Mocopan Coffee’s Kyle Rutten on opening a café, and why it’s more important than ever to understand your market and stand out from the crowd.
The modern café market is a very dynamic one. While there are many simple yet successful cafés operating today, it’s not as easy as it once was to get people through the door. Once upon a time a simple window sign that read “coffee” with a large lurking coffee machine in the background was all you needed to attract a crowd. Today it’s about more than just the caffeine kick. Customers want the story, the flavour, and the trust that the person making their coffee is excellent at it, and a great environment to experience it in. We want it all.
However, with so many factors to consider, where does one begin when considering opening a café, never mind a successful one? If you dare, read on as I present some of the key factors I believe you should consider and plan for before considering your opening day party.
Location
In Australia, there is a varying level of saturation in the café market. For example, the number of cafés in Melbourne CBD is very different than the Victorian town of Traralgon. There is also a big difference in the number of people in the area too. You need to do a bit of research on how much competition there is, what kind of competition (we’ll explore this later on), and whether or not you can bring something uniquely different or better to the table.
Setting up shop in a small town is not a negative, nor is being in a busy, saturated city location. The key to picking the right location is knowing if you can pull a crowd wherever you find yourself. Think about busy streets, roads, eating or shopping places, nearby schools, and other points of interest. If it attracts people, it can attract coffee lovers.
The only way to overcome the location factor is if you can create a space so unique and special that you become a destination. The Grounds of Alexandria in Sydney springs to mind as a prime example of this, as does Veneziano Richmond in Melbourne. These operators have created such cool spaces that people will go out of their way to visit, regardless if parking is limited or there’s no access to public transport. If it is cool, they will come.
Target market
Addressing your audience is one of the most important factors to consider when opening your very own shop. Understanding who lives in your neighbourhood or who you want coming to your café is critical because your ‘regulars’ will become your bread and butter. Consider the following questions when addressing who your target market is:
- Do your regulars care about the latest single origin from Ethiopia, or do 99 per cent of them just want a flat white or cappuccino? Understand what your market wants and provide them with it.
- Does the look of your equipment matter or is the consistency and speed at which people can get their coffee the most important? Many new café owners fall into the trap of going all out on the latest tech from the get-go before they have even tested the waters of the café business. On the other hand, it’s not always a bad idea to come out the gates with equipment that will turn a few heads.
- It’s worth considering the age demographic of your audience. What millennials want can be quite different to that of baby boomers. For example, millennials prioritise experience over cost. In other words, they are generally willing to pay more for a great experience whereas baby boomers generally prioritise value over experience, meaning it doesn’t have to be the most insta-worthy spot as long as the price is right and the offering is consistent.
Budget
Working in the coffee industry for years and getting to know first-hand daily operation costs, staffing, and bottom line was the best budget experience I could have gained. My advice: don’t open your own place until you’ve spent enough time in the industry to know if it’s the right fit. Justin Carriere, Owner of Arvo Coffee in Toronto, tells me that running a café is about so much more than return on investment. It’s a lifestyle. His budget was an honest one of what he had in his hand – savings and a desire to see organic growth. Start small with big dreams and have a passion to push the boundaries. That’s what kept him going. He learnt quickly to diversify his growth and think outside the box.
Consider introducing catering, masterclasses, an online store, and how you can turn your unique space into a profit generator. This way, you will quickly stop looking at the competition and focus on what you have in front of you – a business that needs growing. I’m a firm believer of having more vision than resources but always being honest with your budget so you can execute a plan and see your vision come to fruition.
Long-term strategy
What’s the end goal? Do you want to have a large multi-site café business with locations across the globe? Or is your dream to own a unique café that becomes an extension of you? Having a general idea will help you focus your resources, especially when it comes to hiring and the kind of systems you want to have in place. Write down your goals or put it into some kind of vision or mission statement so your employees can get behind the bigger picture other than making the best coffee possible.
Hero product
While it may seem commonsense that a café these days serves both coffee and food, it’s not always the case or even required. One of my absolute favourite cafés in Sydney is Artificer Coffee. They sell no food. You won’t find a single pastry in sight. It only sells coffee (and milk) and nothing else. They are also always busy because they are some of the best in the game and the owners have about 30 years’ experience between them. That business structure satisfies them, but it won’t for everyone. Sometimes less is more and other times more is more.
Decide if you are going to make coffee your hero with food to support it, or food as your hero with coffee to support it. You can choose to go the best of both but keep in mind the cost of a good barista and a good chef is a lot higher than a great barista and a decent cook or vice versa. Some of the best cafés do awesome coffee and have a menu of three to six items with some pastries for sale. This is a not a bad way to start or even operate. It’s really up to you and the strategy you have for your café.
Point of difference
I mentioned it earlier that the way to cut through a crowded market and get attention is to have a special point of difference – something that sets you apart. Even if you are the only café in the area, it’s always a good idea to have something that makes you unique. We’ve all seen those crazy milkshakes on Instagram or a unique cold brew method in the shop window. Whatever your X factor is, be aware of what others around you are doing and put some time and thought into what you can bring to the table. Some ideas could be around sourcing of beans, sustainability, special menu items, a unique story behind the café, unique shop fit-out, or location.
The reasons people want to open a café may be different, but the one thing that they all need to have in common for them to be successful is profitability. Be smart about your offering and be aware of your market when it comes to your customers and competition. Be ready to adapt and open-minded to new ideas, all the while staying true to the core of a good café: creating a welcoming place where people enjoy great coffee and engage in conversation with their friends or with your staff. There is no concrete map to success but there are things you can do to help put yourself in a better place to succeed. Good luck.
This article appears in the June edition of BeanScene Magazine. Subscribe HERE.