To think a coffee shop is a goldmine?

[Heps9]

How much do you think the franchise owner of a costa shop makes? I am guessing it must be a good amount considering how many there are.

In my town centre - admittedly a large town- with offices, shops and underground station near by- there are: 2 costa, Starbucks, cafe Nero, black sheep coffee, and one independent shop. 6 coffee shops within a 2-3 mins walk.
we also have Greg’s, McDonald’s, pret as well.

Yet all these shops continue to trade so they must be ££ in coffee shops

I’m interested in the answer to this too. So many independent coffee shops don’t make it so suprised one high street can sustain so many chains.

Running a franchise of a larger chain like Costa or Starbucks is likely to be far more profitable and easier than setting up your own independent shop. For a start there’s instant brand recognition, centralised support services, marketing, stronger purchasing power etc etc.

Coffee is massively popular at the moment but I can’t help but feel it must be moving towards saturation point with the number of shops.

We’ve got loads of coffee shops too, although we’re a tourist town so I suppose that helps.

Given the number that have gone bust in our local high street YABU. Like any other business, some can be; others can't.

Buying power. If you’re buying coffee for 1 shop you’ve got little negotiating power. If you’re buying for 2000 shops you can wrangle a far superior discount.

I agree I think the profit margins at Costa/Starbucks etc must be huge. We have a coffee shop near us which is really cheap in comparison, for 2 latte’s 2 slices of toast and 2 crumpets it is less than £5, which is amazing but it does make you wonder how much profit the likes of Starbucks make which easily charge £4-5 for just 1 coffee sometimes!

We open our garden once a year for charity, I do cream teas, cakes, coffee etc.
We open from 1-5, it takes 5/6 of us to run the kitchen and wait on tables.

I do all the baking the day before.

We run at full capacity from opening and have to refuse custom.

Charges are a bit below going rate, we will take about £140 an hour with seating for around 24 people.

Take from that all the ingredients, gas, electricity, time and the pay of 5 people, rents, business rates etc.

My dream of running such an establishment suddenly became reality, I would never do it!

Never again will I complain for the price of a cup of tea/coffee and a cake.

I appreciate we are not a professional kitchen and coatings are approximate but it’s very hard work for little return.

How on earth are they making any profit on that?!

My local independent coffee shop is crazy expensive. £4.95 for a slice of cake, £3.90 for an Americano. Always busy though.

As long as folk are willing to pay almost as much for 2 coffees as they would an entire jar or pack, profits will be made.
Ok, I appreciate the meeting for a coffee, or lunch etc, but getting one on the way to work? Why not buy a thermal cup and make it yourself?
I admit, the Northerner in me thinks it's wasting one's hard-earned brass, and I do occasionally meet for coffee, but tend to use independents (easier in London, perhaps as there is a plethora)
Not criticising people's lifestyle choices tho, just to be clear!

Independent coffee shops are a notoriously easy way to bankrupt yourself.

I'm not sure about franchise's. But the ones that always get mentioned as money spinners aren't coffee shops. Dominos is good I believe.

A Goldmine - yes in that the owners have to work, work and stay open and trading even when it's a slow day.
They have to chance to attract a high number of customers.
Many coffee shop owners sell it on or go out of business after a few years due to the physical work load and financing the venture.

People love coffee and familiarity. If you're willing to pay £4+ for a coffee you want to know you're going to enjoy it. It's a gamble in an independent place, you don't know if you'll like it and it's hard to complain to someone working for themselves if you're not happy.

So yeah, a franchisee of a coffee chain in a prime location will be making a killing, and good luck to them. It must be a huge initial expense to take on the franchise.

The thing I dont get is independent coffee shops all go bust and there is chain after chain.

In principle, I get the economies of scale but they can't be buying their coffee, water, heating, sandwiches much cheaper. The staff must also ve on the same minimum wage.

So what is the difference? Is it to do with upfront cost like fitting it out, or rent or just a way of evening out cash flow.

Edited to add - our independents are always full and popular but still close. They do seem to have smaller venue though.

A quick Google suggests you need hundreds of thousands of pounds to buy a Costa or dominos franchise

I can't see how it's profitable, even at the exorbitant prices these days. The cost of setting up - machines, fridges, display cabinets; business rates and rents in central areas are obscene, staffing costs and staff turnover, set up, cleaning and stocking during hours when no money is coming in; people spending a fiver to sit for an hour or two using your electricity to charge their phones and stay warm, your wifi to surf the net.

