Although the author barely touched on it, I used to have a friend who owned a coffee shop and told that there's always an interesting push-pull. People like a coffee shop for two reasons: Great atmosphere (most important), and great coffee.
Great atmosphere encourages people to linger on that $5 ticket for hours, which is a black hole for money, but if your atmosphere sucks you'll never get the buzz and reputation to keep the long lines of to-go in the mornings that you need to survive.
Great coffee is hard to find, and requires competent baristas, which are a hard to find/train outside of big cities.
I'm a huge coffee shop nut, but from a business perspective it seems crazy. As an interesting aside, another slate article noted once that indie coffee shops that have a starbucks open nearby actually do _better_ afterwards on average.
> Great atmosphere encourages people to linger on that $5 ticket for hours, which is a black hole for money...
This is a problem that restaurants and other places solved a long time ago. I don't get why coffee shops never seem to do this: train your staff to make the rounds when they're not busy. Stop by any table with an empty cup, pick it up quietly, smile, gently ask the customer if they'd like anything else. (Don't nag or harangue the customer or ask the same one more than once an hour.)
Coffee shops have a problem with customers coming in and making themselves at home because they aren't being run like a business: there's very little staff-customer interaction. People come in, order (maybe), find a corner, and park there on the wifi for two hours. Shops respond to this by making customers come up to the counter to get a wep key, but that's the wrong way to do it. Instead, invite people in, invite them to stay, and ask them once in a while if you can bring them anything.
And as an added bonus, your staff will make a little extra in tips, too.
Most coffee shops aren't staffed for table service. Even when it's quiet, customers are arriving in dribs and drabs. Payroll is their largest expense; adding a headcount is probably untenable.
This also assumes that if you gently asked a "customer" if they wanted another cup of coffee that they would buy. Customers interpret this signal in restaurants because there are social cues and a meal progression. When you get done with dessert, there's an expectation that you're going to clear out and free up your 4-top for someone else.
Clearly, some people have developed different expectations about coffee shop tables.
> Most coffee shops aren't staffed for table service.
That's part of the point. If the coffee shop is so busy that the staff can't sweep the relatively small space, then they have no need to bother anyone to buy more. The bulk of my experience though, in both large cities and small towns, is that the staff spends plenty of time just hanging out.
> Customers interpret this signal in restaurants because there are social cues...
And those social cues are only social cues because restaurants train their wait staff to visit with the customers on a regular basis. The coffee shops are the only ones that don't seem to know this about the industry; if they started doing it, customers would learn the cues PDQ. (My pet theory for this is that coffee shops aren't run by restaurateurs; they're run by hobbyists, people like the article's author.)
You make sense, but the attraction at staying in a coffee shop for me (and often paying the inflated prices) is in treating it like a library. In any business if a salesperson comes past more than once asking if I've found what I want yet I'm pretty tempted to leave. That's probably the desired result here but I'd pretty quickly find an alternate coffee shop that didn't bug me at all.
Yeah, that's the least desirable of the outcomes, but it's still not a bad deal for the business.
You have to figure that there will be some customers that want to be able to come in and basically rent space (plus, usually, a restroom and wifi) from the business for a couple of hours for the price of a cup of coffee. Although there's nothing really wrong with a customer wanting that, it's not a good deal for the business and they have no motivation to support it.
That's why the interaction from the wait staff should be really low-key. If the customer really isn't OK with being offered something once an hour or so, then that's just not a good customer for the shop. (My local co-working space charges $20 per day for anyone looking for a place to work; I use that as a yardstick for what's reasonable at a coffee shop. If I'm going to be there for more than a couple of hours, then I'm treating it as a co-working space and I owe them $20 of revenue.)
Most other people find it fair and convenient to get another cup of coffee or other treat delivered to them, and regard it as good service.
I suppose that if the shop thinks there are a large enough number of people in their area that are just looking for a place to work, and are willing to pay for it, but just don't want to be bothered at all, then they could offer something like a "day pass" -- $10 for camping out for more than a couple of hours without being interrupted by the staff, plus a discount on their coffee or other products.
But I'm not sure that would have enough takers to be worth it.
You say, My local co-working space charges $20 per day for anyone looking for a place to work; I use that as a yardstick for what's reasonable at a coffee shop. This logic is totally broken. Your co-working space has a different cost structure than the coffee shop. In particular:
* Your co-working space doesn't need to factor in the cost of baristas and managers into the value of a table/hour.
* Your co-working space isn't set up in a super-expensive retail property, so the inherent value of a table/hour their is lower.
There's a limit to how much of a business's problems the customer should have to consider. I don't think very much about the co-working space's costs (are they spending more on marketing? What about faster internet? Building maintenance?), and I'm not thinking much about the coffee shop's costs.
