While it is sexy to brand this (especially for media) as a 'threat' or 'will take on' Starbucks, that should not be the focus and it should instead be about delivering maximum value to its customers, which are likely going to be different customers than Starbucks customers. Starbucks customers go there for the customer experience, not for the coffee - there is better and cheaper coffee elsewhere, even McDonalds (literally).
I hope they are laser focused on their demographic and who their customer is rather than try to be the universal solution to coffee. A challenge will be how do you deliver the same exciting experience on a coffee stand without having the focus becoming operations and churning out coffee as quickly as possible. Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine. If the person(s) running the stand need to be super friendly, engaging, fun, etc. if this is going to really take off, and experience shows us that is no leap of faith as you operationalize and expand locations so quickly.
Rent and costs has spiralled in the big cities, meaning that a customer that sits half a day with a laptop costs Starbucks money. Starbucks profit is in Take Away.
Every customer at Wheelys is a take away customer.
The customer who sits half a day in a Starbucks is doing free advertising for Starbucks. A filled and busy shop attracts much more business than an empty one.
I've had chats with the manager of one of my favourite locations. It gets pretty slow mid-afternoon, and she made it really clear that she's super happy having some people sitting in there working, even if they're sipping the dregs from a 2-hour-old free-refill coffee. The regulars usually have chatted at least a little bit (maybe that's a Canadian thing), and having conversations or work going on improves the atmosphere.
The trick with restaurants is to sit customers near the window so it looks like they are more busy than they are. Ever wondered why in a huge mostly empty restaurant you're placed next to existing customers.
> "... meaning that a customer that sits half a day with a laptop costs Starbucks money."
If you consider that the largest cost is probably rent, then people sitting around probably add only a tiny amount more. It's only an issue if the shop happens to be be full and there are other customers who wanted a seat.
That person sitting there is probably doing Starbucks a favour. People are more inclined to go somewhere where there are other people.
This is not quite accurate as it assumes that Starbucks must have premises of a certain size. If Starbucks had smaller shops they'd pay smaller rent. Their business model of having large shops is their problem right now.
I don't think it's a problem, but it is a limitation. Starbucks can't place a location anywhere they can't fit one of their buildings.
As comments further down noted, there are two types of coffee customers: (1) get it and leave & (2) spend time in a coffee shop.
Where (1) breaks down is basically if you don't have access to a Starbucks on a commute. Which to me is a particular type of customer: lives in a city core, bikes or walks to work / uses mass transit. These are the type of customers Starbucks can't really afford to chase. They're designed as a stop when someone is commuting in from the suburbs via car.
Deliver a high-quality, dependable (key!!), possibly cheaper product right in front of a rail or transit stop? Bob's your uncle.
Good luck!
PS: Step 2: ? Step 3: (Get bought by Starbucks and profit!)
> a customer that sits half a day with a laptop costs Starbucks money.
First, congratulations on your launch! I hope to try Wheelys out soon!
A bit of well-intentioned feedback regarding your positioning strategy: as I am often the customer you mention who sits at Starbucks (or other coffee shops) all day, I can assure you that the owners don't perceive me as a cost even though I don't buy much (I often speak with them and ask about life as a small business owner). In fact, at locations I often visit, it's very common (say 1 in 3 visits) for the managers to give me a tiny freebie. Maybe I'm just a likable guy, but I don't think I'm so charismatic as to completely warp their perception of me being a drain or a benefit.
I think one important point is that I make sure to buy something any time I'm taking up space and the place is crowded (say 70+% fill rate on seating space). But that's at most 2 hours per day (the morning pre-work rush and the lunch rush). In those peak hours I would agree that I am taking up valuable real estate and should contribute something to their upkeep.
Anyway, congratulations again and I hope to see one of your sites soon!
Sure, I elided a bit of complexity. I visit many coffee shops, including Starbucks. Some are owner-operated, some are not. Indeed Starbucks doesn't have a franchise model. And yet the managers both there and at owner-operated shops always seem happy to have me around "taking up space", and often offer me a free something-or-other.
That doesn't change the fact, raised in a sibling comment, that given the fixed cost of rent, having someone in the shop during off-peak hours is in a sense "advertising" the desirability of the place. Trickle revenue + "advertising" using up slack capacity seems like a clear win for them, given the pre-existing real estate investment.
Restaurants (and probably coffee shops) seem to have an easier time attracting customers when there's someone already in there. So, at high utilization you'd be a cost, but at low utilization every bum in a seat is an advertisement.
Interesting. Then how come there are so many non-corporate Starbucks outlets? The ones that don't get the same new products and don't take their gift cards -- like airports, for example.
I believe it's a licensing arrangement. Those locations often buy and license Starbucks coffee (though often not their baked goods), but are not run by Starbucks. e.g., Barnes and Nobel, Safeway.
Just to confirm, that's exactly what it is. From what I can tell around here, it's mostly for places that already have a larger unionized food service organization. Two examples that come to mind are the local university and a local hospital. These "Starbucks" use all of the branding and coffee, but are staffed by the organization that hosts the store.
Agreeing with you, I'm pretty sure there's no way for an individual to open their own Starbucks store; the licensed stores pretty much have to exist within a larger organization where it would be impossible to open a store independently (in the local cases, that'd be due to the food service unions).
In Canada at least, there's also instances where Starbucks has worked out some kind of cross-renting deal. Chapters/Indigo Books is a prime example. Every Indigo I've gone into has had a Starbucks, but those are staffed by Starbucks employees and not Indigo employees.
