When Is The Right Time to Quit a Business?

oztite on 29/09/2017 - 13:02
Last edited 02/10/2017 - 13:07

Hi, seeking some public opinions here. When is the right time to quit a business? A bit of background:

Business: small coffee shop at the ground floor of a fairly isolated business building in a Melbourne south east suburb. Only customers would be workers in the same building.

Business model: people working in the building would buy coffee from me. Based on the number of people working in the building, there should be about 50 customers per day. Don't expect customers from elsewhere given its location.

Closest competitor: about 7-10 min walk down the street, established coffee shop where the workers of the building seem to go to

Lease: 3x3x3

Rental: $8,000 per year

Running cost including staff salary but excluding my own salary: $45,000 per year

I still hold my old job, and only work there two days a week, using my salary from the other 3 days to fund this business.

Problem: no one is coming through… we are getting about 5 people through per day at most and it has been just over 3 months now since we opened. All the people in the building have seen the shop but just not coming through.

Question: when should I quit given this unique situation? Advertising is not an issue because we are only there to serve the building, and people have to walk past the coffee shop to get to work.

EDIT:
Better fit-out, increasing range of food, hiring better baristas are all good suggestions but they all cost more money. For a big cafe it may be ok, but for a small coffee shop it is difficult unless I blow all my savings…

EDIT 2:
Missing a pretty, attractive, flirty, sexy extrovert in the cafe and run a free coffee day/ week seem to be popular advice.

EDIT 3:
Thanks everyone! So many great advice here, too many for me to respond to one by one. Really appreciate everyone's input and in hindsight I was ill-prepared for this business. Lesson learnt and will try some more promotion before closing it down/ selling it for a token. Hopefully some wannabe cafe owners out there have gained some experience from this too.

Poll Options

  • 189
    Shut down tomorrow, bad business model to start with
  • 30
    Give it another 2 months with more promotion
  • 4
    Invest more on fit-out, food range, barista quality etc. Get rich or die trying.
  • 3
    Cut cost even more, reduce opening hours, try and ride out the lease
Financial

Comments

  • zpclmyy on 29/09/2017 - 22:47

    you need to start selling a variety of foods as well or you won't be able to get 50 customers per day once the offices brought in their own coffee machines for their staffs with quality beans. Go and pay a visit to any busy foyer cafe around you to see what they are selling and simply copy them at this stage. Try to get catering afterwards to grow sales. Mate. good luck. just my 2c.

  • outlander on 29/09/2017 - 23:13

    Is it a standard store or a open stand? In other words do you have to walk to the counter to get your coffee?

    • outlander on 30/09/2017 - 11:10

      That should have read: Do you have to walk through a doorway to get your coffee?
      Very important point of difference for an operation like yours

      • oztite on 30/09/2017 - 11:54

        Yes there is a door.. but you can walk through the door via the lobby of the building, so you don't have to leave the building..

        • outlander on 30/09/2017 - 12:14
          +4

          Theres your problem. When it comes to coffee shops, its either a nice place to sit and relax, or its a cup to go. You're in the middle, compromised in no mans land.

          Picture me, the average office drone. It's lunch time, I've been granted a brief respite from my meaningless duties, and I just want to get away from this building where all my stress seems to come from. Theres a coffee shop in the lobby, but to get to it I have to walk through a door. A door is a barrier, a weak one, but even weak barriers can be enough to discourage. I might go in if it had the right atmosphere, but this one is bland and basic, just like everything in this building. Plus I'll see the people I work with there, and I really don't want to spend any more time with those people and their fake niceties. Instead, I tell myself I'll get one from the coffee place 10 minutes down the road. It's cheaper, and the walk will do me good, and it will be nice to be around grass and trees and feel the fresh air blow on my face.

          Starting to get the picture?

        • PuppieWayne on 30/09/2017 - 12:27
          +2

          Prop this door open with an A-frame board advertising your daily special. NEVER let this door close - ever!