I'm just starting with what a particular thing would cost me elsewhere, and offering to pay that to someone else.
Also, I'm trying to avoid going into specifics because they won't help us understand why coffee shops should work on their customer interaction, but I can assure you that our local co-working space has much higher monthly expenses than any of our coffee shops.
Your coffee shop doesn't have: phones, copiers, fax machines, professionally-managed high-bandwidth internet, copious power outlets, comfortable workstations, secure entry, indoor bike storage, whiteboards, etc. How about we call it a toss-up?
I have an office with phones, copiers, fax machines, high-bandwidth internet, comfortable workstations, power, secure entry, and whiteboards. We have about 10 people working out of it. I have a very good idea of what these things cost.
On the first floor of my building is a coffee shop. It pays more than 3x per rentable square foot than we do. Retail space is priced differently from office space. Attractive retail space is far more expensive than good office space.
No, I don't think phones and Internet makes it a toss-up. I think you're way off.
Well, there's two sides to this: the cost to the business, and the value to the customer. As you say in another response on this thread, if it's unprofitable to the coffeeshop, they should do something to prevent it. OTOH, if I'm working at a table in a mostly empty coffeeshop I'm not affecting their costs at all (except maybe for a small amount of power); their fixed costs are unchanged and the marginal cost of me sitting there is basically zero. (I'm assuming the situation where the cafe isn't full and other customers are discouraged from buying.)
Also, FWIW, I've seen enough co-working spaces come and go that I find it hard to believe that they are running a massively profitable business relative to coffeeshops (& retail in general).
Do we have a shared understanding now that the $/hour cost of a table at a coffee shop is far more than that of a coworking space? I pointed out that the coffee shop:
(1) Pays for commercial retail space, which is (in many cases) more than 3x more expensive than commercial office space (which is far more plentiful).
(2) Pays for multiple people's fully loaded headcount cost to staff the shop.
I didn't point out, but should have, that the shop also:
(3) Pays the wholesale price for the coffee (which is cheap but not free) and food (which is extremely expensive) and so has worse margins than the coworking space.
I agree that the rent per square foot is higher in a coffeeshop than in a coworking space. OTOH, if I rent a desk at a coworking space, I expect to get 40-70 sq ft of semi-private space. At a coffee shop, I'm liable to be working at a 2-top that's barely large enough to fit both my laptop and my coffee and having the ass-or-crotch debate with my neighbors if I need to get out of my chair for some reason.
As for headcount, coworking spaces need to employ office managers. A single barista can serve hundreds of customers in a day. Per customer, a coworking space might actually need more employees.
I think location is likely to be more important than either. My possible bias is that my father works in real estate and he thinks Starbucks shares the crown with Wallgreens as being to real estate siting what Wikipedia is to SEO.
I have about five coffee shops I frequent in my small town. The best location in town is in the station, and it is physically impossible for them to avoid selling $1k every weekday morning. The best coffee was at my favorite Sunday hangout and they were about as easy to get to as Customer Service at Google. Three coffee shops have thought they could make that location work.
Most coffee shops fail at their primary function: serving a quality cup of coffee.
In years and years of being cafe-obsessed, I've never seen shop fail that went the extra mile with their drinks, whether by roasting their own beans, training their baristas to competitive levels, or simply buying good beans, milk, and machines.
I read this article some time ago, and didn't see the obsession with coffee shine through. Without that passion, a cafe will be replaced by the next hip or quaint establishment that pops up to cater to idling customers.
This is the strategy that the Apple Stores, Starbucks and lots of other organisations attempt to create. If this is successfully achieved, the actual quality of the cup of coffee would be less important.
I think the majority of us, as consumers, like to think that we are completely rational and would frequent a coffee shop based upon the quality of the coffee. However the environment/branding of the shop, locality and the type of customers who are present - is in my opinion - more likely to increase sales once a minimum standard of coffee is achieved.
That focus shows too, I literally can't walk past them without stopping in for a cup. The baristas know me by name. Even after a two week absence due to traveling they still had my order brewing as I walked through the door and ready immediately after I paid.
Yes. I've always thought the advantages a local shop could use are killer product, free wifi, and great ambience (third place, friendly baristas, local art, etc). For some reason many local shops serve mediocre coffee. Now Starbucks has free wifi and by corporate mandate they work hard on ambience. Hopefully this will push the local shops to improve their coffee and barista training. The 18 cents for very good beans stat, if true, doesn't leave much room for excuses.
Interesting article about a failed business, marred only slightly by the way the author wants to write off his own bad business decisions as an inevitable problem with the coffeehouse business model.
