Replies to This Discussion

Permalink Reply by Matt Milletto on February 10, 2009 at 3:53pm

I would not try to open on such a limited budget. There are so many variables in opening a coffee shop that will come into play, inventory, equipment, rent, operating capitol, pre-opening labor, utilities, etc. From start up it is generally good to have closer to $100-$150k to ensure adequate capitol to open, and operate in most cases. Many of our clients spend over $300k to really do it right.

What you may consider is looking at a much smaller concept, a kiosk, cart, or very small operation with much lower overhead. I am sure there are others here that will give you stories/advice and I wish you luck in whatever you do in the future. I hate to see retailers get in over there heads too early on, and lose the money they had up front from being under-capitalized.

-Matt

Permalink Reply by Brady on February 10, 2009 at 4:54pm

Full scale shop? No.

We went about as cheap as you can go on upfit - doing all of the design, engineering, and upfit work (pretty basic, converting from an existing retail space) except for plumbing and wiring ourselves. Went inexpensive on materials as well - stock cabinets, lighting, etc. from Lowes. Lots of used equipment that we refurbished, maintained, and installed. Worked it ourselves, so no payroll. Minimal marketing budget, lots of flyers distributed on foot. I love our shop, and feel like we did a great job. We could not have gotten to the 6 month mark on 30k. No way.

The question to ask yourself is, even if you could make it to opening day with 30k, when would you have to break even for this to work? What sort of initial sales would be required? What sort of growth? What sort of cushion for the inevitable overruns and miscalculations?

I don't think it could be done. Kiosk? Maybe.

Run the numbers honestly. Sometimes, the answer really is "not right now". Better to wait until you can do it right. Good luck.

Permalink Reply by Joseph Robertson on February 12, 2009 at 11:31am

Barbara,
Here is my real world situation. I don't have much time for this reply but you will see why as you read this. We planned this shop/operation for 3 years. Capital? We sold our commercial Building / home for 475.000 paid some bills bought all equipment except the building and land with cash. The building and land for the shop is on contract. All that money was gone before we finished the remodel. Still a considerable amount on credit cards. We opened JoLinda's Coffee Roastery and Wine Shop on 9/21/2008. We are still open and have long term plans for survival in this downturn economy.
Please do not think I am trying to discourage you. Quite the opposite. If you have a dream and you keep working toward it you will achieve it. Hey we are not talking about being an astronaut here.
Although I did fail to mention I am a general contractor and that I hired two employees to help with the year long remodel of the building. Check out our website to see what you can do if you have enough drive and desire. Do not forget it is not really about the $. You will find the money in time, just remember this. Do ever give up. Forget what the others say, you know you can do anything if you put you mind to it. I'm still in the process of proving it. I will never give up, I love coffee and coffee people too much.
Best Regards,
Joe

--
Ambassador for Specialty Coffee and palate reform.

Permalink Reply by Mike McGinness on February 18, 2009 at 10:20pm

If you could find a coffee shop selling for a low low price with low down payment balance on contract and if the shop didn't require much if any remodeling/buildout and if the we would be running the place 'til you drop without employees until shop clearly in the black and able to support paying employess after paying all day to day bills then maybe, just maybe you might make it. But find out why they're selling so cheap and then ask yourself why you'll succeed in the same location when they're failing.

To answer your direct question, 16 months ago bought an existing shop on a shoe string more than twice yours. Doors are still open, haven't missed a payroll (currently just under 2 full time equivalent employees down from 3 as the economy has dived), most bills current but not all and business barely surviving with zero cushion zero personal credit left and not paying myself a cent in 8 months while working 60 to 70 hour weeks. First seven months didn't take one single day off and seriously about had a breakdown from exhaustion. Now I force myelf to take one or two days off a month. Sometimes I question my sanity but hey, sanity is highly overrated!

Not trying to discourage you. If you have a dream, and the dream is strong enough, go for it. Just don't be disillusioned thinking it'll be anything like easy. No guts no glory. I may loose my house but not for lack of giving it every single fiber that's in me following my love of coffee.

Permalink Reply by Barbara Adams on February 19, 2009 at 4:06am

Thanks for all the input. I knew myself that without additional investor we are a no go. I just wanted to cover all the basis. We decided to keep working on our future place (menu, logo, website, training) until we get the rest of the money: would it be investor, a loan, a treasure found somewhere int he ocean. Since we have equipment, we decided to put together a cart and work in the shows around town to get experience and exposure.