        • oztite on 30/09/2017 - 12:29

          @outlander: Yeah… good point, when you put it that way. When I started, I thought being convenient would be an advantage. But if people actually prefer taking that walk, then the business model is dead because we certainly can't compete with them in terms of fitout and staff…

        • outlander on 30/09/2017 - 12:42
          +3

          @oztite:

          Not exactly my point, but yes if your not willing to do what it takes quit now before you sink further

          My advice would have been to cut a hole in the window, and setup a counter so people can walk by and grab a coffee on their way in/out of the building
          Focus on speed rather than quality, and have nice cups

        • ajGold on 30/09/2017 - 22:16
          +2

          @outlander: I think you nailed some of the psychology here. A door is a barrier and many successful coffee shops in the lobby of buildings seem to be open plan or readily accessible. OP should notice that low walls are more popular dividers for coffee shops.

          Another factor might be the sheer lack of patronage itself being a turnoff. OP may need to look popular to be appealing. Rewarding existing customers incrementally might help. Include a biscotti or licorice bullet or tiny-teddy with their coffee. When they come back a few times, offer them something occasionally that might encourage them to sit awhile. Perhaps a 'melting moment' biscuit served on a plate?

        • GaryQ on 01/10/2017 - 03:07
          +2

          @outlander:

          There is a coffee shop in Collins St 50m from Southern Cross Station. Huge foot traffic in the morning.

          There have a shelved counter with sandwiches and rolls / baguettes, and a barista taking orders for custom coffees. They also have a really cute french girl standing in an open window with a sign "Flat White $4 - Hot, just like Colette"

          So people have a choice - go in and order, or have change ready and grab a coffee from a smiling girl on the way past

        • outlander on 02/10/2017 - 12:29

          @outlander:

          Heres an example of a business doing it well
          https://files.ozbargain.com.au/upload/24621/52638/img_201710…

          Its not even a coffee shop! Yet it gets huge traffic because people intent to walk by, but get stopped by the inviting nature of it. Without that window the place would be empty

  • edwardcr on 30/09/2017 - 00:09
    +3

    If you're only getting 5 people a day I tthink it's a lost cause.

    You really must be doing something wrong if people are prepared to walk 5-10 minutes down the street.

    People have become much more sophisticated about the quality of their coffee in the last couple of years, and expect a high standard, even in a small place.

    Given your very limited customer base I really can't see the point in investing money to expand into food etc.

    • ankor on 01/10/2017 - 22:51
      +3

      Yup, pretty safe to say he's already exhausted the goodwill of an opening. Probably a huge number of factors towards a successful coffee stand weren't taken into consideration..

      Those hipster looking kids are probably also working on something like a Five Senses or St Ali roasted account, which gives them a $25K setup, not including two or three grinders to do different bean blends, single origins and maybe even some type of filter. Then you have the expanded food service and the better surrounds overall..

      oztite sets up with a mini stand and cheap coffee, perhaps with someone who isn't as well trained as one of these 'hipsters', then 5-10 people try the new place, tell everyone else in the building, and voila- dead business by week 3.

      I suggest shuttering it, and for the next thing you do, look at a consulting company like cafe biz to help you out with these things.

  • cannedhams on 30/09/2017 - 00:11
    +11

    http://www.slate.com/articles/life/a_fine_whine/2005/12/bitt…

    The amount of friends Ive had who have put themselves through hell on account of a coffee shop or restaurant just depresses me.

    Apart from personal trainers, no other market is as over saturated. However, if youre a PT at least you dont have a lease to pay out.

    Most people will tell you they can distinguish good coffee from bad, or cheap wine from expensive stuff. Most people are liars. The bottle is what makes people think the wine tastes good and the decor and the tattooed funky chick with the big boobs is what makes the coffee taste good.

    Watch this video of people convincing themselves that they can distinguish between two cups of identical coffee

    http://www.dailymail.co.uk/news/article-2240180/Jimmy-Kimmel…

    • dcep on 30/09/2017 - 00:18
      +4

      i guess OP can cut cost by hiring a high school tattooed funky chick with the big boobs, instead of a barista to make coffee.

      • cannedhams on 30/09/2017 - 05:59
        +8

        In all honesty he could do a lot worse. Look at all the witty banter and mild flirting that accompanies the purchase of coffee. For a lot of guys in sexless marriages this is the only regular female interaction that they have. Of course theyre not going to give that up over a 7 minute walk.

        • [Deactivated] on 30/09/2017 - 08:54
          +3

          That's a very profound statement and I suspect very true. Men have a natural attraction to attractive women. Sex does indeed sell.

