Successful Coffee Shop

While we have touched on the extremely competitive and challenging nature of the coffee shop market in the UK (and the primary reasons why fledgling ventures fail), it is also important to recognise the opportunities that exist within the sector.

In simple terms, the coffee shop market in the UK will be worth an estimated £15 billion by the year 2020, with an estimated 30,000 outlets nationwide.

Even more impressively, small and independent shops will account for approximately 47% of this sector, with high street giants such as Costa, Caffe Nero and Starbucks dominating the mainstream marketplace.

 

What are the Secrets to a Successful Coffee Shop?

So what does this combination of risk and reward mean for aspiring coffee shop entrepreneurs?

Above all else, it is crucial that they understand the fundamentals of operating a successful coffee shop, learning from the mistakes and triumphs of those who have gone before.

With this in mind, here are some of the tried-and-tested methods that can help you on your way: -

 

#1 - Understand your Value Proposition and Scale your Offering to Customers

Coffee Shop Menu

Often, start-up coffee chains strive to achieve a competitive edge by offering a wide and diverse product range, in the mistaken belief that this will engage a larger number of customers.

This can often be counter-productive, however, particularly in terms of cost, your margins and creating a clearly defined value proposition for customers.

When customers visit your outlet, they are often simply hungry or thirsty and in need of refreshment, while they are also likely to have a relatively clear of what they want.

The introduction of numerous menu options can subsequently creation confusion and frustration, and prevent you from fulfilling the fundamental needs of your consumers.

So instead of focusing on the range of your offering, you should instead define a simple value proposition that delivers quality and strategic products at viable price points.

This means limiting yourself to a select few flavoured beverages and no more than three sizes of drink, particularly as you look to establish your venture.

While you can look to scale your menu over time, this must be done in line with volume sales and the changing needs of your customers.

 

#2 - Make Quality your Watchword

Latte

No matter what market or industry you operate in, it is crucial that you are able to deliver quality on a consistent basis. Without this your reputation will falter over time, meaning that you will find it almost impossible to drive the long-term retention of customers.

Without this your reputation will falter over time, meaning that you will find it almost impossible to drive the long-term retention of customers.

Now while most product manufacturers are willing to compromise slightly on the quality of their offering in order to minimise costs and optimise margins, the same cannot be said of espresso coffee. After all, this is not a particularly price sensitive commodity in the current market, while customers will often forego closer chains and outlets in order to seek out the highest quality beverages.

After all, this is not a particularly price sensitive commodity in the current market, while customers will often forego closer chains and outlets in order to seek out the highest quality beverages.

These facts mean that you should strive to invest in the highest quality espresso for your drinks, tailoring your price points and promotional offers accordingly.

In terms of consistency, it is also worth making a considerable, up-front investment in your commercial coffee machine.

A highly-evolved, four group head machine can help you to produce the highest quality beverage on a regular basis, while also enabling you to drive high volumes every single day.

This makes for an ideal (if slightly unorthodox) commercial strategy and one that is central to the success of any coffee shop in the modern age.

 

#3 - Consider the Importance of Volume and Ergonomics

Coffee Shop Equipment

While we often talk about coffee shop beverages boasting a favourable margin, this is relative to the market and must be taken in context.

While the margin made per sale may be enticing, coffee is a low-value product that must be sold in high volumes if you are to make a long-term and sustainable profit.

This is often overlooked by start-up chains, who often forget that overheads are paid in cold, hard cash rather than percentages.

In order to drive high sales volumes, you need to ensure that you have the necessary equipment and efficient order processes in place.

While the commercial coffee machine that you use must have the capacity to cope with your daily demand, you will also need to develop processes which ensure that orders can be taken quickly and executed with accuracy.

Trained and conscientious employees are also central to this, as they will bear the responsibility for implementing processes and managing a constant flow of customers.

On a final note, you will also need to recognise the importance of ergonomics when attempting to complete a high volume of sales.

Each workstation must have a logical layout that empowers baristas to operate quickly and efficiently, while there is also a need to optimise the amount of available space in which employees can move freely and safely.

 

#4 - Promote Multiple and Complimentary Sales

Cake and Coffee

Even if your shop is able to generate a high volume of coffee sales, this may still not be enough to establish a profitable venture.

With inflated overheads constantly eating into your margins (particularly as your business grows), a single range of coffee beverages is unlikely to produce the necessary turnover or target market to sustain success.

So what steps can be taken to overcome this, especially given the fact that a larger range of beverages may dilute your value proposition?

The answer lies with the sale of complimentary products through your menu, including coffee shop staples such as muffins, cakes and sandwiches.

This will enable your business to achieve multiple sales on a daily basis, without forcing you to increase price points or execute a costly marketing drive to win new custom.

This will enable your business to achieve multiple sales on a daily basis, without forcing you to increase price points or execute a costly marketing drive to win new custom.

As a general rule, coffee should never account for more than 40% of your weekly sales, while you should also aim to sell two items to each customer on average.

One of the best ways to achieve this is through strategic promotional offers, where complimentary products are offered at a discounted rate when sold with a specific beverage.

This tactic is commonplace in successful coffee shops, so long as you give careful consideration to your promotional offers and use customer behaviour trends and buying habits to inform your decision.

 

#5 - Create a Loyalty Card Scheme for your Customers

Customer Loyalty

At the beginning of this piece, we mentioned the importance of learning from the mistakes and triumphs of established coffee shop chains.

So while you may ultimately hope to compete with large, high street outlets such as Costa, it is also crucial that you study them in great detail and adopt similar strategies in the pursuit of success.

One tactic that unites the market leading coffee shop chains is the use of loyalty cards, which is often something that start-up venture eschew.

This remains an excellent way of rewarding loyalty and building a relationship with your customers, which in turn the lays the foundation for retention and sustainable success.

The precise nature of the reward scheme and its mechanics are entirely up to you, of course, but the key is to focus on the needs and behaviour of your customers to generate genuine satisfaction.

So in addition to offering generic rewards such as a free beverage for every nine purchased, do not be afraid to think creatively when developing your scheme.

It always makes sense to offer free drinks in exchange for new customer referrals, for example, while you can even diversify your range of rewards to include alternative, non-coffee related prizes.

You should also be prepared to make a sizeable investment in the rewards that you offer to your customers, as this will reduce the amount that you need to spend in order to acquire new ones.

See related: 4 customer loyalty scheme ideas for cafes

 

The Last Word

These tactics have been at the heart of coffee shop success for generations, and they are arguably more important now than ever before given the ultra-competitive nature of the market.

By adhering to these strategies over a consistent period of time, you will be affording yourself the best possible chance of success as a coffee shop entrepreneur.