All Starbucks out of a few markets are operated by Starbucks. And even the ones that aren't operated by Starbucks are operated by Sodexo, Marriott, or some other big company.
That customer is likely to purchase coffee or something at Starbucks. Half a day is quite some time to go without having something to drink or having a bite to eat.
Presumably Starbucks has calculated this. There's new one near me on 53 and 3rd that has plenty of sitting space, and the food is arranged differently (more like Pret I guess). And there's a sign posted outside that anyone can come and sit without having to make a purchase.
The coffee shop is, for many people - especially those starting a company or working on their own - their office.
If Starbucks is smart they will let people sit there all day!
The only reason I drink Starbuck's overpriced bitter coffee is because they have been kind to Anyone who walks through their door.
They have allowed anyone(including the homeles) to use their restrooms. Although I think that's starting to change? Watch it Starbucks--some of us notice those Managers who take their job too seriously, like its their bathroom.
I go to Starbucks because of the welcoming environment--period. I don't like anything they serve. I could go to the coffee shop across the street(the Coffee Something), but I remember the time they asked my friend to leave. (He looked homeless, but was worth a few million dollars.)
I will never forget that day, "You get outa here, you don't spend money!" He was actually one of their better customers, but this particular day, the owner was filling in for a employee. He never went back. My friend easily spent $4/ day, and he was there 4-5 days a week. RIP--RBB.
I like Starbucks even if it is overpriced in my opinion. I think the coffee is good. But mainly, you are right, I am willing to pay more for the welcoming atmosphere and ability to sit and get work done without being bothered. With that said, I was in Boulder last winter and was running early for a meeting. I swung in the Starbucks downtown to stay warm and do a little work. I didn't purchase anything, but had to use the restroom. To my surprise the restroom had a keypad on the door. When I asked the cashier for the code she said I had to purchase something. I was rather shocked, although at that point they pretty much had me on buying something :) Ended up using one of my rewards, calling corporate to complain, and having my reward refunded back to me. A lot of work to go through just to use a bathroom. On the flip side, I live in a resort town where the population swells by the hundreds of thousands over the summer. The Starbucks here could care less if you are a customer or not.
... I don't think this is the success story you want to paint it as. Who cares if he's a millionaire if he's only purchasing $4/day? If a retail shop is reliant on a customer worth a mere $4/day, then it has serious problems.
And if his presence discourages other patrons or consumes space that other paying patrons could have occupied, it's a drag on business. Sure, having an empty shop is a problem because it makes you look unpopular, but conversely, having a full shop of people who aren't purchasing anything is equally bad, because it blocks people who do want to purchase.
I would think SB understands how to maximize revenue based on size, rent, and location of their stores. Revenue/sq ft would be one metric to use. There's SBs out there with no seating or public seating (like airports), to ones in stripmalls you have to drive to.
This would also need a licence to operate in many European cities, you can't just start selling coffee on the street. I guess the licence will be much cheaper than rent, but it's a cost,and it might not be even granted in the first place.
There are some interesting psychological reasons why people hang out in cafes. Procrastination is one of them. When you're at a cafe and you have your laptop out, there's a similar social pressure that exists in the workplace or university classroom that sort of discourages procrastination (eg watching YouTube videos) and encourages being productive. I remember reading about this in NPR or Psychology Today, but can't track the article down now.
yes, this headline is a perfect example of Maciej's recent complaint: "The other part of our exponential hangover is how we build our businesses. The cult of growth denies the idea that you can build anything useful or helpful unless you're prepared to bring it to so-called "Internet scale". There's no point in opening a lemonade stand unless you're prepared to take on PepsiCo."
Why not back this company to, you know, sell good coffee and be a success on its own terms?
Starbucks customers go there for the customer experience, not for the coffee
Actually we go for the coffee. But there is something to be said for the store experience of Starbucks, it is high-class and delightful, compared to something like Dunkin Donuts.
there is better and cheaper coffee elsewhere, even McDonalds
People who can't taste the difference between McDonalds' coffee and Starbucks, are not in Starbucks demographic. For the price, you can't get a better cup of coffee, unless you're willing to roast the beans yourself.
With that said, the key issues with Starbucks, are long lines, high prices and the wi-fi squatters. I seriously doubt that a cart based coffee stand can address all of these issues.
As a curiosity, have you tried the new McDonald's coffee? I'd call myself a low-mid coffee snob, and I'm pretty impressed with it, for what it is.
I, however, do go to Starbucks to be one of your problems: I'm a wi-fi squatter. I'll go in, get an Americano and sometimes a breakfast sandwich, and sit and work until lunch time. If it gets busy and there's no tables available, I'll leave early.
I get the impression that the organization doesn't see us as a problem though. The Starbucks closest to my house wired in extra outlets so that there's a row of tables with 2 outlets per table. I'm on a first-name basis with all of the staff, and we have deeper conversations beyond "how's your day? good. good."
There is lots of better coffee nearby in my town, but I go there pretty much 100% for the welcoming atmosphere. There's a place that's across the street from a Starbucks with little signs on the tables that say "If you're staying for longer than 45 minutes, please make another purchase." I don't go there very often; we obviously don't have compatible desires from the exchange.
McDonald's regular brewed coffee has always been quite good (same with Dunkin' Donuts), and they brew it fresh constantly.
The 'McCafe' or whatever they call it espresso-style drinks are pretty poor.