People see the cost of a coffee versus the cost of making one at home and think it's profitable but the overheads are huge for tiny amounts being spent by each customer. People often spend as long over a coffee as they do in a restaurant but the place earns £5-10 not £30-100 per head

There’s loads of coffee shops here and new ones constantly opening. With the independents though, I often find the coffee isn’t that nice. Bitter or burnt tasting with over steamed milk in an annoying cup and then I feel annoyed I’ve spent £3.95 on it. I have an espresso machine at home so take coffee in a flask if it’s just me.

ETA my friend opened a coffee/cake stall last year. She’d never used an espresso machine or milk steamer before and it showed. It went under very quickly which was a shame as her food is very nice.

Lots of additional costs of being a franchisee. No flexibility in buying - you must buy their products at prices they dictate. Percentage of profits go to franchisor on top of annual costs. Branding has to comply with head office rules.

Also, being a franchisee is hard - probably worse than being an employee. Loads of reporting to do, audits, secret shoppers, comparisons and still have all the staffing and facilities issues to contend with.

Not easy money at all.

It's interesting the franchises are so expensive and have extra work but keep going v the independents.

Is it just the franchises keep being sold on, but I dont notice

It totally depends on the area.

I have no idea what a franchisee makes, the Caffe Nero where I live and even the Costa in the next town, they always seem to be busy.

Where I live it's fairly middle class and there must be, ooh... at least 8 coffee shops, but some are a mixture of greasy spoon, others more continental and one American diner. We have a Caffe Nero which does well and we did have a Costa, it always looked a bit grubby though, compared to the others and it was no surprise when it closed down and didn't reopen.

Where the local farmers market was, there was a small cafe/bar, but this was away from the high street and got less business and I don't think the owner was that bothered about it.

There is one chain (Brown and Green) who started out in the local pub, then went to have 8 more locations, locally, including one on the platform of the local station. They've also branched out into doing wedding functions. Was started by twins and their DH's. They appear to have worked bloody hard so well donem to them.

There's another chain (Blackbird Bakery) who are a bakery/cafe who have 10 locations in similar areas, and are, I guess their local competitors.

I know the owners of another local coffee shop (does lunch) called La Bruschetta, very nice, they're also open til 6pm which is very handy if you fancy popping there after work.

What's interesting about all of these is the owners and staff are always very friendly and helpful.

At the station where Brown and Green started out, before they moved in, there was a station cafe, the most miserable woman used to run it, barely smiling. I got tea and coffee there because I wanted it, but sometimes begrudged using it.

Depending on the coffee shop you mean, there's a small one in another local park, I mean it's more a park cafe, I go there if I'm in the area but it's not brilliant. It isn't really a coffee shop though.

Small town, only two shopping streets but we have 10 coffee shops! Just one chain can you believe? All seem busy & buzzy. My favourite is an old fashioned tea room with flowers on each table, pretty china and treats for the dogs!
It's the loveliest thing to walk in and be greeted like a friend, really uplifting if not having the best day- a real tonic. If you are a hard working waitress/waiter thankyou for the smiles & chat

There’s a fabulous small chain of dog friendly coffee shops where I live that are hugely successful. Always busy even on Sunday afternoons. They are partnered with Guide Dogs so you feel that by having coffee and cake you are helping a good cause.

Yeah, but that bears no resemblance to running a coffee shop, and certainly not a franchise one…?

If you worked out how many coffees you'd have to sell to break even, let alone make a profit equivalent to NMW for the hours you'd put it, it's likely to be huge, probably hundreds, if not thousands a week.

Rent, rates, ingredients, utilities, interest rates on business finance and staff wages have all increased massively over the last few years.

Some years ago a local cafe owner responded to a bad online review for charging for a cup of hot water, with an explanation of the costs that he faced:

https://yorkmix.com/york-cafe-owners-stupendous-response-to-a-diners-complaint-goes-viral/

There might be the odd coffee shop that's a goldmine, but a lot more will be scraping by. Plus a lot of the chains will be propped up by cheap debt, that's likely no longer available.

I'm not sure about Costa, but I remember reading you need a million quid to set up a McDonald's franchise. I think even a chicken cottage was over 100k?! So yeah, I reckon you'd make loads but you'd need to have a lot of capital to start it up.

I think the big chains will always do well .My Son works for a large company with their own Costa on site(swallowing copious amounts of wages no doubt)! Also in Salisbury and Bournemouth hospitals) Smaller shops are a bit of a slog ,Often open for about 6 months to a year then gone again. I much prefer the vibe of a traditional coffee house, and think its a shame .Many people think they will make a bomb but it often just bombs instead !