In the second of my blog posts on starting a coffee shop, we will be taking a quick look at competition and how to interpret it.
On a high street increasingly filled with chain coffee shops and franchises as well as independent café bars, not to mention every restaurant and bar now serving a “gourmet” coffee menu, it is easy to feel overwhelmed by the sheer quantity of competition.
However, no matter how many other cafes on the street, one thing will be apparent – if there is a market for them, they all will thrive.
The trick to understanding how the presence of competition can affect you is to firstly stop thinking of them as competition. The presence of cafes, bars and restaurants are key to identifying up market or flourishing areas, and in such areas, can feed off each other to create a buzz, and to make an area synonymous with leisure. You, as an independent, can benefit from the investment that other stores have already put into creating this area, and feed off the marketing they have already done.
The trick to understanding how the presence of competition can affect you is to firstly stop thinking of them as competition
This won’t, however, come without a price – rents in such areas can be sky high, and price from street to street in suburbs can vary dramatically. Look for other independent cafes and stores in the same location – are there any? Do they fit into the street comfortably with the branded stores?
High street cafes are all about location, and picking the right location can make or break the survival of your business. Opening a café in an area where there are no cafes already can actually be riskier than opening one in an area heavily populated by food and drink outlets. If there is no such business in an area already, it is highly probable that the need for it is simply not there.
It is also important to look not just for the existence of competition, but also its longevity. If other businesses have opened, existed and actually flourished (look for signs of expansion, redecoration, extended opening hours etc.) then the precedent has been set for success.
However, if the area in question has a high turnover of coffee stores, and the stores which are there are run down, closed several days a week or have a very limited menu, think seriously about operating from that spot.
Ultimately however, your final decision must come down to your bottom line – keep on eye on the rents and think realistically and seriously about how many coffees you as an independent store must sell to maintain your position. A branded store will have the weight of a company behind it, you will not. Don’t take on what you are not comfortable with, no matter how tempting the location may be.
