The growth in coffee shops over the past five years has been huge, almost 5% a year in numbers taking the total to 14,071 according to an IBISWorld report. $8 billion worth of coffee is sold through these shops, which range between 6 – 2,000 square metres and employ 73,000 workers altogether.
I’ve interviewed many of the owners and staff, and have photographed their amazing and personally created shops. Small shops like Jay’s Nest and Bar 2101, medium sized shops such as Axil, and large emporiums like Criniti’s. The sector is still the domain of well-run independent coffee shop owners. As IBISWorld points out, “there are no companies with a dominant market share in this industry”. Starbucks tried and failed, and I won’t share with you my personal shopper experience in most of the major brands that play in this sector. They just aren’t very good.
According to IBISWorld, all these independent coffee shop owners have three key success factors mastered — business expertise of operators, effective cost controls and effective quality control.
However, whilst that may be true for the larger multi-shop businesses, I’m going to suggest that ‘business expertise of owners’ isn’t high on the skill set of many smaller ones. I’ve helped owners buy and sell a few shops over the years. Terms like monthly management accounts, gross margin by product line and total cost of doing business don’t feature highly in our conversations. What they do clearly understand is the shopper in their local community. They truly understand service and product quality, and have a passion for coffee and food. So do their staff.
They are innovative with social media, local area marketing and ‘in and just outside’ store communication. They treat both their regulars and new shoppers very well and aim to build a relationship with them. Their team use phrases like “thank you”, “I’ll be with you in a minute” and “sorry for the wait.” And they mean it.
They use your name to greet you and write it on the coffee cups.
If you own a good quality coffee shop in your community, well done. It’s a great way to earn a living for you and your family. When done well, it reflects the culture that your community generates; buzzy inner city, funky inner suburb, modern and busy outer suburb, laid back coastal or country town feel.
If you don’t own a coffee shop and are looking for a change in your life, then it’s not too late to open one. Just make sure you think clearly about the retail trifecta in order to create a great shopper experience.
Then your coffee shop wont’ be ‘just another’ coffee shop. You and your shop will be a part of your community.
Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Now Comms Group. He is also an independent director of Australian fintech company InvestSMART.