However, most McDonald's offer free wi-fi that's usually faster than Starbucks, usually don't have many people in them, and don't mind you sitting around for a couple hours working on stuff. Bonus, they have a better menu of stuff to snack on than Starbucks.
most don't "brew it fresh constantly". they keep the pot on the burner until it is empty (or in newer hardware, store it in an urn that limits air exposure somewhat) until they need more. None I've seen actually time a brew set and throw it out when it hits that shelf-life counter, like Starbucks (let alone do individual pourover brewing like better coffee shops).
McDonald's requires their franchises to brew a fresh pot every 30 minutes (I'm not saying all do, but I've seen it happen often enough I'm pretty sure most stores follow the rule, McDonald's brand is built on consistency across stores).
They also source their beans from Gaviña, a well considered supplier, who I believe does the roasting as well.
I love coffee, particularly darker roasts. I tend to drink my coffee black, I usually buy better-quality coffee (pretty much all big-brand store-bought coffee, e.g. Folger's, is bland and weak).
That said, I hate Starbucks coffee. I'm sure their fancy, sugary drinks are better (and the reason people prefer them to another coffee place) but as far as just black coffee goes, Starbucks is terrible.
Dunkin Donuts is better (particularly the dark roast) and I also enjoy the new McDonald's coffee (although it seems to depend on location, some McDonald's seem to be better than others).
I go to Starbucks pretty often, but specifically for their espresso drinks (latte, macchiato, iced drinks, etc). None of which you can get at McDonalds, or at a cart like this. Most of the people I see in Starbucks are not drinking "coffee", they are drinking some fancy thing with syrups and ice and espresso.
I go to Starbucks for the coffee. And I don't generally stick around unless I have time to kill for some reason. And I'd get coffee from one of these if the line was shorter and the price was close to the same. Admittedly I'm not super particular about my coffee, but I drink a few cups a day.
>> Starbucks customers go there for the customer experience, not for the coffee - there is better and cheaper coffee elsewhere, even McDonalds (literally).
This is a sweeping generalization. Coffee, like food, is a vastly subjective experience.
>> Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine.
Who are these 'most people' are why are we making assumptions about where the get their coffee from without a research or a survey citation?
I'm sorry, I don't intend to be mean spirited here, just that I've been increasingly seeing seeing comments here that appear well thought out and well written on the surface but are peppered with logical and factual fallacies.
Oh, lighten up, this is a discussion forum not a thesis paper. It should be obvious that comments like this are anecdotal opinions without the constant need for phrases like "in my experience/opinion".
McDonalds, seriously? It tastes like pre-Pike Place roast Starbucks (circa 2006), whereas current Starbucks Veranda blend pourover is actually pretty good.
Hi, my name is Tomas Mazetti. I'm one of the founders of Wheelys. I also like the outdoors, though not unreasonable so. I am from Sweden, home of the swedes.
Hi Maria,
How can I find out if this is legal to operate in my city? Do you need some sort of permit to occupy the space when parked?
It would be helpful if you had a list of the laws in different cities. For example, I can't find any information on non-stationary selling for Montreal or Vancouver, Canada. Thank you!
Hi! The regulations are different from country to country, and even from city to city. We are learning by doing and will collect a database of all this but as for now I recommend you to check with your local council or health department :)
So how easy is it to ride one of those bikes? Do you have to be particularly strong, and what if you have say 50km to ride in a day to visit all the consuming destinations?
I think this could be popular in Australia. We hate Starbucks - it flopped in Australia and there are only a handful of them open in tourist hotspots. Aussies tend to be snobby about coffee and know the name and children's names of their barista. You may do well in AU if the coffee is top-notch. Although the market size is quite small here compared to the US of course.
Australians are interested in but not big consumers of pour-overs. Cold-drip and other "exotic" coffee styles are increasingly seen, but by far and away the dominant style is Italian espresso.
And, presumably for power, space, and desire-to-be-low-carbon-footprint requirements, that's precisely the style Wheely's cannot provide. I'm doubtful whether this would be a viable business in Australia.
It would be very dependent on location in Australia. I live in Sydney and I am spoiled for choice. There is literally no road from my place without at least 1 good coffee place. There are 3 roasters within a 1000m radius to me. I can get a great coffee just about everywhere.
We can certainly support more coffee businesses, but you're not going to become huge doing it.
As a British expat, the whole coffee scene is quite an amazing thing about Sydney. I can get a reasonably good barista coffee almost anywhere - the hardware store, the swimming pool, the furniture shop, most pubs, at childrens activities etc.
There are 1 or 2 coffee shops on every street near where I work in an otherwise very industrial area. They put a fair amount of effort into making themselves unique in style and differentiating themselves.
I don't drink coffee, but I could see this working in the Adelaide CBD where the streets/footpaths are flat and in decent condition. It'd be easy to move around. Shame about the council's recent attitude to food trucks.
You are rightm but we can use Biogas in the burners, since the amount of fuel is negligeble compared to an engine. It is not avalible in all places yet though.
But it's not up to us. It's like someone who charges an electrical car with a diesel engine. How could Tesla police that? They would need thousands of private investigators, and we all know the quality of work of private investigators.
I don't understand -- the primary function of the cart is to make coffee, right? And it's impossible for the cart to carry out this primary function without some source of combustable fuel, yes?
If that's the case, there's no honest way you can claim it's "powered only by the sun and your own body".
I came across Wheelys online a few weeks ago, and it literally spoke to me, because it combines so many great things:
(a) bicycles
(b) tech
(c) environment
(d) coffee
Anyway, how did you connect with YC? What do you plan to do with the funds you've raised?