      • tryagain on 30/09/2017 - 12:08
        +2

        Most of the food trucks that service building sites etc seem to be attractive backpackers wearing small tight clothes. There is a reason for this.

        • oztite on 30/09/2017 - 12:32
          +3

          Honestly, before I started this business, I never paid that much attention to how people look when I order coffee - maybe I do but at a subconscious level. Now that I am running a failing business, I start to see it everywhere.

          I am starting to think it's actually a huge part of the business - to hire attractive people.

        • tryagain on 30/09/2017 - 13:17
          +1

          @oztite: I think looks do play a decent part in a situation like yours, although I think personality is even more so. You really need someone with great personal skills, someone out going who can build a rapport with the people working in the building.

          Maybe a different approach could be to get a barrista as a business partner as opposed to an employee, you supply the rent, equipment etc they provide most of the labour. This might be a better carrot to attract the right kind of person and reduce your overheads. I'd be upfront about the current situation to any prospective business partner though.

        • cannedhams on 01/10/2017 - 14:17

          @oztite: I wouldnt necessarily say that they need to be absolute sex bombs but they probably do need to be of a certain age, and have that hipster aesthetic about them. At least most of them seem to look that way. I suppose there is a certain look that people associate with a barista.

          However, I think that the bigger problem is as per the cafe owner above said, most cafes in the foyers of buildings tend to be lacking in ambience.

          Are you able to deliver coffee to the people in the building?

        • ankor on 01/10/2017 - 22:52

          horny food truck owners?

    • oztite on 30/09/2017 - 12:00

      I spent a lot on getting good quality equipment. I admit the staff I hired are not particularly attractive. In fact, they are probably quite the opposite of attractive, but they are nice people, just not flirting with every customers coming through I guess. I probably chose people more based on their integrity/ honesty given they are going to be there without me for 3 days of the week, and I didn't want them to be stealing from me or simply not show up to work (I wouldn't know). I guess in hindsight I should have hired the more attractive people.

      I didn't really get any attractive/ flirty people applying for the job though… Just the nice type but definitely not sexy/ flirty. I wonder if I had put something wrong in the ad… Surely you can't say "Looking for a flirty barista" on Seek?!

      • Slippery Fish on 01/10/2017 - 11:44

        "seeking large talking breasts, must appear promiscuous, able to work long shift and be flexible in all applicable positions"

        That'll get you both lawsuits and big butch lady's ready to reach up your bum and pull your head out of it lol. But the butch feminists girlfriends will be pretty.

        Lol now I wait for the hate.

      • danyool on 02/10/2017 - 00:20

        given they are going to be there without me for 3 days of the week, and I didn't want them to be stealing from me or simply not show up to work (I wouldn't know).

        You could get an IP camera - then you could check in any time. (Well, check if they are there at least)

  • PuppieWayne on 30/09/2017 - 00:34
    +4

    How extrvert are you? Did you do a grand opening?

    Have you been to the other shop and trial out their coffee and compared that to your's.

    Everyone I know will happily pay $1 extra for decent good coffee as opposed to mud water.

    Once you have done the above, I will do a grand opening and for that ONE day - free coffee to EVERYONE. At worse, you will blow $300 + salary but if your coffee is better and all, that money you blow will be less than any advertising you do.

    Friend used to offer coffee delivery, but then he realised that MOST people wants the walks.. and that might be an issue also, the workers might enjoy the 10min walk to clear their head; sadly, I am in the group, I rather waste 20min getting a bubble tea than work.

    And I hate to tell you this as well, hiring a nice looking staff will help - it's about getting customers to come in and chat with them etc; and make the whole place hippy like, you know, gluten free this, vegan muffin that. People LOVES that shit..

    If you don't think those are good idea, it's best to shut down shop.. or try and sell the business for a token $1.

    • oztite on 30/09/2017 - 12:03
      +2

      I am not very extrovert, and neither are my staff… that is a bad thing I know now. A lot of people have mentioned the hiring nice looking staff, and honestly at the start I thought about it too, but as applicants came through, none of them was particularly good looking/ flirty, and I kinda talked myself out of the need of a "sexy barista"… In hindsight that was probably a big mistake. They are very nice people though, like I feel really bad even saying this. They are good staff that are willing to work hard, just not born a flirty. That, I start to think, is quite a big problem of the business…

      • dealman on 01/10/2017 - 15:39
        -1

        add to this the fact that they are non caucasian indians, not a stereotype you'd traditionally associate with barista, I think this is a small part of hte overall probvlem

    • llllllllllllll on 01/10/2017 - 17:44

      Walking 20 mins to get a bubble tea from work break, you're living my dream Sir.

