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Permalink Reply by John P on March 23, 2013 at 9:50am

Emile,

Congrats on your new shop!

A few things.

1)  Locating near DD is a smart move. It will pay dividends. Be proactive!

2) Raise your prices! 

a) You don't buy anywhere near the volume of coffee that a national chain does, your base cost is (should be) much higher. Unless you are using a very average product, you can't afford to run a business like that. If you don't have confidence in your product, neither will customers.

b) If you can afford lower prices, then you need to purchase better coffee.

3) Nix punch cards immediately. It's early. Punch cards are a bad idea. 

As I wrote here on Feb 7th, 

"Loyal" and "Customer" are congruous. One cannot be a customer without being loyal. The notion that someone would need anything other than an exceptional product and service in order to be a loyal customer is simply not the case. You're not "rewarding loyal customers", you're devaluing your product. 

All relevant data shows that ongoing discount programs of any sort hurt businesses. They increase labor, ultimately slow sales, and only attract "customers" who are loyal to the discount. 

It's about value, not price. In fact, most businesses who raise their prices on a regular basis retain more customers than those who offer discounts.The business knows it's offering something remarkable and sets a price that's reflective of that. But, as in most customer oriented businesses, service plays a significant role as well. And it's that combination of excellence in both facets that creates an exceptional value proposition for the customer. 

If you want to reward your customers, improve your product, make your service even better, and raise your prices. Nothing is more satisfying to your loyal customers than to see you prosper. Because the more successful you are the greater your ability to be there for your customers."

4) You're doing fine! It takes a while to grow a customer base. 

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Permalink Reply by Fraser Jamieson on March 23, 2013 at 4:22pm

Exactly what I was going to say!

John P said:

Emile,

Congrats on your new shop!

A few things.

1)  Locating near DD is a smart move. It will pay dividends. Be proactive!

2) Raise your prices! 

a) You don't buy anywhere near the volume of coffee that a national chain does, your base cost is (should be) much higher. Unless you are using a very average product, you can't afford to run a business like that. If you don't have confidence in your product, neither will customers.

b) If you can afford lower prices, then you need to purchase better coffee.

3) Nix punch cards immediately. It's early. Punch cards are a bad idea. 

As I wrote here on Feb 7th, 

"Loyal" and "Customer" are congruous. One cannot be a customer without being loyal. The notion that someone would need anything other than an exceptional product and service in order to be a loyal customer is simply not the case. You're not "rewarding loyal customers", you're devaluing your product. 

All relevant data shows that ongoing discount programs of any sort hurt businesses. They increase labor, ultimately slow sales, and only attract "customers" who are loyal to the discount. 

It's about value, not price. In fact, most businesses who raise their prices on a regular basis retain more customers than those who offer discounts.The business knows it's offering something remarkable and sets a price that's reflective of that. But, as in most customer oriented businesses, service plays a significant role as well. And it's that combination of excellence in both facets that creates an exceptional value proposition for the customer. 

If you want to reward your customers, improve your product, make your service even better, and raise your prices. Nothing is more satisfying to your loyal customers than to see you prosper. Because the more successful you are the greater your ability to be there for your customers."

4) You're doing fine! It takes a while to grow a customer base. 

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Permalink Reply by John P on March 23, 2013 at 6:18pm

Fraser, 

You are a brilliant man.

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Permalink Reply by Denis Porlier on March 24, 2013 at 8:05am

Thanks guys for these pearls of wisdom.

I too have just taken over a coffee shop in a thriving neighborhood, less that 1km away from large corporate competitors (in our case Starbucks and Tim Horton's). Under the previous management, our coffee shop was slowly being driven into the ground by a complete lack of vision and poor decision making, despite having (by far) the best coffee in town. This place has tremendous potential to be succesfull and unique.

I subscribe whole-heartedly to the principles of offering value based on quality, not price, and doing everything possible to constantly uphold the superior quality of the coffee experience that you provide your customers with. That means resisting the urge to discount, give away, or otherwise undermine the perceived quality of your product and service. It's easy to forget all this when rent is due and your mail box is full of bills, though!

Thanks for the inspiration.

Cheers!

Denis

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Permalink Reply by nick placakis on March 24, 2013 at 2:01pm

The feedback so far has been spot on. The one thing I would add to the points mentioned so far is the following:

Begin a process of educating your customers as to why your product is so good. Discuss the varietals you offer, what makes them special, how its processed etc. As you and your staff begin to do this your customer will understand more clearly the difference between you and your competitor, in this case DD. I will guarantee you that your customer has not and will not experience this at DD.

Ask your customers what they like in coffee and point them in the direction to one or several of your offerings. Help explain nuances in the coffees you offer and begin making suggestions based on their likes and dislikes. When discussions like this take place on a regular basis, the difference becomes glaring and you will begin creating your reputation as "THE COFFEE PLACE" in town. While doing this, never put down your competition. Your customer will be able to draw their own conclusions, it's your job to be your best inside your walls.

Remember 2 things:

1) The big chains have heavy advertising $ and market power, you are not likely to put them out of business, but you can earn a real nice living off their marketing dime.

2) In order to wow them and create that solid coffee experience, you and your staff have to be on your "A" game at all times. If you don't already know all the varietals and their subleties....get to know it. Be that kind of coffee niche that gives the big guys a run for their money. Like I said, your not likely to put them out of business, but you can take a fair share of the market.

 

Good luck. And BTW... great move going next to DD.

 

Nick

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Permalink Reply by emile on April 5, 2013 at 1:34pm

Thanks a whole bunch for your supports, we starting to get a little busier, not quite there yet, but getting our regulars... Please forgive my ignorance, and maybe even a dumb question, but On your experience, how long you think a normal "wait" time is? I mean until the feeling of "damn, rent again?" Is not so painful. Im sure it is all based on different factors, but what would say an average time?..

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Permalink Reply by John P on April 5, 2013 at 3:08pm

I (guessing) would say 3-6 months.  It was 3rd month in for us. We had enough extra cash to cover us for 5 months if we actually made zero dollars.

1) Have you raised your prices? If not yet, it's a must!!

2) Do you have too many employees? Too many labor hours? And if you have no employees are you paying yourself when you should not?

3) Do you minimize waste? Efficient espresso making?

4) Do you have good heat/cold retention in your space? 

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Permalink Reply by emile on April 5, 2013 at 3:52pm

No price changes yet, im thinking about making a small house brew 10oz instead of 12, i figured it would be easier on the eye;-) hours are long, around 15 per day, but i dont mind it, kind of got used to it, and i enjoy it, its not like im rushing even after closing. Salary?? What salary:))) for now, its just me and my girlfriend, (she's great, i didn't even know that my alarm has 5am :-)) heat is good, but got to figure smtn out with ac. Thanks for your comment, got me a little calmer)))

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