Almost two billion cups of coffee are sold in the UK every year – and the market shows no sign of slowing down, with 85% of us visiting a coffee shop at least once a week. Good coffee, and the establishments that serve it, have become an integral part of UK culture.
The good news for small business owners is that when it comes to coffee brands, indie and artisan are the buzzwords of choice. Despite a crowded marketplace, this is one industry where bigger is not better: according to figures compiled by the London Coffee Festival, independent coffee shops outnumber branded outlets by two to one.
A quick look at the figures proves this is a healthy market, and a potential growth area. Think you’re ready for the grind? We spoke to some of the country’s caffeine entrepreneurs to see what they had to say about making it in the coffee industry.
Don’t fear the competition
You shouldn’t assume that because you are a small business, you can’t compete with the big players. The things that make you different are also the things that could attract a potential customer. “We love to open right next to big long-established players,” says Gabe Shohet of Black Sheep Coffee. “Our typical customer cares about the quality of what’s in the cup, the expertise of the barista, and consciously avoids large chains that are unable to deliver the same attention to detail and quality.”
David Abrahamovitch, CEO and co-founder of Grind & Co, agrees. “Every year more and more people are seeking out a better coffee, as well as going out of their way to avoid the big chains,” he says. “Small independents have been the driving force of this change, and it’s been such an exciting movement to be a part of in the last few years.”
A high margin doesn’t always equal big profits
“Everybody seems to think that there is lots of money in coffee, that ‘the margins are so high’,” says Alex Galatino, founder of Italian espresso bar La Bottega Milanese. However, the reality is that “having a high margin on a small-ticket value is not the same as having a low margin on a high-ticket value. You need volume, and a lot of it,” he says. “If then you start talking about specialty coffee, it’s an expensive product. The practice, done properly, involves a lot of calibrating, testing, tasting and wastage.”
Do something different
The downside of a booming market is that competition will be fierce. If you want to stand out, try to find a unique selling point that differentiates your brand from the hundreds of other household names. Shohet says Black Sheep made a name for itself as the first coffee company to develop a specialty grade 100% Robusta coffee “at a time when everyone believed 100% Arabica to be the only premium species of coffee”.
James Dickson, founder of Workshop Coffee focused on creating a new customer experience. “Within our flagship store we make a name for ourselves by conducting on-site roasting – a first for London,” he says.
For Grind & Co, changing the proposition after dark expanded their customer base. “By day, we serve the best coffee in the city, and by night we serve cocktails, including a killer Espresso Martini,” says Abramovich.
Quality is everything
With the abundance of sophisticated blends and speciality products comes a discerning consumer. “Independent does not necessarily mean ‘good by default’” emphasises Galatino. A slick brand may draw in consumers, but they won’t come back if the product isn’t up to par.
“Coffee is a simple product that should first and foremost taste good,” says Shohet. “The majority of our regular customers don’t know that their coffee was hand-picked, sun-dried, double-washed and shade-grown, but they come back every day because they love the taste and that’s the most important thing to us. Coffee should taste great every time. It’s that simple.”
The right team creates the right atmosphere
Customers want baristas who know their stuff, and create the welcoming, personal environment that is often lacking in big chains. Staff should be well informed, friendly and a good fit with your brand and customer base. “We have an amazing team of dedicated lovely staff, but they were hard to find,” says Phil Ross of The Roastery. “Our team create a warm welcoming environment that you just want to hang out in, and that is one of the reasons why the customers come back.”
Know your niche
For a small business, it is often better to focus on a niche offering and do it really well, rather than trying to be a jack of all trades. “I am a believer in having an uncompromising approach to what you set out to do – not an easy thing to achieve,” says Jorge Fernandez of Fernandez and Wells. “For me this has always been offering a limited range of simple yet quality products. A good example would be our coffee range, which is very small.”
Be realistic
In the hospitality industry, work doesn’t stop when you put up the “closed” sign. If you want your business to be a success you need knowledge, passion and an unshakeable work ethic: this is a 24/7 business, and you must be realistic about the sacrifices it involves.
“You need to be at the top of your game to encourage new customers and retain existing ones. This requires a relentless approach to robust retailing, backed up by the product and service,” says Fernandez.
Ross adds: “It never stops, even when we are closed, there is something else that needs to be done. You need to love coffee, and love customers as they are your business. As a lot of our business is wholesale [of roasted beans] we see a lot of cafe startups that fail – that’s the untold story.”