      • PuppieWayne on 02/10/2017 - 00:04

        The trick is offering to buy the boss one also, then the boss doesn't care how long you are gone for, as long as he gets his Rose Ooolong Tea with Poping jelly when I get back. lol!

  • abently on 30/09/2017 - 00:44
    +1

    If you read all the responses carefully, there are some very good points made…

    Chances are people just want to get out of the building / work to take a break.

    I suspect you could boost your margins with better food selection but you need to be creative…. maybe gourmet sealed sandwiches etc?

    The end problem is you still need to generate significant sales to make it a low profit business… is it worth the effort? Depends how much it means to you..

    I wouldn't try to compete on price but on offering something the others don't but people want.

    Even think outside the square, is that retail space better suited to some other type of business that will generate more sales per day with same or less overheads. I would almost see if you could sub-lease it to advertisers / sales guys who sometimes just want a spot for a week each to approach 95% of the foot traffic with their product.

  • msimpatient on 30/09/2017 - 00:47
    +10

    You need to consult some other people on your business model.

    You sound very logical but like you have no flare.

    Just because you value a cheap, close cup of coffee doesn't mean everyone else does.

    I wait for 1 coffee van to turn up at work or I don't get a coffee. He doesn't even sell food. Just coffees. But his coffee tastes good, is never burnt and he is a lovely guy to chat to.

    For you I would suggest the following

    1. Speak to family and friends about their coffees. Go to a high density cafe area and strike up convos with coffee drinkers
    2. Go to the businesses on site with a proposal to give their staff a treat. In return for a very low price (make sure you still make a tiny bit) they give coffee vouchers as a treat to their staff.

    All at once (some workplaces do treat days) or as rewards.

    As a new starter we were given a free coffee voucher for the local cafe.

    The workplaces will pay upfront and then more staff will be motivated to try your coffee.

    1. What's your actual point of difference? What extra service do you provide that makes your customers go 'wow'?

    A place i went to gave a tiny biscuit on top of the cup. I paid 50cents more and walked further to buy from them because the first time i got that bikkie it was such a pleasant surprise, i relived it each time i went there.

    1. Make sure you have card facilities. If i can't use my card, i can't buy. Get one of those chips that attach to a phone. This is a huge draw card.

    2. Take at least 2 weeks holiday from your job and work there full time. Have friendly chats. Don't ask people what they like about their coffees. Ask them about themselves. Their day. Holidays. Build a rapport.

    3. Don't get caught up on the whole equipment etc. Most of your business is about connecting with people and making their day better.

    People buy coffee to wake up, feel better, treat themselves, taste and to enjoy a small luxury… Make sure you are making this happen!

    • oztite on 30/09/2017 - 12:07

      That is a very good point about logical but no flare… That's exactly how I feel about some of the smaller coffee shops that are successful, they look so "cool" and "hip". I tried, but in the end couldn't delivery that "x-factor". I think my fit-out is not good enough, and the people running it are also not , as many have mentioned, sexy enough.

      I have card facility (costing me a bit actually, having used it rarely due to the low customer volume)

      I did get caught up on expensive equipment. Probably should have spent more on getting the right staff in the end…

      • effgee on 01/10/2017 - 11:05
        +2

        a good barista will make a much better coffee on crap equipment than an unskilled barista with the most expensive equipment. It's not about hard work, it's about passion, skill and experience.

        Extroversion is a 100% requirement to work in the business you describe (poorly located cafe). If you're not engaging your customers (doesn't have to be flirting) then they simply won't come back a second time or recommend your cafe….as you are finding.

        How good is your coffee ?
        Are you anything of a coffee nerd, to be able to judge ? If not, find people woh are, and give them free coffee in exchange for honest feedback.
        Is your barista capable of making different coffees to suit people's requests (and I don't mean espresso vs latte).

        Possibly being cheaper than the opposition is working against you, plants the idea you're selling inferior product.