Hi Thomas, I am Erik and am interested in purchasing a wheelys. Here are my questions:
* Would you consider your model a true franchise?
* Does a Wheelys 3 make drip coffee and espresso drinks?
* As you expand across the US and gain brand recognition, will there be a store locator app, gift cards, loyalty programs, etc.? (I live in a California tourist beach destination)
I am an American, home of the Yankees, the cronut, and truck balls.
* Would you consider your model a true franchise?
I would not describe it as a true franchise. Rather a model of it's own inspired by the franchise model.
* Does a Wheelys 3 make drip coffee and espresso drinks?
Yes
* As you expand across the US and gain brand recognition, will there be a store locator app, gift cards, loyalty programs, etc.? (I live in a California tourist beach destination)
Yes
How does the "live in SV for a while -> demo day" model work for a company like this? Are you doing this like most regular YC companies? Does it involve conquering the SV market or maybe working on the corresponding app or are you actually back in Sweden?
Congratulations Tomas and Maria on the launch! It's a really interesting concept and it am excited to see if, when and how it will succeed.
Based on what I've read so far, it sounds like if I purchase a Wheely's cart, I almost a franchisee. What's different between Wheely's and the typical franchise model? Would I have to pay royalties for this? Also, would I have to source my own locations to place my cart and deal with the regulation within my local city?
I'll see if I can convince folks I know to bring this to Canada :)
Disclaimer: I'm the co-founder of a startup who's helping franchises find the perfect location for their store. We have done some analysis work on coffee store locations in Canada and the United States.
I'd be really interested to learn more about the "mobile greenhouse where you can grow your own coffee beans. Do you have anything written up anywhere?
Last time I looked into growing coffee the summary was pretty much "yeah, right", so hearing that it's possible on a small scale is very exciting.
I highly doubt growing coffee on a small scale will work for this application. Coffee trees typically take 2-3 years before they produce first fuit, and they mature into very large bushes/trees. A young coffee bush might make a good decoration, but will produce few if any coffee cherries.
> Then, he met his co-founder Maria De La Croix, through a feminist organization. As part of that movement, they protested the average pay gap between women and men by burning the extra wages he hypothetically earned because he was a man.
Wait what? Hasn't this common misconception been debunked, or at least to be shown to be very insignificant when controlling for obvious variables?
It hasn't been debunked because there is a wage gap, according to the first three articles you linked. You can argue about what constitutes "significant," but the first article notes that according to the BLS, "the gap is 19 cents when looking at weekly wages" and "even smaller, 14 cents, when you look at hourly wages." The AAUW report, which looks specifically at college graduates working full-time, similarly found a gap of 14-19 cents. Also, the first three articles you linked are the meaningful ones here; links 4 and 5 are about gender differences in salary negotiation, and the last is an opinion column. It and the CONSAD report are the only ones of your link set that claim the gender gap is "very insignificant."
The variable CONSAD is controlling for, at least from my reading, is "people who have interrupted their careers by temporarily withdrawing from the labor force or switching from full-time to part-time work" -- mostly women who take maternity leave or part-time jobs to raise children. The amount of money those women would make if they hadn't interrupted their career is an interesting data point to determine, but I would argue that by using that "adjusted" amount, CONSAD has moved the goalposts, because that's not the median gender wage gap as actually experienced. The various studies linked to by the WaPo and the AAUW study all seem to be in general agreement around the 14-19 cents range. Whether that's "significant" is subjective, I suppose, but it doesn't strike me as a small amount.
I always have difficulty understanding what people expect here. How can they expect companies not to reward the people that progress in their career while others interrupt their career?
Are we supposed to just unfairly give people the same salaries when one worked part time instead for 4 years?
One thought is that we could reframe the question (as e.g., Sweden has done) and work to increasing gender equality.
If the starting point is recognizing that people have kids and it takes time to care for them, and both parents have that right and obligation.
From there, one could devise policies that encourage BOTH men and women to take parental leave and invest in high-quality childcare for when that parental leave is over.
Are we supposed to just unfairly give people the same salaries when one worked part time instead for 4 years?
We're supposed to fairly reward two people the same for doing the same job. If you have more experience then you should have more responsibilities - that is what should increase your wage, not simply "time served".
There are almost no jobs where two people are doing exactly the same thing where experience doesn't matter. It's idiotic to think an employer would prefer someone with less experience to do a job, regardless of responsibilities. Because employers prefer experience, that is reflected in the market value of the employees.
I wasn't offering a prescription with my comment, just observing that the evidence suggests the gender wage gap is a Real Thing. But:
Are we supposed to just unfairly give people the same salaries when one worked part time instead for 4 years?
Let's dig into that a bit.
Suppose Bob and Agatha are both working full-time at the same company as, for the sake of example, sales engineers, and they're both making $100K. Agatha goes on maternity leave, and afterward the company agrees to keep her on as a part-time sales engineer, working 25 hours a week at $62.5K.
If, after four years, she and Bob both apply for full-time senior sales positions, is it "unfair" for Agatha to be offered the same salary as Bob?
I could wrong but you seem to be just citing data for the US. Aren't the founders from Europe? Does every country in Europe have fair pay between genders?
> As part of that movement, they protested the average pay gap between women and men by burning the extra wages he hypothetically earned because he was a man.
I feel like the better option would have been to split the difference with a female co-worker?
I disagree. The founders seem insane. imo it's a trait that tends to do well with the chaos and adversity of startups. It's not for normal people (at least in the beginning)
I'd have much preferred an honest and evidence-driven response instead of a sarcastic one. This kind of attitude won't help your cause, nor your startups, get the good kind of traction at all. Some food for thought.
