- Mistakes I Made Launching a Coffee Bar 3X
Pam Chmiel on Entrepreneurship
Just now·6 min read
And How I Finally got it Right
In the winter of 2003, I found myself pushing a stroller through the slushy streets of Lower Manhattan on the hunt for a storefront to launch a coffee bar. I was looking for a career change and had the entrepreneurial bug for a long time. It was time to take the plunge.
I based my qualifications as a coffee bar owner on the fact that I was a coffee connoisseur and worked in restaurants as a youngster. You could say I was taking a risk.
I found a storefront on a winding street called Maiden Lane, just off busy Broadway and down the road from the remains of the World Trade Center site. Even though the area was rebuilding from the 9/11 terrorist attacks, the neighborhood was bustling with people who worked there.
Start With A Simple Business Plan
Some people will argue that you don’t need a business plan, I wholeheartedly disagree. I don’t mean a full-blown plan worthy of an investor’s attention (unless you seek funding), but one that will prompt you to think through your idea to identify potential issues and make sure it’s a viable idea.
Writing a business plan seems daunting to most people, but in fact, it’s not that complicated. I break down each section here. Unfortunately, I didn’t write one for my first business, and it came back to bite me.
If I wrote a business plan, I would have known how much money I needed for startup costs and how much revenue was needed to break even. Luckily, getting a credit card with a $20,000 line of credit was easy during those days, and I needed 4x the money I guestimated for. It took a handful of credit cards to keep me afloat while waiting for my business to gain traction.
Location, Location, Location
I wasn’t confident enough to shell out thousands of dollars a month for rent to secure a prime location on Broadway, where hundreds entered and exited the subway lines. Instead, I chose a spot around the corner which had a decent amount of traffic, was less expensive, but it had its downsides.
I overlooked the fact that there was very little foot traffic on weekends without the office workers. Since there were few residents in the neighborhood, we relied on tourists for weekend business, but it turned out we were too far away from Broadway to get their attention.
If I wrote a business plan, I would have learned that it needs a full 7-day a week business for a coffee bar to operate profitably.
When deciding on a location, identify your target market and make sure you land in their path.
I made the coffee bar stand out by giving it an east village vibe in contrast to its corporate setting in the financial district and called it Klatch (ˈkläch; a social gathering, especially for coffee and conversation).
Vintage furniture, a wall of rotating artwork from local artists, and cherry-picked artisan food vendors were the charm for this homey, community-based coffee bar.
Menu and Pricing
I envisioned an espresso bar that served espresso drinks in ceramic cups along with savory pastries and tempting sweets. I didn’t want to introduce a kitchen to serve breakfast or lunch and make operations more complex. I quickly changed my mind when day after day, the store stood empty during lunchtime as tons of people scurried around outside looking for a meal. I seized the opportunity and added a light lunch to our menu. Wow, what a turnaround. We ended up with a bustling lunchtime business with every seat filled.
When deciding on menu pricing, I did competitive research in the area and based pricing on those findings. But I neglected to calculate the cost of goods for each item to be sure I was charging enough. My margins were too thin, and this resulted in cash flow issues. Coupled with the lack of weekend business, I started to crush under my lack of business skills.
A business plan would have revealed the need and opportunity to generate revenue by adding a lunch menu and the cost breakdown of those items.
This saying is not true — “Build it, and they will come.” No one attracts customers without effort. It takes people multiple interactions to register a brand and engage with it.
Know your customer and tailor your marketing strategy to their needs.
Good Service As A Strategy:
At Klatch, our customers were usually in a hurry as they dashed down the street to get to their desks on time. They had no time to waste standing in line for a coffee and pastry. We needed to be fast and efficient in our delivery and do it with a friendly smile.
Since our customers worked in the neighborhood, we had a chance to bring them to the coffee bar a few times a day. We enticed them through our buy ten and get one free loyalty program. It was a hit.
Make your product and service so good they won’t go anywhere else.
Keep Your Eye On The Money:
It was fun hosting events like art openings, meet and greets, readings, and so on, but our real focus and concern were the workers because they were our bread and butter. I was hyper-focused on making it perfect for them, from product to service.
Sometimes You Get lucky:
Klatch had only been open a week when NY Governor Pataki showed up with an entourage in tow that included a few journalists. It was a photo opp meant to show support for businesses post 9/11.
At the very least, the Governor and his entourage turned heads on the street and made people curious about this new coffee bar called Klatch.
The Importance of Fostering The Right Employee Culture
A happy employee is a happy worker. One achievement I’m proud of and never had to change was the culture I built around my employees.
First, most baristas are not career baristas and are working towards bigger goals. I supported them by being very flexible with their schedules. When they asked for time off or a schedule change, I said “sure!” with a smile even if I was not sure if I could cover their shift.
I treated my employees as if they had a stake in the business. I sought out their opinions on everything from menu ideas, marketing tactics, and any other business decision I was contemplating. It empowered them to be concerned about the business as if it were their own.
As an owner or boss, you set the tone of conduct. I prefer the culture of “nice,” and that was the tone I set. I don’t remember one time where we had employee bickering or backstabbing.
I’m happy to report that I went on to open two more locations in different parts of town that became very successful with a loyal following. One ran for 12 years and the second one was only around for a year before they closed for good because of Covid. They were much easier to launch and run because I made the mistakes previously, and I now had the formula down.
Klatch lasted for a little over five years before it closed because of poor cash flow and unprofitable margins. It was a truly special place in many people’s hearts, and I’m not just saying that because I’m the owner. I believe the parts I got right led to its success. Over ten years later, I might run into Klach customers on the street, and they speak fondly of their memories there. That’s success.
- Date of publication:
- Tue, 05/04/2021 - 17:33
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