    • danyool on 02/10/2017 - 00:31
      +1

      Take at least 2 weeks holiday from your job and work there full time. Have friendly chats. Don't ask people what they like about their coffees. Ask them about themselves. Their day. Holidays. Build a rapport.

      Think this is good advice (assuming you are going to try and continue)

      One idea I had if you contact Donut Time or similar and see if you could do a pop up shop? Might generate some interest - depending how crazy people are for $6.00 Donuts?

  • PuppieWayne on 30/09/2017 - 00:54
    +1

    One other thing I though of, most business does not give a time limit for coffee breaks but they do for lunch break.

    Most workers will not blow 20min back and forth to get their lunch from the other place so you might want to look at providing warm food; such as package chinese Chicken Rice, Mee Goreng, Curry Chicken and the popular Sushi.

    All those you can source out from outside to be supplied, or approach people to 'rent' your location and you get a cut.

    Or, working on free coffee.. for one day, make like 60 cups of coffee and just get your staff to give them to people getting onto the lift in the morning.. with a little card also that give them 50% for the next cup.

    Try and force a habit for them to get used to getting down the lift and going to you for coffee.

    • oztite on 30/09/2017 - 12:09
      +2

      I actually see them, coming down, walking past my shop, and 15 min later return with a cup in their hands… It's a soul destroying experience tbh…

      I'll give this free coffee thing a shot thanks.

      • PuppieWayne on 30/09/2017 - 12:20
        +1

        Give this ONE last try; find out if they ever do a 'Friday' charity thing witha gold coin donation. The place I used to worked had this..

        How many staff have you got? Beside the barrister, you might have to tell the other one that you need to cut down their hour and I can guarantee you they will hand in their resignation.

        I used to be in business myself - had 2 staffs that I thought were 'wonderful' as well.. until the business run into trouble, they asked for pay rise, told them can't justify it and they both quit.

        Once they resigned, hired someone that is extrovert, pretty and (I know, weird) have tatts.. and get HER to serve and chat with people when you do the above; you need just a few advocates to pull their friends.

        All the above will take a few months, talk to the landlord and tell them the situation.

        Otherwise, start advertising your business and sell it for a token $1. Someone might look at your business and have more experience and willing to buy it and all.. you would have lost, but at least you will get your bank gtee back.

        • oztite on 30/09/2017 - 12:39

          Can I ask, did you notice an increase in business after hiring that pretty girl with tatts? I definitely am missing someone like that in the business. I don't have any extrovert working for me (and I myself am not really one either).

          When you say you used to be in business, can I ask what happened in the end?

        • PuppieWayne on 30/09/2017 - 12:49

          @oztite:
          Sorry, I meant for YOU to hire someone with tatt once your staff quit cause you cut down their hours. The way I wrote it was badly structured.. sorry.

          I never hired anyone with tatt, not for the lack of trying but it didn't happened.

          Mine didn't go well, I had the HQ and the shopping centre that I lease the shop from against me from day one - they basically lied and told me they were doing a $40M renovation which included putting their main car park right where my business was (it currently is located at the back facing a pit - no one knew I exist); once the lease was sign, that never happened - long story.

          I sold it for a token price and walked away..

    • Quagles on 01/10/2017 - 11:49

      Totally agree. I use to work somewhere with a coffee shop right in my building. Rarely went to it. Went to the one 5-10 min away. Liked the walk. Liked being able to talk to colleagues without other colleagues in the same shop listening in.

      Lunch time though I highly valued somewhere quick and fast as who wants to walk back with hot food to the office to eat then it's cold on arrival?

  • OzzyOzbourne on 30/09/2017 - 01:38

    When it goes bankrupt

    • oztite on 30/09/2017 - 12:08
      +1

      Technically speaking it is bankrupt. It never made any profit from day one…

  • [Deactivated] on 30/09/2017 - 02:42
    +8

    as someone who owns a coffee shop your problem is the location.

    People who work in the building don't want to be seen in the foyer 'not working' if you know what I mean.
    They want to go somewhere to get out of the building for some:
    -Privacy
    -Activity/light exercise or just stretch their legs
    -take a break from their work environment ( and not look like they're bludging while doing so).
    My suggestion is pack up now or provide some extra products for a few months.
    eg: Smoothies/fresh healthy drinks and/or Sushi.

