Home  >  Discussions  >  What Are Things I Need To Consider When Buying A Coffee House?

What Are Things I Need To Consider When Buying A Coffee House?

Share This Page    See All Discussions    See All Contributors    All New Discussions & Comments

Comments & Replies: 2     Views: 1217     Posted By: Joe Ranieri  



Topics: Buying A Business     Tags: buying a business



Call it what you will, cup of joe, java, or morning brew, one thing is for certain, Americans like their coffee. According to the Specialty Coffee Association of America, "the retail value of the U.S. coffee market is estimated at 30-32 billion dollars a year." A survey conducted by Zagat found that 43% of coffee drinkers make theirs at home, while 26% buy it at a large national chain, 22% from a small/independent, and 9% from other. The same survey found that coffee drinkers consume about 2.1 cups a day.

One of the first things you need to consider is location. Large national chains can afford high rent/high profile locations, but there are there are many consumers who enjoy small local coffeehouses and will seek them out. Large national chains can be found on practically every street corner, making it a convenience for everyday consumers, but they also have their drawbacks. Try not to compete with the high rent/high profile model, and figure out a way to attract those who are drawn to a more intimate/less corporate environment. When operating a small independent store, one must ask themselves, "what can I do so customers go the extra mile and come to my store?" Ideally, you want to look for something near universities, hospitals, apartment complexes, or anywhere near heavy traffic flow. If you find a place with a captive audience, for instance a location in the lobby of a high-rise building, ask the property manager what is the occupancy level? Your rent should not exceed 10-15%.

When buying a coffee house, you need to decide whether you are going to go for a true independent or franchise store. I recently sold a coffee house where the buyer could get out of the franchise agreement and save the 6% royalty fee, allowing them to redirect that money back into the business.

It's important to remember that running a coffee house includes early mornings, while mid-day going to the restaurant supply store and stocking up on inventory, and then later going back to the store. Itís a business that needs to be owner occupied, because if itís absentee, one runs the risk of the staff giving free coffee to their friends, and eating into profit margins. One of the most important aspects of running an independent coffee house is customer service. Yes, you could walk into any chain store from Orange County, California to New York, New York and order a Venti Mocha whatever, and the experience will almost certainly be identical, but for a lot of people who frequent the same place every day itís important to build a relationship with the proprietor. By being around the store you get to learn your customersí names, drink preferences, and things they enjoy.

When investigating the business, find out how much business they do in straight drinks vs. pastries, etc. Selling just drinks, you will have a much lower food cost, but pastries and other treats will run up your food costs, because they can spoil and end up getting thrown out. Itís important to invest in Point of Sale system, so you can track to the bean of what sells and what doesnít. I have seen people who sell just drinks have a food cost of 15-20%, while those who sell (and throw out) a lot of pastries have food cost be around 30-35% When you buy the business make sure you get proper training, about to two weeks, so you can learn to make the drinks, and also communicate to the staff that you plan on keeping all of them on.

Itís important when running a coffee house to ask yourself, ďwhat am I really selling to the consumer?Ē Obviously, you are selling coffee and pastries, but you are also, in many instances selling to your customer ďa home away from homeĒ. Try to safeguard yourself, just in case a large national chain builds a drive-thru coffee house around the corner, because your customers not only come to you for the coffee, but also for the experience that corporate stores canít provide.

If youíre going to have an independent store, then you might as well create an environment thatís warm and personable. A great way to make people feel welcome in addition to have tables and chairs, is also have a couple of couches where people can sit back and relax, and of course a free wi-fi signal is a must! Another idea to build a relationship with your customers is to put up a corkboard where people can post for sale items, room for rent, etc. Also, once a week, maybe have music night where local musicians can play their guitar and sing or have a poetry night.

In addition to coffee, many business owners have increased sales by offering items like boba drinks and other tea based drinks commonly not found at large national chain stores. By creating an environment thatís a second home to the customers, it encourages them to frequent it multiple times a day, once in morning on their way to work, and later at night so they can relax and catch up with friends.


When considering a coffee house, I think its important to evaluate the key employees. I previously owned a coffee house and losing one early morning employee, that had a regular clientele of repeat customers who came to see her and enjoyed her "barrista" methods. Her replacement was new to the industry and couldn't carry on a conversation while making technical drink combinations and a lot of the customer base left for Starbucks or a similar competitor because the small independent coffee house lost its appeal, when there was no personal interaction during the sale. Make sure the employees are well trained, and try to gauge their likelihood of staying on board after the purchase is complete.