I'm very excited about this aspect and their focus on being CO2 neutral. I'm not entirely convinced yet and would be interested to know the energy source split (particularly more about how they use the NBG).
Also allowing people to charge their phones is a given really but that's got to be super fast charging otherwise it could get awkward... XD
This appears to be offering a fundamentally different experience from Starbucks, whose business model, as I understand it, is to offer a bunch of weird, vaguely coffee-related drinks, but more importantly, space to sit down and drink them. With Wifi.
There are several variations of these running around Australian cities, however they still don't compete directly with cafes, as they provide a different service.
I spend a lot of time at my local coffee shop. Been going there ten years now, know the owners pretty well. I see way, way more people come in, get their coffee, and leave, then I ever see sitting down with their drinks to enjoy the ambiance.
Having a bunch of regulars does add character to the place, but the volume of business they do directly likely doesn't even make a dent on the top line. On the other hand, I've seen plenty of intown coffee shops with maybe three tables do brisk business.
The real problem with the business model is, unless you can figure out how to give each of these stands a big enough parking lot where you can serve an area larger than your customers can walk to, you're stuck in downtown. Office parks big enough to have their own cafe generally already do, they're unlikely to take you rolling in to compete with them lightly. It's a niche market, which is probably why nobody's tried a franchise model already.
The stated goal of Starbucks is to provide the 'third space':
He had a vision to bring the Italian coffeehouse tradition back to the United States. A place for conversation and a sense of community. A third place between work and home.
The coffee is a mechanism for achieving that ( by making money ).
I don't use Starbucks because I don't like their coffee, but I understand what they're doing.
Is anyone else here immediately turned off the moment a company mentions "carbon neutral"? I'm willing to look past it as a standard marketing slogan, like "natural", "fair trade", etc., but it stands out as a particularly unfortunate bit of language in almost all cases.
Not me. I see it as a plus, not so much on saving the planet as a positive for the balance sheet. Carbon* is an externality, I would prefer to deal with/invest in a business that accounts for externalities instead of just producing them and hoping to evade the bill.
But in this case, like many others, they are just lying by excluding the carbon from the manufacturing of all of their equipment, their heating source, the transportation of their ingredients, etc.
Any time someone says something has zero carbon footprint I know instantly they're full of it. No carbon was burnt in the fabrication of your brand new aluminum coffee cart? Ok.
Carbon neutrality does not mean that atmospheric CO2 is not released at any point, but rather, that any release of carbon is offset in some way. Offsets might include planting trees, purchasing carbon credits, etc.
Chill out .. there is nothing made by man that has a "zero-carbon footprint". Even if you don't burn fossil fuels, merely by breathing you release co2.
This is a techcrunch PR launch, and you know what they meant.
I don't understand how a pour-over coffee cart is going to scale (scale in the sense of one cart serving many customers quickly). It takes 2.5 - 4 minutes to make a pour over coffee, assuming the water is already boiled and the coffee is ground; and there is a limit, just based on physical space, to how many you can have going simultaneously in one cart, right?
The Philz truck in San Francisco seems to handle this alright, but they have 3 people making the coffee and 1 person taking payments, and they're charging 4+ dollars per cup for a known/cult brand.
Just make a bigger batch of pourover when there's a line? If anything it should be faster than the typical espresso style that requires a fixed minimum of 60s of attention per cup.
Cool, it's not just a portable coffee stand, it's a company that sells cheap portable coffee stand franchises and (appears to) make franchising really easy - http://www.wheelyscafe.com
I want to know whether there are any in Seattle. It would be nice if there was a map of active Wheelys on their website.
My question is this, once someone buys the franchise what prevents them from just using their own cheaper coffee? If they have not figured that part out then they will need to soon.
>If buyers operate under the Wheelys brand, they need to ascribe to the product line, which is all fair-trade and organic.
This is a typical franchisee arrangement to ensure quality uniformity across the franchise [1]. Not following this would be a breach of contract with potentially grave consequences.
[1] This can seriously hamper a franchisee's ability to make profit / be creative, as is the case for Family Mart convenience store franchisees in Japan.
While that sounds very good on paper, in reality it's going to be an issue unless they have a good way of keeping track of the sales of the franchises. If you buy into McDonalds you have Millions of dollars on the line and performance metrics to keep up with and thus it's easier for the parent company to keep you in line. If you're only investing $3000, it's easy enough to just mix in 50% beans from other/cheaper sources and claim your selling 50% less then you are. This is a solvable problem but to think the agreement they sign will be enough is naive.
McDonald's was way ahead of everybody in this element of franchising strategy. Almost everything is McDonald's branded and must be purchased from Martin-Brower, their wholly owned distribution arm. (This is back in 1980, but back then the only food elements not McD-branded were the mustard, produce, eggs, and milk... and even those items had to be purchased from and delivered by Martin-Brower).
Plus, the franchisor can penalize the franchisee, or revoke the franchise outright. Years ago, I overheard a conversation in a Baskin Robbins in which the owner complained about getting dinged for using his own chopped walnuts.
I assume they can infer from order volume and replenishment, mapped against cashflow and supposed inventory turns, whether someone is selling their approved products. From there, they can audit franchisees with unusual patterns.
Example: My revenues are strong, yet my orders from Wheelys are suspiciously low relative to what sort of inventory you'd expect me to be turning. Red flag.
