How the Best Coffee Shops Beat the Odds (And How You Can Too)

Here's the tough about 60% of coffee shops fail within their first year of operations. In this video, I'm going to break down those top five reasons for failure and what you can do to prevent them. Reason number one, that coffee shops fail. Poor location. The old mantra, location, location, location. Nothing could be truer. When you have a physical store that's serving coffee, you want to be in highly walkable areas. If you're in a city or if you're in a more rural area, then obviously a place where people can commute to that's easy to get to you from a main road and, and that you have that high visibility that people will see and you're on the right side of traffic basically. So one of the biggest things that people get caught up in especially is they're paying super high rents in an area and they might be just off a main road, but they're tucked away in the corner where really nobody sees them. And so it's really important before you sign any lease to scope out that, that location, scope it out during different times of day, different days a week. You need to be really educated on what the traffic patterns are. And it's a good idea also to scope out the competition that may already be in that area. So don't avoid this pitfall. It's all in your hands. We know you're exc excited about opening that shop, but really this is one of the most core decisions that you'll make along the journey. Reason number two, that coffee shops fail. No clear niche or differentiation. Let's be real. In today's world, coffee's everywhere. So you got to find your thing. Whether it's a unique brewing method, whether it's a really inviting atmosphere, or whether it's your staff and they got a really cool and interesting take on the world. One of our busiest customers, CoffeeDose. They've built a bold, unapologetically filled, feminine brand that really speaks to their customers and has created this mass following of just super fans that'll post every time they go to the store and really help them spread the word. That word of mouth is magic. So when you do find your niche, lean into it. It's something that will help to differentiate you. Reason number three, that coffee shops fail. Financial mismanagement. Coffee shops have pretty thin margins, about 12 to 15%. And a lot of owners fail to recognize how hard it is to get through those early months, those slower months, and how hard it is to, to get to that break even point. So you want to make sure you're using financial tracking software, you should be on a modern POS like Square, which will help you do that and that initially. While you want to make sure that you have enough staff for those busy morning rushes, you also want to make sure that you don't overstaff. The best remedy for that is for you to be on site, especially when you're opening all the time. And to make sure that like, you know what you need even in the busiest of times. Track inventory, track labor, vendor costs and use accounting software. And if you need to, bring in a pro. Reason number four, that coffee shops fail Weak operations and management. When your operations start going awry, then everything else starts falling apart. Inconsistent drinks, long wait times and high staff turnover, those are all signals that there's definitely some room for improvement. Strong shops, they run on systems, they onboard employees the same way they track waste. They schedule their employees smartly and they measure what matters. So don't just hire for personality, hire for reliability and train for skill. Build a team that's going to want to grow with you and be with you for the long haul. Reason number five, that coffee shops fail no marketing or retention plan. When you open up, you're going to want to make sure that you have a modern point of sale system like Square that can help you track all your regulars and see how frequently they're coming. This can really be streamlined through online ordering where you can track their email addresses and start building out that list. And if you really want to take that to the next level, that's where you have your mobile app. Starbucks already wrote the book on this, but today you can use services like Per Diem to launch your mobile app. In a day, it seamlessly integrates with Square. And then your most loyal customers are downloading your app. You can offer them different promos, different offers, you can talk about new drinks that you're offering, but if you're not building that list yourself and it's not first party, then you're at a disadvantage. While Instagram and social media is great and you can really blow up there, the one negative there is that you don't own those customers, Instagram does. So what a modern point of sale helps you do is to really own your customer database market to those customers directly, which is ultimately going to be your most profitable and your fastest growing channel.