    But yeah, the location issues are paramount and you're not getting any new potential customers.
    It's the same people every day who probably don't have a problem with your coffee/product or service- It's that the location is just too close to work for them. I would probably get out now.
    source: have owned cafe for 9 years. Rent and location are 2 most important factors.
    Your location is terrible by the sounds of it.

    • cannedhams on 30/09/2017 - 06:15

      This is excellent advice. Ive noticed that a lot of coffee shops in lift foyers tend not to do outstandingly well. The desire to escape from work is also very significant.

    • oztite on 30/09/2017 - 12:11

      Thank you. Yes that I think is a huge problem. I build the business model on convenience and I guess "cheaper" coffee. In the end people actually want to walk around (guess that's time not working) and people don't care about spending more on coffee!

      One advice I got at the start is that my coffee must be a bit cheaper than down the road. Honestly, I don't think people care about that at all…

      • [Deactivated] on 30/09/2017 - 13:17
        +1

        not really when you're working in the city and making 80K-100+ a year at least. It's about your lifestyle and your 20 minute break each day is a big part of that lifestyle.

        • BartholemewH on 02/10/2017 - 06:47

          Exactly, OP they aren't walking to avoid working, some of them are likely in high stress positions or spend the entire day sitting. This is important when working out what they get out of a cup of coffee.

  • pennae on 30/09/2017 - 04:39
    +1

    It also sounds like you need the draw of an established coffee brand that people will support. How about Sensory Lab coffee? And have different blends on different days so people try them out… Their marketing guys know what they’re doing judging by the brand visibility when I was in Melbourne last week!

    If people are buying coffees with corporate cards they’re not going to be so fussed about loyalty cards/free coffees. But if the sixth coffee went to “pay it forward” or the profits for the sixth cup were donated to a local school P&C or charity, then customers may be more loyal.

    Your initial question was when to quit - the general consensus seems to be “as soon as you can” but why not try out some strategies before your lease is up?

  • KingJuf on 30/09/2017 - 07:02

    Try hand out pamplets with a free coupon for coffee and market your place abit more. Alternatively have a big bang free coffee day with more than 1 staff perhaps and see how that goes. I can see the situation you have being quite normal, coffee drinkers dont usually just switch places over night. There needs to be an incentive and onpar quality coffee for it to work. Plus you need to build a good rapport with the customers that do come through, start by remembering their order then their name perhaps.

    I wouldnt have started this myself, but considering you are already paying a lease you may as well try different marketing tactics for the next month or so and then decide whether its time to close up shop.

    Goodluck and hope your situation improves!

  • htc on 30/09/2017 - 07:53

    Skimming through comment above, I think if op is a barista, he could save more money. I think most small business start with the owner doing everything to minimise cost. I think this business is more suited to someone who is very passionate about food and coffee. I think people who spend money to buy coffee usually focussed on quality. Otherwise they can make the coffee by themselves from the office. Think of this experience as your tuition fee, if you are keen to make money by business, don't give up, i think your next one will be more successful. Thanks for sharing this experience. Good luck

    • oztite on 30/09/2017 - 12:33

      Thank you, that's how I see it. Someone said an MBA is similar price but you are getting the real world experience. Sigh, still sux to lose money like this. I can calculate the exact amount I lose everyday. I am trying very hard not to convert that amount into "what I could have done with that money" at the end of the day, cause that is really painful to think about.

  • qwerty on 30/09/2017 - 08:30
    +1

    Go up to each business and offer coffee delivery - do this with the ones inside first and then branch out, advertise outside even little signs in peoples yards on main roads - offer them freebies in return for having signs placed because even if you think its in the middle of nowhere right now you have 5 sales a day so even a couple extra people coming in a week could double your business.

    Next is a loyalty card system imo so workers have a reason to go to you .

  • chrisburnett on 30/09/2017 - 09:10
    +2

    I have a large cafe over the road from a large office. We possibly make only $300-$500 a day selling coffee, cake, pizzas and toasted sandwiches. There is considerable foot traffic too. Two staff on for most of the day. Where we make most of our money is we are a bar at night. In the two hours from 4-6 we can take $1300 easily. I spend a lot of time in the hundreds of small cafes that have opened up in every small space in the inner north of the city counting staff members to customers and can’t work out how any of them survive.

