depends what you want to do. 

 

First, don't fall in love with a location.

You should have several suitable locations in any given city. It depends on location, size of space, lease parameters, etc. You DO want a location that fits the style of shop you are having, and if you have a good product, people will come. 

Ideal if you can have somewhere accessible both by foot and by car. You want coffee customers coming to your shop, not market customers stopping in just because you are there. It will make a difference.

 

On your other question: You don't need to have coffee based drinks only. You can have teas or chai.... but something that fits in with what you are doing. You CAN have a coffee only business, but it's about location and size of space. 

 

Best of luck to you.

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Permalink Reply by Troy J Mallett on April 8, 2011 at 3:52pm

Only you know what your food/beverage costs are. If you are able to undercut the supermarket's prices marginally, or offer discounts by a coffee card, some people will probably switch over. Quality and service will attract some, but cost might be an issue for others.

Diversity and choice are always good in any market. If you are able to give people a reason to try something new, and they like it, they will no doubt start giving you their money. Depending on the space, you might want to consider offering things that a supermarket cannot, such as live music. Perhaps having a liquor license might be valuable? Is there outdoor seating?

 

TROY

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Permalink Reply by christopher myers on April 8, 2011 at 8:17pm

There are a lot of factors we don't know here, and it would take too long for you to describe every detail for everyone to weigh.  And I can only speak as someone who's also looking for a location and as a consumer and student of coffee business.  But if we're just taking into account that you're concerned about competition with the market, I wouldn't be.  The people who want cheap; they weren't going to be your customers anyway, and you'll never undercut that kind of product.  So the real question is like john pointed out, the demographic in the area.  And you said there was a lot of residential and a lot of younger people around.  If that's true, and your stuff is really good, then all you've gotta do is get them into your shop.  And even "foodies" shop at supermarkets sometimes; just because they're buying toilet paper there doesn't mean the won't want a legit cup of coffee on the way home, or won't notice your shop and come check it out later.  Like I said, lots of other factors to consider, and I'm just a noob, but it seems not worth your while to consider a supermarket as competition at all.  Why go to the supermarket, buy a pastry from its "cafe" then go to your cafe for coffee, when they could have done their shopping, then gone to your place for coffee and a pastry like any normal person.  Just have better food items and let them decide if they want cheap, or gourmet with a nice atmosphere.

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