mycuppa wrote:
Thank you Chester for outlining a similar theme to what I've also been trying to say for a while now - the gold rush is well and truly over ! Unfortunately, when it comes from the mouth of an industry operator like myself, mostly it's treated with suspicion on the grounds that I'm trying to protect or preserve my interests, rather than my honest objective of telling people there is better (and easier) money to be made elsewhere. Reality is - the margins are not as healthy as most people think, because they simply perform basic arithmetic on the raw materials costs less the finished goods sale price and they throw in a few simplistic assumptions and variables - almost nobody knows the real costs as you only discover all these additions once you are up and running. I have a similar case with one of my cafe clients at the moment - he is not doing so well with his cafe and wants to buy a roaster because he thinks 95% of the cafes out there just begging for good coffee and he is going to give it to them. Despite me warning him over and over (because I actually care about his long-term welfare - I really like the guy) it's almost impossible to get the message through. Here are the key points in case people miss it..... 1. There is already really good coffee out there - almost everywhere. 2. Coffee is a volume game - not a "high priest of the temple" play. 3. Deep pockets are needed right from the very start. 4. It's really very hard work - physically and emotionally. If you don't like lifting stuff, working late nights and weekends, cold weather, hot weather, getting dirty - don't even think about it. 5. Customers will do anything to avoid paying their Invoices - this practice is endemic in just about any industry (see point #3 above) - situations like these can kill a business. 6. You can't please everyone - euphoric highs are balanced with the random unexplainable and unreasonable unhappy customer (like every other service business). 7. It is different to other industries - being that it's unlikely to ever undergo structural reforms such as market consolidation - a buyout is literally impossible (but it does happen in very rare cases - just don't build your strategy on the chance of a buyout).
Have to say I agree with you there I look at how hard my roaster works to produce a great and consistent product, and then, on top of that, there's coffee machine and grinder breakdowns, as well as scheduled maintenance, roaster maintenance, rebuilds, sample roasting, packaging, marketing, deliveries, cuppings, industry events and scheduled tastings, billing and invoicing, chasing clients for money .... And the list just goes on and on - its about being on call seven days a week 24 / 7 if needs be with little or no downtime And this is for an established roasting business I can only imagine that someone starting off in the roasting business would be facing all this AND a massive learning curve if they're going to thrive and survive As for cafes all I can say is that to do them well and to do them right is a tremendous amount of work I've never worked harder than I do now, in my mid 40's, with a young family in tow - and it's certainly a labour of love coz I'm sure I could be earning more working elsewhere When people ask me how much does it cost to get a cafe off the ground I say imagine getting all the money you own and or can get your hands on, and then tipping it into a bucket which is full of holes, so that the money is constantly leaking out, and then imagine that the bucket is constantly leaking and that you need to constantly fill it up, regardless of whether you can afford to do so or not... Industry insiders I speak to say that the modern economic climate means that you need to be capitalised to sustain several years of financial loss, before, if you're lucky, you start to turn a profit Factor that into your setup costs and operational capital, and then multiply that by two, and I reckon that's how much dough you need just to keep the business afloat ... So anyone out there still interested in starting a cafe ?