Sure, but now our hypothetical system-gamer is dipping a pinkie toe into the muddy waters of tax fraud. He has to wonder if taking on that kind of risk is worth getting slightly better margins on sales from a coffee cart.
In the United States, franchising is regulated by the FTC and state agencies. Wheelys makes multiple references to "franchise fees" on its Indiegogo page but I did a search in California, which requires registration, and could not find any franchise disclosure document associated with this company.
I really like this and I'm interested in buying one and having someone run it here in my area.
What I'm not clear on are the coffee/food costs and margins. The FAQ says you can make $250-600/day. I assume that's gross. It doesn't say what it costs to order the beans, etc. Hopefully the costs are exploitative.
Does anyone know what standard margins for coffee/casual food is?
Even if you serve the most fair trade ultra organic coffee there is, it doesn't cost you more than 30 cent per cup (Most cafés spend 10 cents. You sell that cup for $ 2, or more, since this is 2015 in San Francisco, and the world is mad.
The guy i mentioned above (http://mrcotton.com/) charges €2.20 which at current rates is over $2.40 for a black coffee, more for cappucio etc. He's usually outside my office for approx 90 mins and some back of the envelope points to him making over $200 in that time. Ant that's not SF, that's Cork Ireland
You might want to edit this comment, not good for a CEO to essentially say his customers are mad to pay what they do for his product. Bring's to mind this guy who destroyed a much larger business with a similar comment: http://www.telegraph.co.uk/news/uknews/1573380/Doing-a-Ratne...
Coffee margins for cafe's are about 20-25x, keep in mind without daily grinding you'll be losing most of your pre-ground product within a 48 hours of unsealing.
From the article: "Mazetti estimates that in a decently trafficked location in a dense city, a Wheelys coffee shop might do $400 in revenue per day and keep about $200 after the cost of goods."
Yes I came here looking for discussion on that. A good store does $200 a day after COGS?
Say 8 hours/day and you're looking at $25/hour, which I guess is pretty far above minimum wage, but is someone for whom $25/hour is an upgrade in a place to spend the $3k to buy in?
And if you're operating in a slower area you're not that far from making minimum wage. If I wanted to operate a fleet of them I don't see how I come out ahead after salary, overhead (increased loss from the minimum wage employee) and taxes. Even at $175/day your looking at $21/hour income after COGS, pay someone $12/hour plus taxes and overhead and you're profiting maybe $3/hour/bike.
I guess once you get to 30 or so you're starting to make real money. But at that point you have to wonder about saturation of the good spots.
As someone fortunate enough to be living in a major Australian city, I am perplexed by Starbucks [1]. It didn't catch on here as we already had something better.
One of my favourite cafes is run out of a re-purposed electrical closet in the CBD, with a few nearby tables. They have good coffee. You don't need much space.
Wheelys seems like a pretty reasonable idea. Good stuff!
My wife ran a food cart for ~18 months in Seattle. There are a lot of regulations around where you can set up food carts/trucks; most people end up renting spots (for ~$100/day near Amazon) or buying a license for a specific street spot from the city for ~$1100/year.
"Most cities in the world allow for non-stationary selling. That means as long as you keep moving you won't be needing a permit."
Hardly. Many cities (essentially every city in the Bay Area, for example) either outright ban peddling on public property or thoroughfares or requires a license for it.
Yeah. This gentleman (http://zoomcaffe.com/) lasted at the Mountain View Caltrain station for a few weeks before he got kicked out (so I heard). It was very welcome.
I worked at Stanford in the dept which supported housing and dining. Concessions agreements and relationships have to be engaged and signed before setting up shop in an area, regardless of whether someone believes it to be "public." In this instance, it would have meant engaging smctd. [0] It seems like they don't have any sort of formal concessions process or outreach, which is business-unfriendly (uphill battle). Otherwise, the relationship will be adversarial / nonexistent and the business will be finished unless it can legally skirt on a technicality (by moving just far enough out of the muni authority's jurisdiction). There are certain municipalities / area which need certain types of permission... CalTrain land is not technically under the local city's jurisdiction... They like other U.S. transportation authorities have their own police and own rules, like Stanford (ZIP code 94305) and some other universities too.
He followed that with "for example." The Bay Area is one of the largest metros in the US, it's not an awful example. And he also said "many cities," not "most." I think you took snippets to present this in the worst way possible. Be charitable.
It seems as though it would cost several thousand dollars per year to be licensed to operate this in Toronto, Canada. Toronto is really struggling to work out a decent model for licensing food trucks and the like, and it seems as though being a mobile food vendor on a bike doesn't really fit in their models at the moment.
If it wasn't for that, i'd be all over this. $3000 for the basic bike is a steal, and I could totally see me doing this for a couple of days a week over the warmer months.
Watched the video... Why do they have a guy screaming in the middle of the video. So annoying and unprofessional, and I'm listening with headphones.
But anyways, seems like an interesting idea and concept. But looks like no free Wi-Fi or a place to sit, which I know some people love that about Starbucks.
kevin, as YC design guru, do you think a large sign on the top would be wise?
I was thinking of something like a two sided /\ sign on top would increase the amount of signage, and increase the height of the signage. A large sign on top that reads "COFFEE" or similar and can be read from a block away might be advantageous. And if need be, it could fold __ flat when not in use (or when local signage laws prohibit it).
Could easily rebrand and repurpose this at times to work at events or serve a different product category - popcorn for outdoor cinemas, alcohol for private functions like weddings, cordials/lemonades, corn on the cob, etc. Use magnetic or stick-on signage when required. Have portable seating to lay out nearby.