    If your space is small, I suggest you go to North Melbourne and watch what the people at Pocket are doing. I couldn’t think of a worse place to hide a cafe. It is the size of a small bathroom yet really cool with a few staff and they are killing it. Tiny, hidden and people are seeking them out. To do well you need to look cool and high end. If you look like cafe from the 80’s you will be ignored.

    I hope it improves for you. It is a stressful business to be in for small profits. Everyone has jumped on the bandwagon and there’s only so many people to buy the coffee. You need to sell lots to make a little.

    • oztite on 30/09/2017 - 12:15

      I see.. yeah, well I belong to one of those cafes and I can confirm it's very difficult to survive. It's only holding up because I am putting everything I earn from my other job into this.

      That's very interesting the differences in revenue between the bar and the day time coffee shop. I don't have a licence unfortunately, and the space is too small to be converted into a bar.

      Would your business survive if you didn't have a that revenue from bar at night just out of curiosity?

  • Mary Poppins on 30/09/2017 - 09:12
    +7

    Hi Oztite, Would you be willing to give location of your coffee shop so some Ozbargainers could come try your coffee and give you their support/opinion?

    • PuppieWayne on 30/09/2017 - 12:23
      +2

      Excellent idea, if I'm in Melb, I would drive that extra mile just to get a coffee from you. I am a coffee'lohic.

  • DiscoJango on 30/09/2017 - 09:13

    there could be a variety of factors as to "why" employees go to the shop 10 minutes down the road, than to you. i suggest asking honestly, from an employee you have built a relationship with, why people dont come to you. it might be something as simple as, people just want to get out of the office. taking that 10 minute walk is like getting a breath of fresh air. whereas coming to you, its not much of a break, they still remain in the building. it could be that, your coffee just isnt that great. customer service could be another: if your employees look and sound depressed, that could be a deterrent.

    consumers have so much choice now, we can afford to be extremely picky, and finding out why can be tricky. i for one certainly am, and always vote with my wallet. if theres something i dont like about a shop, i just wont come back. could be anything from the ambiance, wait time, size of shop to how the person behind the counter looks and acts. if there is a shop 5 minutes away that i feel much comfortable in, then i will go there. simple as that.

    this is exactly the case in my office building: at ground floor there is a cafe, they are terrible, they cannot even get a simple coffee or toasted sandwich right. there is an excellent cafe about 5-10 minutes walk away, and even if its cold, even if its raining, you will see employees walk the 10 minutes to get their morning coffee, than to go to the cafe right in their own building. the cafe owner easily sees people coming back with coffee from the other place, and i have even offered them honest feedback: your coffee is, pretty bad. but they refuse\cannot change, therefore people dont go.

    hope this helps you, and dont forget, life is all about failures: you live and learn :)

    • oztite on 30/09/2017 - 12:18

      That sounds very much like my current situation. You are right, the competition is tough. The advantage of being in the same building I don't think is very useful at all. People don't really value that unfortunately. It's also not that easy to create that right "vibe". It's very costly and not guaranteed.

      I am trying to remind myself just that, see the failure as a learning opportunity, hence this post. Maybe others can learn something from it too

  • Aceboy884 on 30/09/2017 - 11:07

    $8k a year rent is dirt cheap

    I pay $5k a month to google

    • oztite on 30/09/2017 - 12:20

      It is very cheap. But as a result, I think it does affect the shop's image.

      It is a very low operational cost business if you compare to other businesses, which is what made me comfortable at investing in it at the first place. I only need like 1/100 of what other cafes get to survive. Unfortunately I am not even getting that…

      • ankor on 01/10/2017 - 23:04

        About 9 years ago, something similar happened to a coffeesnob who was IT by day, and coffeesnob by weekend. I used to be in the coffee industry back then, and he went around to a bunch of different cafes all around australia, and even decided to do a trip to espresso vivace in seattle. Then he decided to open up in a dead shopping mall, where the only foot traffic was probably less than 250 a day, and most of that was straight to the dominos next to him, or to the supa iga that was in the same complex .
        He thought he was getting a great deal in rent, but it really wasn't because of the following:

        1) bogan area
        2) all the coffee drinking types were drinking at coffee club in the main shopping centre about 400m away from this mini-centre he went in with
        3) no anchor tenants in the mini-shopping centre
        4) major renos to this shopping centre at about month 4 so it drove away the meagre traffic that he had
        5) about the only people that bought anything from him near the end were the dominos workers who felt sorry for him

        The most remarkable thing was that every barista he spoke to, including myself, told him not to open a coffeeshop in his appointed area, because we were all of the opinion that the region hadn't developed that level of latte-sipping yuppyness yet. It was a very sad and harsh lesson that could have been avoided.