Permalink Reply by Joseph Robertson on February 19, 2009 at 9:53am

Barbara,
Nice to hear back from you. Your seriously on the right track. Any way you can get your foot in the local coffee biz door. My next major project is to build a tow behind espresso trailer/cart for local events, etc. Keep your eye and mind/karma on that shop that is about ready to close for what ever reason. You will find it.
Best Regards,
JoeR

Permalink Reply by Melissa on March 9, 2009 at 8:28am

If you are willing to do everything yourself, you can do it. I opened my shop almost 6 years ago with $25K. I bought used equipment to start out with and replaced it a little at a time. I leased a vacant retail space that used to be a bar, and my husband and I cleaned and painted the place and had it open within 2 weeks of signing the lease. We started out with just my husband, son and myself working and have added a few employees over the years. I feel the main reason we were able to do this was because we were willing to do it all ourselves and willing to work as long and as hard as necessary. So, it all depends on what you are willing to do. FYI, we broke even our first month, made a profit our third month and have been increasing every year. With the economic downturn (isn't that the current PC term for a crappy economy), we are back to the three of us again plus the addition of our daughter-in-law. All food items are prepared in house (4 loaves each of 5 different quick breads, brownies, cookies, granola bars, biscotti, breakfast burritos and croissant sandwiches) and we do almost all repairs ourselves. The only technicians we call in are the espresso machine guy every 6 months, and an electrician for electrical. We have been open for almost 6 years now and do over 50K a month. So, it can be done if you are willing to work 20 hours a day, 7 days a week for a few years.

Permalink Reply by Barbara Adams on March 9, 2009 at 8:34am

Thanks Melissa. And congratulations on a job well done! I am envious! I love this industry so much and I want this so bad, that I am willing to work day/night. Just got to figure out what to do with my 7 mo. old twins :)

Permalink Reply by David Davenport on June 1, 2009 at 11:54am

I did one in Houston for 30K but it was real tight. Pastry cases were hard to find used. It can be done though. Watch out that you leave enough working capital.

Permalink Reply by william kevin emmons on June 8, 2009 at 11:56pm

you can find come coffee shop for sale for about that much. i,ve seen drive thrues for as low as 12k

Permalink Reply by Joshua Longsdorf on June 9, 2009 at 3:28pm

If you take the route of a pour over bar or french press your coffee you might be able to get close. Assuming you have great design abilities and can do the build out yourself. Your biggest expense would obviously be for a good espresso machine. I think it could be done if you had a landlord willing to work with you. I've seen great places done for less.

Permalink Reply by Tim Flebbe on June 14, 2009 at 6:54am

we are squeezing on 12k, some maxed out credit cards, and the whims of the community. We purchased an existing establishment. It had an Astoria 2 group and accoutrements, 2 mazzer dosser grinders, 2 huge bagger grinders, dual and single airpot brewers, 15 airpots, 2 mini fridges, a regular fridge, an ice maker, a chest freezer, an upright freezer, a digital scale, storage shelves, a display cooler, an oven, tables, chairs, cabinetry and some decor...We fully "re-opened" the joint this past April, after giving the place a thorough cleaning. The walls actually looked like they had been repainted when we were done.

We continue to break even, which I happily blame on an existing stigma in the community against the business due to the politicking and overall neglect of the place by the previous owner(s) and managers. We knew this up-front, but 12k for an existing coffee house was a steal we could not pass up.

A few things that are helping: We bought an aeropress and have several customers who now demand their coffee prepped this way. We sell those at our Americano prices for single origins, add 50 cents for the estate coffees, when we can afford to get our mitts on them. We also bought a couple siphon brewers. Not a lot of interest due to our not being able to display them as we want to. The local police chief and his brother love the coffee out of the siphon brewers. The chief refers to it as the coffee bong :).

I talk this stuff up. The history behind siphon brewers is interesting and the fact that the Aeropress is made by a frisbee and yo-yo manufacturer is funny to people. Even if the customer only buys a latte or airpot coffee, letting that customer know that the new owners have done some legwork learning and offering other prep options makes an impression. We are lucky enough to have a roaster 20 miles from our shop. We point that out a lot. Fresh ingredients, freshly prepared before the customer's eyeballs goes a long way.

Another thing, my partner is one heck of a baker. She has introduced several goodies that are outpacing the pre-made pillsbury scones that our customers were demanding when we first opened. And we make a tidy profit off of the items we make ourselves.

A few weeks back, the baby-mama/business partner loaded up some airpots and samples of the baked goods and hit up the banks, insurance agencies, doctors offices, etc... Our sales went up 20-25% each week she did that...

Also, learn how to maintain your equipment. Not necessarily the complicated stuff, mostly the back-flushing, portafilter and grouphead cleaning. I do not know about Nuova equipment, but for our Astoria there are a few little things that must continually be done in order to insure quality.

And I have found that with the budget tight, the internet is priced right :)...tons of information on how to prep coffee and maintain equipment out there. Never used Gimp (like photoshop, but free!)? There are tons of websites hosting how-to's. Design your own ads, flyers, etc.

and if you do apply for a loan and get turned down, now there is www.kiva.org/

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