Of course it must be possible to make a lot of money with a coffeehouse; Starbucks frinstance does just great, and plenty of non-chain places must be making a lot of money too.
Many of the problems he had just sound like he didn't have enough time to optimize his business model... if he was throwing half his croissants away then maybe he should have been buying fewer croissants? And do you really need a guy in the kitchen getting paid to whip up the occasional crepe when coffee is where you're gonna make the big bucks?
He obviously tried to create not a standard a-la starbucks coffee shop, but a more luxury experience. It seems he had to revert to non-cozy and fast or to charge premium prices and try to become "fashionable" place.
The real issue seems to be that he tried to create a "family restaurant" operation without the "family" (in this case him and his wife) wanting to work in the business:
My wife Lily and I could work there, full-time, save on the payroll, and gerrymander the rest of the budget to allow for lower sales. Guess what, dear dreamers? The psychological gap between working in a cafe because it's fun and romantic and doing the exact same thing because you have to is enormous
In other words, he had the luxury of choice. And he chose not to.
As one of the maligned "people with laptops", I often wonder how much I'm expected to spend. What's the expected $/hour you should drop if you spend all day working in a cafe?
> As one of the maligned "people with laptops", I often wonder how much I'm expected to spend. What's the expected $/hour you should drop if you spend all day working in a cafe?
I think it depends on how busy it is. If the place is dead, they'd probably be grateful for you to sit there and make it look more happening for someone who comes in. But during busy time, clogging up table space for three hours on one coffee is probably aggravating.
When I go to a non-chain, if I want to sit for longer than is normal, I just ask them. "I was thinking of having a coffee and hanging out on my laptop for a few hours - is that okay with you?" 90% of shops will say yes if they're not busy, or tell you when the time that that they get busy is. 10% will give a hesitant yes or non-answer, and I'll either only stay a short time or head out from there. Like everything, it depends on the particular situation.
Wow, actually working together and talking to solve problems instead of passive-aggressive "no laptops allowed" signs or "I hate my customer" blog posts? What a concept...
When I'm in a non-chain coffee shop, I make sure to tip well and to make sure to keep an eye on how active the shop is. Plus, buy a coffee or a small thing to eat every so often if I plan on being there for awhile.
If it gets busy and its been a decent amount of time (30-45m-ish) since my last purchase, I'll just head out.
The exception to this rule is the coffee place in my college's library; there's plenty of seating in the rest of the building. If I'm on a couch there, I tend to stay there until I'm done with whatever I'm working on.
I suppose it depends on the place. If you tip well you can spend a long time in Starbucks without ever getting hassled. I drop 50c to $1 for each drink, including "free" refills.
I worked for another corporate coffee company and we never gave any customers a hard time for staying for hours or holding meetings. It was the same philosophy we had for re-doing drink orders no matter what the complaint. Sure, some small fraction take advantage, but for every illegitimate complaint you ferret out by putting up resistance you will irritate at least one paying customer, and that's a customer you lose forever.
The economics might work out differently for an independent coffee shop, but I doubt it. I find it far more likely that many coffee shops are opened by people who aren't that great at business or customer service in the first place and just think starting a coffee shop would be cool.
In sum, spend as much as you like on the products you want, and don't worry about it. If the shop decides you're a drain on the business, it's up to them to ask you to leave, and lose you as a customer forever. That's their calculus to decide, not yours.
My logic is that I can stay as long as it takes me to finish what I'm eating and drinking, and maybe a few minutes longer. If I'm working on my laptop or reading a book then I'll stretch it out a bit, but it's not really possible to make a cup of coffee last more than twenty minutes.
I can't possibly imagine eating and drinking enough to justify my presence in a cafe for an entire day.
Because Hugh would be denying the café revenue if he occupied the table without a purchase or 'nursed' a coffee for an unreasonably long period of time.
Each table needs to earn $n each hour to keep the place in business. If you enjoy your neighbourhood café, you should do your part to add to that revenue as much as possible while you enjoy their services.
A coffee shop isn't a sit down restaurant so $/table/hour isn't a very good metric. A friend of mine owns a coffee shop and he's told me that most of his business is walk in and outs. He doesn't mind if people buy a single drink and hang out for a few hours (IIRC he said 1 drink/2 hours and he comes out ahead). He even has one room that groups can 'reserve' for an hour or two if they want to meet in a more private setting. Keep in mind this is a very local shop with great coffee, and he runs it with 2 other employees.
His biggest complaint/cost/profit issue is the price of milk and how much is used in a latte.
