In an age when national coffee chains and heavy hitters like Starbucks have been dominating the market, can your local coffee shop or regional coffee chain survive? Indeed, as the year 2019 sets in, the question on everyone’s mind is: Can the small coffee shop owner compete against the big guns and live to tell the tale?
According to foodservice experts, the answer, in a nutshell, is a resounding YES. Not only can your café or mom-and-pop survive, but your java business can thrive if you are industry savvy and:
- Learn about the latest coffee trends
- Learn which demographics are currently leading the pack in coffee consumption
- Understand the wants and needs of your customers
- Create a niche market that becomes your trademark
- Implement key tricks of the trade as they relate to small business owners
Coffee Consumption at an All-Time High
The facts are in: The number of worldwide coffee shops is increasing exponentially and the biggest chains in the industry (do the names Starbucks and Dunkin’ Donuts ring a bell?) are upping their game by offering more menu options, loyalty programs, and innovative recipes to appeal to the masses. According to the National Coffee Association (NCA) and Forbes business magazine, the competition has never been greater nor the playing field more saturated. Not only is the percentage of daily coffee consumers increasing each year, but the market has expanded to include a younger demographic (Generation Y, ages 13-18). And, in the United States alone, the coffee business is a $30 billion/year industry. In the words of the NCA, Americans are one ‘very caffeinated nation.’
Do the Coffee Mammoths Hold a Monopoly?
It wasn’t long ago that a dominant perception maintained that the mammoths were driving out small businesses, creating an unfair and insurmountable monopoly with their financial and marketing clout. However, in an article titled: Starbucks and the Small Business, the authors found others that contend that Starbucks, by promoting consumer taste for specialty coffees, has actually “created the market for the small coffee shop.” And, in a more recent article, in Business Insider, the author states unequivocally that “the coffee giants are keeping an eye out on trendy independent shops” rather than on competing coffee moguls.
So, it seems that currently, Starbucks is actually closing stores while many smaller coffee shops are thriving. So what is the secret to success? What are the dynamics at play shifting the java tides and how can your coffee business cash in on the waves?
Coffee Quality vs. Quantity
According to coffee connoisseurs, here are some answers. While the larger conglomerates have been competing in a race to create the most marketing hype and to bolster their brand by creating the likes of Frappuccino or offering the next 52 greatest flavors of coffee, successful trendier coffee shops have been focusing on quality versus quantity. Consistently making great coffee and offering the finest, freshest brew every time is one of the main keys to success, according to experts, as is creating a niche reputation for even a single familiar product.
Take New Orleans coffee franchise PJ’s, for example, which has built their entire reputation (and now booming business) on a cold brew technique that has been their signature mark for almost 40 years. Ensuring that each of their franchise stores implements the same process, they now boast a loyal following and continue to expand across the region.
This strategy is expounded upon in the Forbes article: “What’s The Secret To A Successful Coffee Shop?” Here is what Peter Bakersville, founder of 20 cafes and businesses, had to say:
“It is rare in business to discover a product where consistently offering 100% quality is the best commercial decision you can make…But espresso coffee is one of those rare products where consistent 100% quality matters. Customers will walk past ten other competitors to get the best espresso, which is why this factor alone means you don’t need the highly visible, most expensive location.” His advice is to: “buy the best espresso coffee machine…install it with a water purifier and demineralizer, use a conical grinder, and only buy top quality…freshly roasted beans, and make sure every cup is made by a fully trained barista” who wants to make the finest shot of coffee – every time.
Know Your Customers
The second major strategy for small coffee shop success is: Know your customers. According to National Coffee Drinking Trends reports, understanding the new coffee consumer and what factors limit or encourage consumption is vital to your operation.
While many of the larger enterprises are forgetting that customers value experience just as much as they do taste, foodservice experts claim that your business will speak for itself if you let your customers and location dictate operations, as opposed to making your establishment a coffeehouse copycat. In this regard, being a small chain is advantageous as it allows you to be flexible and create your own standard.
Part of the allure at PJ’s, for example, is the ambience where the owners play songs about New Orleans and jazz music by local artists, staying true not only to the flavor and tradition of their signature coffee but to the cultural milieu.
In the language of trending java jargon, what we are witnessing now is the ‘third-wave coffee’ phenomenon. While ‘second-wave coffee’ was the movement that saw the rise of gourmet and specialty flavors, emphasizing luxury versus necessity, the third wave focuses on customer experience, how consumers think about their coffee, and how foodservices foster consumers’ relationship with their cup.
More Marketing Strategies for Your Small Coffee Shop
Here are some more tips on how you can break into the market and take your java journey to the next level:
According to the Specialty Coffee Association of America, customers – like owners – are looking to find their niche in the form of their favorite breakfast, lunch, or evening brew. Getting to know your customers’ go-to pick allows you to consistently profit every time they frequent your shop. Your personalized attention to detail and the customer relationships you nurture, almost guarantee they will be back for more.
Create an Inviting Ambiance
Generation Y is the fastest-growing sector of coffee consumers, and what they value are friends, social networking, and experience over price tag. For this reason, in addition to great coffee, be sure to create an ambience that will attract traffic by outfitting your establishment with inviting and comfortable furniture, music that appeals to drinkers’ tastes, and tables that can seat large groups of friends.
Coffee on the Go
Today’s public is constantly on the go and bottles of premade coffee are capturing a significant part of the market. In fact, for today’s largest java consuming contingent, young professionals and millennials, ‘grab-and-go’ beverages are not just a convenience but a necessity. You can cash in on the fast-paced environment and cater to the crowds by selling ‘ready-to-drink’ coffee in your shop.
At the same time, consider expanding beyond coffee to selling java accessories such as travel mugs, coffee cups for the car, ‘smart’ coffeemakers, and even latte inspired art.
Non-Dairy Coffee Alternatives
If you are looking for ways to profit from the latest coffee trends, it’s time to add dairy-free and gluten-free options to your menu. With the number of lactose-intolerant and vegan customers on the rise, demand for non-dairy alternatives has never been higher. Some trending options to consider include nondairy coffee creamers, rice milk, soy milk, and oat milk. Also expected to surge in 2019 are macadamia, coconut, and cashew milks. Finally, be sure to check out the new powder creamers made from maca root, a natural ‘superfood’ with multiple health benefits, such as increasing bone density and balancing vital body systems.
Add Technology to Your Coffee Cup
The age of the Internet has given rise to a wealth of technological tools aimed at making the life of the business owner easier. Keep your foodservice up-to-date and streamline your daily operations by learning how to use the latest software, including tools to manage your coffee inventory, process orders, provide point-of-sale transactions, track consumer behavior, and more.
Finally, be sure to maintain an active social media presence and regularly update your profile. With platforms like Twitter and Facebook accessed by millions daily, this strategy alone is worth its weight in java business gold.
The fate of the small coffee shop is anything but gone. It’s looking brighter than ever, and you can capitalize on it by perfecting a signature product, following industry trends, and above all: understanding and catering to the wants, needs, and culture of your customers.