Friend of mine bought an old caravan for under $1k and was selling homemade lemonade at street events for a while. Was making hundreds each night, then renting the caravan out for private functions on weekends.
Someone entrepreneurial could buy a few of these and set some keen uni kids to work running them for profit share.
This is shown to be a hit in European cities, where just based on a guess espresso and coffee is more popular. The majority of Starbucks customers are probably buying mixed specialty drinks.
Watching a Sbux barista make just a few drink, they probably go through a gallon jug of milk in minutes at peak times. How much fresh chilled milk can this cart hold? Not saying there's no market, but taking on Sbux seems a bit mis-targeted.
Something similar to what you say now was said by people when Starbucks was just beginning. "The majority of Americans just drink Folgers and don't care about arabica coffee"
I guess I'm wondering what this offers Starbucks customers that Starbucks does not or cannot, which will steal marketshare? The advantage to a franchisee is obvious, but not so much for Starbucks customers
Coffee that tastes good. Starbucks coffee is just horrendous. I assume they are so successful because they mostly sell glorified milkshakes these dayd. If you don't believe me type "third wave coffee" into yelp and go do a flavor comparison.
I actually think Starbucks Americano is one of the best Americanos I've ever tried, and I've tried all kinds. I've lived in both SF and NY and been to many "famous" coffee shops like blue bottle, philz, etc. (in my book philz is better than starbucks but blue bottle is not so much) but haven't had many Americanos that top Starbucks. Plus they are the only ones with really large size (venti). I don't drink their regular coffee so I can't really say much about them but have you tried Starbucks americano?
His point may have been that there are some really obvious, ugly typos, especially in the BIG RED BANNER segments (which can only be fixed by redoing the imaged).
Mazetti has a background in quirky projects. He and his team once illegally flew into Belarussian airspace and dropped several hundred teddybears carrying pro-democracy messages out of a plane
Most YC startups do something new, enabled by new technology - typically the internet.
Does this startup rely on some technological development that meant it wasn't posible before? eg in making the whole thing small enough; "pour over" coffee (whatever that is); eff/cheapness of solar panels etc?
NB not necessarily a selling point itself, but something that enables one.
"More importantly, Wheelys is about pour-over coffee rather than the Italian-styled coffee drinks like lattes and cappuccinos that many popular U.S. chains now use. “If you like the taste of coffee beans, pour over tastes way better,”"
Lots of effort in sales but what about the end product, coffee? In my home town, Melbourne, where the locals are raised on expresso, Starbucks was run out of town. [0]
Wheely appears to be a trojan brand for expanding other products as well as coffee at the expense of existing franchises in fixed locations. An Uber for fast food products.
As a Melbournian, you should know better than to call Espresso "expresso".
Also, and unfortunately in my opinion, Starbucks survives in Melbourne. I think it lives because it stays open longer than most places, giving those who enjoy a late night coffee somewhere to go.
"expresso" yeah good point, I'm thinking Espresso but somehow that black granular in a tin comes out. Do you really think "Starbucks" is making a go of it in Melb? There are a lot of places open late in the city. When in SEA I do pop into Starbucks because they have a place I can sit while I cool down. Maybe you are onto something.
T would. E interesting if, for a premium, they allow people to take the Wheelys cart and apply their own branding to it. Which could kick off a whole wave of independent coffee businesses a la Etsy but for coffee and purely offline.
I'm not sure if this is the case currently, and it seems you're right. They want to push their own brand and eventually consolidate the different types of food cart businesses (hot dogs, pretzels are too easy but perhaps they steal some ideas from food trucks too).
Man, part of me thinks this is a terrible idea for a host of reasons but the founders seem really brand-centric and financially savvy. I wish them the best of luck, it is clear success is possible, maybe even likely, but the magnitude is an open question.
I'll go a step further: This smells like a bubble!
If you're in a dense urban center like NYC there are already countless coffee stands that already do this (most have doughnuts and a wide range of pastries). But it's a really hard business to be parked in the street.
Also that sort of business can't really work in suburbia unless you use the ice cream truck model, which is also very tough. And unlike a food truck you won't do well in bad weather (do you want to drive on of these in the winter in Maine or the summer in Texas?).
The idea that this competes with Starbucks also misses the point that people go to Starbucks for a seat and to recharge their phone more maybe even more so than the coffee.
Of course this can be a successful business, but you're dead on about magnitude.
The funding of junk. It's not the same as the dot.com era in that era was so much about public companies. But maybe it's more of an angel investment bubble? There just seems to be a great deal of money being pumped into low quality.
But you tell me: Do you see this company as game changer that can scale to be something more?
I think it's funny that there are portable coffee stands all over parts of Southeast Asia.
I wonder if most people realize that the "innovation" involved has to do with franchising and finances, rather than the fact that it's a cart that sells coffee.
It is a great idea for the take away customers. I'd love to see if the society and market will accept this system. The world changes everyday. Don't worry to create something new.
Two hundred a day for a well traffic area does not look like much profit, let alone that appears to be before taxes, fees, and other such expenses. This is for a business that would be very dependent of location but also weather.
Have these been used inside of enclosed shopping centers/malls? Is the kiosk size cost many of those charge worthwhile to a business such as this? How about at airports? How are small setups like this treated by cities with regards how some do not seem to care for food trucks?