I use the library a lot, but in a weird way I actually find it quieter in a coffee shop. Libraries are mostly quiet, but the one group of gossiping people pretending to study becomes that much more annoying since you can make out every word. Background noise in a coffee shop is more ambient and generally constant. I also don't get outraged when I hear someone speaking since they aren't breaking a rule or making me think they never saw the episode of sesame street where kids learn to be quiet in the library.
But the best thing is to take a brisk walk in the fresh air, and notice nature. How fortunate to be prompted to do this beneficial thing! (a convenient rationalization that is also absolute truth.)
True, sometimes silence becomes too noisy. I believe it has to do with flatting out of the spectrum in a coffee shop.
Your comment brought one idea, I know there are white/brown noise samples, and nature sounds that make the atmosphere more ambient. Does anyone know sound samples taken in coffee shops?
This is not at all what you're asking for, but I was reminded of something I found a few years ago that some of you may find interesting, the Arcade Ambience project. This is a series of ambience recordings done in video game arcades 1981-1992. http://arcade.hofle.com/ If you're in the mood for a nostalgic, noisy ambience. :D
I will usually buy an iced coffee freeze (or whatever they're called) + pastry when I sit down. Once I finish the freeze, I'll buy root beers and bottled water as I go through them.
Sort of a side question, but what do you (or others) do when all that fluid makes you urn to the bathroom?
Do you leave your laptop at the table? Pack the expensive stuff up and and take it with you? Find a pal and ask them to watch your stuff while you go pee?
If the place is empty, it’s easy to just pack up and take your stuff with you. If you’re at a university, I generally ask someone if they’d be willing to watch my stuff. If I don’t feel comfortable and it’s busy, I’ll put my laptop in my bag and leave a book or something where I was sitting.
I take my cell phone and iPod, and ask the waitstaff to please keep an eye on the laptop (which I've locked to the login screen). I figure that's good enough.
No doubt New York's a very different beast, but in Melbourne it seems cafes are still bursting out everywhere (and have been for years). This is even more amazing given how many still serve bad coffee. It seems to remain profitable here, whereas the dream of running a restaurant is what seems to drive more people to ruin.
A local celebrity chef started a new restaurant with another talented chef partner. Six months later, the partner left to run a cafe, since the work and stress involved in making paninis and light meals for people was far less than a gourmet restaurant, and the payoff better.
Um, you need to get out of Melbourne. I am always amazed at how universally excellent espresso is there: beautifully roasted, excellently barista'd and absolutely no milk or sugar required while still being dark, thick and tasty. Compare to Sydney or most of Europe (or much of North America).
Cafés in North America often run to chocolate muffins and energy bars, but the whole Australian café provision of light warm meals is fairly alien there (see the success of Pret in NYC as a business with a very different value proposition to most other chains). I would imagine that the additional profitability from this cultural difference might be one of the reasons of the success of cafés where you are; that and the fact that the inner core of Melbourne has 2m+ residents and is fairly walkable which leads to a different kind of use of these kinds of spaces.
This is an old dupe, but I think it's worth revisiting for the "cautionary tale" aspect: this is the link I send to friends who mention wanting to "open a little coffee shop somewhere."
This particular articles pops up every couple of months. Sure, it's quite interesting, but it's time-saving if you know that it's older and you don't have to reread it.
Doesn't bother me much, but it might be helpful for people who can remember reading an article on this topic a few years back, but assumed this might be another take on the same topic?
I think that's the real message of the article. I don't think it's about the coffee market in NY, or in general - it's about making sure you think and measure before you leap.
Starting a business is a huge deal and consumes huge amounts of your time. If the sums don't add up - that is, you're not going to be profitable unless you work as slave-labour in your own business - maybe you shouldn't do it. I think this is a trap that many educated people fall into that don't have direct business (or time billing) experience.
This is applicable to tech as well - if you build a product, sell it super cheap (say, software @ $20 per year), and it takes around 1 hour per year in technical support per user (per year), you need to consider that when pricing. It may not be worth it. Or you may just have your pricing or business model wrong.
"The most dangerous species of owner ... is the one who gets into the business for love... and pretends that love means total ignorance is okay... who refuses to confront the reality of business, and when he/she can no longer ignore that reality, refuses to come up with problem-solving approaches other than whining or shutting down."
Great atmosphere encourages people to linger on that $5 ticket for hours, which is a black hole for money, but if your atmosphere sucks you'll never get the buzz and reputation to keep the long lines of to-go in the mornings that you need to survive.
Great coffee is hard to find, and requires competent baristas, which are a hard to find/train outside of big cities.
I'm a huge coffee shop nut, but from a business perspective it seems crazy. As an interesting aside, another slate article noted once that indie coffee shops that have a starbucks open nearby actually do _better_ afterwards on average.