Also commit to acquiring a high level of training on the product itself. It may look simple but there are many things that go into making a good shot of espresso, including making changes for humidity and so forth. Competing with the large chains means you will need to have an excellent product and that comes with training on the product. Find out what type of training the suppliers offer to their customers, many suppliers have specialized training facilities to keep your skills at a high level, which in turn means more sales for you and them as well.


  Helpful Resources To Assist In Selling And Buying California Businesses

Bob Baumgarten, Business Broker: Orange, LA Counties

National Business Brokerage is a full service brokerage company that has been serving buyers and sellers of Southern California businesses since 1994. We are dedicated to providing the highest standards of professional service for our clients. Phone Bob direct at 949-588-8727.

Jeff Back, Broker: Restaurant Specialist - SF Bay Area

J. Back & Associates Restaurant Real Estate was founded in 1988 as the first bay area real estate company to specialize exclusively in restaurant real estate. I am the past President of Charley Browns restaurants and have been involved in the restaurant business for over 35 years. 925-736-8200.

Jeff Sacher, Business Broker - North Bay Restaurant, Retail Specialist

Jeff is a leader in business brokering in the North Bay. Since joining Santa Rosa Business And Commercial in 1999 he has assisted Buyers and Sellers in over 200 business sales and acquisitions. Jeff provides other services for his clients as well. Reach Jeff and his team at 707-888-4972.

Helen Yoo: Escrow & Bulk Sale Services - Southern California

New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.

Michael Floorman, Business Broker, BTI, San Francisco Bay Area

Business Team, San Jose (Campbell) located in the Pruneyard Towers at Bascom and Hamilton. Established in 1981 Business Team with over 6600 sales to date has 1000 business listings to choose from, paid Google advertising. We offer highly trained and experienced professionals.

Timothy Cunha, J.D., Business Broker, Northern California

Having managed and sold several businesses of his own, Tim offers business sellers extensive personal experience and professional expertise in building business value, planning a successful exit strategy, "packaging" and promoting the sale, and coordinating a successful sale. 844-237-6487 Toll Free.

Ryan Clark, Business Broker, Southern California

The Veld Group provides a refreshing approach to Business Brokerage, Mergers & Acquisitions and Business Consulting and Valuations. From Your Street to Wall Street, we cater to Main Street Businesses as well as more complex Strategic Firms and Start-Ups. Phone Ryan at 310-652-8353.

Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses

Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.


  Related Articles, Events, Blog Posts, Discussions, Videos, Interviews

Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers

People always need to eat; there should be plenty of business. Some buyers think there is prestige to owning a popular eating establishment. But it isn't an easy purchase. Peter Siegel, MBA (Business Purchase Financing Expert, ProBuy & ProSell Program at 866-270-6278) reviews this topic.

Don't Buy A Restaurant Without Checking The Competition - Key Buying Tips

Looking to buy a restaurant business? Check out these tips first to avoid getting blindsided when you buy any type of small or mid-sized California restaurant. Peter Siegel, MBA (BizBen's ProBuy & ProSell Programs & Restaurant Purchase Financing Expert) at 866-270-6278 covers this topic for buyers.

Restaurant And Fast Food Franchises - Successful Tips From Franchise Buyers

Restaurant franchise offerings are among the most popular of the business types potential business buyers seek. What many would-be owners don't realize is that there are specific tips for buying fast food or restaurant franchises that don't necessarily apply to independent restaurants for sale.

Selling Your Business To One Of Your Employees - A Good Idea? Pros And Con

After investing years of time and talent into a company, many small business owners want to feel like they are leaving their business in good hands and for that reason, some sellers opt to sell their business to an employee. Peter Siegel, MBA talks about the pros and cons to taking this route.

Absentee Run Small Businesses - Is That Really A Possibility For Buyers?

Is buying a absentee run small business really a possibility? Peter Siegel (BizBen ProBuy Director) gets asked this question a lot in his consulting sessions with business buyers. Read more about what other Advisors and Intermediaries feel about this topic on this popular BizBen Discussion!

The Bottomline: What Exactly Is Adjusted Net Income, SDC, And Cash Flow?

The use of add backs & adjusted net income is common among sellers of businesses when showing their financial information/performance. But buyers are cautioned to review financials and tax returns / documents closely. Peter Siegel, MBA with BizBen (ProBuy & ProSell, Financing Expert) explains.