Starbucks is popular because of other factors. For example, not shooshing students that go there to use their wifi (which is usually good)
Maybe the corporate aspect of it even improves this aspect. Nobody will give a f if I'm there (as opposed to a mom and pop shop)
Also the "you know what to expect" factor of chain places also plays a huge part. And as McD is probably beginning to notice, if I go there a couple of times and I have a bad experience, I'm not ever coming back.
Taking on Starbucks would mean having nice seats and free wifi. Starbucks is not a coffee company. Coffee is just how they get you inside and start spending money. Or maybe that's different in LA. In Germany there are many shops where you can take a coffee to go with about the same quality as Starbucks but 20-40% cheaper. People only buy Starbucks if they plan to sit in a Starbucks.
Never the less, I think Wheelys can take on Coffee2Go companies without problems.
There is a distinct disadvantage for not being able to function during almost all seasons and weather conditions.
YC also backs the bike startups ViaCycle and Vanhawks, and Wheelys represents the use of bicycles in business. In a future with safe autonomous cars, does that make it safer for a bike culture to really take off? And YC can be at the center of a drastic shift to the next evolutional step of the bicycle.
It's really so nice to see this kind of business. Kudos to the whole team. I personally feel that you can't take on starbucks, as starbucks is not juz about coffee, but also an place to sit, meet with people along with coffee. So wheelys got to do something about that, at least couple of seat for customers to sit down and have a sip.
Reminds me of this guy who calls to my office building every day. The van does a few locations each day,
http://mrcotton.com/.
He has a few vans on the road, allowed him to pack in his banking job.
I really like the concept actually. Its almost like what food trucks have done to some brick/mortar companies. I dont think this will take on starbucks, but appeal to a millenial userbase.
Besides their newly released app, what's proprietary about this business? What would stop a big coffee company from replicating this at a cheaper cost?
Wheelys implicitly depends on vendors violating zoning/permitting regulations. Starbucks can't get involved with those brand/legal risks, unless Wheelys and similar companies lead to a new regulatory environment (a la Uber) where Starbucks can then enter the market or acquire Wheelys.
Yeah, I had the same question. Starbucks will likely watch to see if this is successful, and if they are will either acquire them or release their own version with MANY more advantages on their side.
Don't get me wrong, I love seeing folks try to compete against entrenched businesses, but there isn't really any sort of major proprietary "moat" here.
Big companies really can't innovate. Its just the law of nature, in order to grow by 10%+ Y/Y they can't serve new markets (they just don't grow quickly enough). So in exchange they buy the successful startups and pay a premium.
That's way too broad a statement and I don't agree with using "innovate" to mean "hockey stick".
While I generally agree that it's harder for big companies to innovate I think the key is to segregate the company into smaller units (Gladwell's "magic number 150").
There's plenty of innovation from huge companies that don't depend on takeovers.
Bell Labs is probably the most common example.
I will agree that innovate does not mean hockey stick, and I appreciate the clarification; I meant to convey "disruptively innovate" and that happens extremely rarely as a native occurrence in bigcos.
I also agree about the "segregate the company" idea; for example Amazon silos its innovation units into separate companies with separate campuses to compensate for the natural organizational dynamic.
But I do not know about the history of Bell Labs (except its prestigious accomplishments) and what enabled it to be so effective. Perhaps there is a telling history book?
i hate to be a pessimist, but i really dont see this going far, for a plethora of reasons... but for their sake, ill hope i am wrong.
grow your own coffee beans on the cart? yea right, that cart will grow enough beans in a whole year to make a days worth of coffee, if you are lucky.
too many, new-agey buzz words for me in that article, along with a LOT of misleading info... building out a small cafe doesnt even cost 100k, let alone 800. and starbucks doesnt pay minimum wage, they offer college assistance and health care. so your own cart doesnt really compare straight across for an hourly wage comparison to be fair.
The coffee plants are not a source of beans, but a source of customers. I don't know about you, but that strikes me as one of the most intriguing marketing plays I've seen surrounding coffee.
Exactly, it's all for show. It appeals to people. It's the same reason I grow a Jalapeño plant in my apartment window in Brooklyn, when I could get Jalapeños at any store for less money and less effort.
i guess i fail to realize how a coffee plant on a cart will attract customers... frankly, IMO, keeping a tropical plant alive in a glass box on a cart will be a lot more work then worth. they take 3-5 years before producing and grow to 6 feet in height or more.
but as i said in my original post, good luck to them.
I wouldn't be surprised if there are dwarf species that aren't used commercially. Or they could just use young plants and toss them out when they get too big or sickly.
I am sure it's an amazing product and will probably sell, I don't see how it compares itself with Starbucks.
I don't go to Starbucks for the coffee, I go there to sit down and code.
Still think it's an amazing idea, because from what I gather, they give you all the tools to sell good coffee cheaply so you really have few competitors for that in countries like Sweden.
I'm just going to take a guess, but i'd be willing to best people sitting down and coding are not the greatest source of customers.
I take the train to work in Boston. On my way from the station to my office I pass 5 starbucks. Everyone has a line out the door. Those customers that come in once (or more) a day, grab a coffee, and then go are the key to their success.
I hope they are laser focused on their demographic and who their customer is rather than try to be the universal solution to coffee. A challenge will be how do you deliver the same exciting experience on a coffee stand without having the focus becoming operations and churning out coffee as quickly as possible. Most people can probably grab coffee at work for free if they wanted to but they choose to go to coffee shops for the "cool factor", and to feel like they are taking a break from their normal routine. If the person(s) running the stand need to be super friendly, engaging, fun, etc. if this is going to really take off, and experience shows us that is no leap of faith as you operationalize and expand locations so quickly.