Tips For Faster SBA Loan Approvals For California Small Business Purchases

In this article on BizBen, business purchase financing advisor and SBA loan broker, consultant Peter Siegel (Business Purchase Financing Expert/Advisor & the ProBuy Program Director at BizBen) at 866-270-6278 shares his views of getting SBA loan financing faster for business purchase financing.

Why Isn't My Business Selling? 6 Great Questions To Ask Yourself For Answers

It can take months, sometimes longer to sell a small business. Here are 6 questions from Peter Siegel, MBA (Business Purchase Financing Expert, ProSell Program Advisor with BizBen) at 866-270-6278 to ask yourself to help you determine why your small to mid-sized California business isn't selling.

See All News, Tips And Events

Michael Brewer, ABC License Consultant
Steve Erlinger Coin Laundry Broker
Willard Michlin Due Diligence Services
Taylorhouseman Laundry Brokers


Auto Related
Business Services
Children Related
Communication Related
Computer, Internet Related
Construction Related
Entertainment Related
Financial Services
Health, Beauty Related
Home Improvement Related
Maintenance Related
Manufacturing Related
Media, Publishing Related
Pet Related
Photography/Video Related
Real Estate Services
Restaurant, Food Related
Retail Related
Service Related
Sports Related
Transportation Related
Travel Related
Wholesale Related

Auto Body Shops
Auto Repair Shops
Bakeries
Bars, Sports Bars
Cafe Restaurants
Car Washes
Cleaning Services
Clothing, Apparel Stores
Coffee Shops
Convenience Stores
Deli Restaurants
Discount, Dollar Stores
Dry Cleaners
eCommerce Websites
Fast Food Restaurants
Florists, Flower Shops
Full Service Restaurants
Gas Stations
Gift Shops
Gyms, Fitness Facilities
Home Health Agencies
Hotels/Motels
Ice Cream Shops
Juice, Smoothie Shops
Laundromats
Liquor Stores
Markets, Marts
Nightclubs
Pizza Restaurants
Postal, Shipping Stores
Preschools, Day Care
Print Shops
Salons, Beauty Shops
Sandwich Shops
Smog Test Only Shops
Smoke Shops
Spas, Med Spas
Sushi Restaurants
Tire Shops
Towing Services
Vending Routes
Wireless, Cellular Shops
Yogurt Shops

Alameda
Alpine
Amador
Butte
Calaveras
Colusa
Contra Costa
Del Norte
El Dorado
Fresno
Glenn
Humboldt
Imperial
Inyo
Kern
Kings
Lake
Lassen
Los Angeles
Madera
Marin
Mariposa
Mendocino
Merced
Modoc
Mono
Monterey
Napa
Nevada
Orange
Placer
Plumas
Riverside
Sacramento
San Benito
San Bernardino
San Diego
San Francisco
San Joaquin
San Luis Obis
San Mateo
Santa Barbara
Santa Clara
Santa Cruz
Shasta
Sierra
Siskiyou
Solano
Sonoma
Stanislaus
Sutter
Tehama
Trinity
Tulare
Tuolumne
Ventura
Yolo
Yuba

0 to $99,999
$100,000 to $249,999
$250,000 to $499,999
$500,000 to $999,999
$1 million to $2 million
over $2 million




BizBen - Where California Deals Get Done! 888-212-4747
7172 Regional Street #364 · Dublin, CA. 94568
BizBen · Copyright © 1994 - 2017, All Rights Reserved

                       
Sign Up Today - For Our FREE BizBen Weekly Email Newsletter
Includes The Best Info On Buying, Selling, Valuing, Financing California Businesses:
Articles, Blog Posts, Podcasts, Videos/Vlogs, Discussions, Q&A, Workshops, Webinars,
Resources. Watch For An Email Confirmation After Signing Up Above. Thank you.


Please confirm your registration by clicking the link we've sent to .

If you can't see it, please check your junk mail folder.

If you have any problems registering, or need assistance with your new BizBen User Account please phone BizBen Customer Support at 888-212-4747.



First Name:*
Last Name:*
Email Address:*
Confirm Email:*
Create Password:*
Confirm Password:*
Phone:
(   
 


You Are A:
Individual
 
Intermediary
 

Email Address:
Password:
 
Search BizBen.com

500 New & Refreshed Detailed Postings Daily
Over 2500 Resources Available On BizBen
Since 1994. Where California Deals Get Done!
Buying A Restaurant Can Be Challenging: 3 Key Tips For Restaurant Buyers...
Restaurant And Fast Food Franchises - Successful Tips From Franchise Buy...