  • NotSureIfSerious on 30/09/2017 - 11:20

    Another factor I may have missed or not read but do you do eftpos? I refuse to go a coffee shop close to work that is cash only because I don't like to carry money to the office. As others have said, people would like to go for a walk and get a coffee or a feed in one convenient place that isn't in their office building.

    Even if you get your targeted 50/people per day then what? You need to expand and spend more money to entice more customers and since you're in an office building, that number is never going to increase enough to make it worthwhile. I know your approach was conservative but you cannot operate a business that just breaks even. Business owners that open a second store do so because their profit margin is good, if they are just breaking even then they eventually give up or invest more money to get it into the green.

    • oztite on 30/09/2017 - 12:22

      Hi, yes, it's not a great model. My thoughts were:

      • break even or make a small profit on this low budget trial
      • open up a few low profit chains
      • hopefully with multiple low profit margin cafes I can eventually make some money once the number of stores increases
      • serpserpserp on 30/09/2017 - 17:40
        +2

        Wouldn't you rather just open up a high profit café? I don't think that requires a lot of capex either, I think a bit thought into what you want to deliver in terms of your customer proposition and dedication to service goes a long way.

        I know a bloke that opened essentially a "coffee cart" style right out the front of a big CBD building in Sydney. He didn't have much of an offering expect for cookies, muffins etc. a decent coffee that was served as fast as he could with a smile and remembering repeat customers names. He also did an extremely cheap "happy hour" around lunch time to bring in the customers. took him about 18 months but he turned that thing into something profitable so he could step out and start a new venture.
        The business had about 10 full service cafes within a 300-400m of the building and he still had people queuing up, and it wasn't about a wide variety of offering, it wasn't about using the most expensive coffee (although he did use something mid-range and could make a very good short black with his equipment), it was essentially all built on convenience (the angle you have covered) and service, it was all service really.

        • ankor on 01/10/2017 - 23:06

          This sounds like those tobys estates coffee carts from way back in the early 2000's. They were thriving back in the day.

  • OldSchoolHarry on 30/09/2017 - 11:32
    +2

    Can you offer delivery to offices?

  • [Deactivated] on 30/09/2017 - 11:34

    Do you do catering as well? Perhaps try and break into the catering market for meetings, etc. Relatively easy to do as you normally get a days notice.

    • oztite on 30/09/2017 - 12:23

      No, we don't have a kitchen as such. The only way to do it would be to order from somewhere else, but then I am really just doing the delivery only…

      • Punda on 30/09/2017 - 12:57

        It would be at least a service you can offer by teaming up with another local business.

    • juventino on 02/10/2017 - 18:27

      nah , dont do it. if people arent buying your coffee, they won't ask you to cater for their function either. Unless you are able to build rapport with the office manager or something

  • tryagain on 30/09/2017 - 12:28

    I think a free coffee week would be better than a free coffee day. I'd split the business up into different day's over the week, if you do it for one day, you run the risk of being overwhelmed and losing the opportunity to make a good first impression.
    I am interstate but there might be some other Ozbargainers near by happy to try it out and give you there impression if you post the location. It's a bit hard to comment on things like fit out, coffee quality, staff performance etc without actually going there.

  • Sensiekatie on 30/09/2017 - 12:34
    +1

    Have you loooked at the mobile van coffee people who move from business to business.

    Up here, some have a permanent route + others on certain days. They will go to parks (parties/picnics crowd) and bar-b-q or parties. can also hire for an hour or a day - saves making coffees/teas. Great for events.

    We had a new coffee business set up in a shed (near industry sheds) and they toast and stuff in front if people so the people go to watch. At first it was just coffee only - early start and off by 2.

    Then they put out a food van out the front to assess feasibility (hired someone to be there). It was, so now they have food. People come from all over now.

    It is a very unlikely spot but very different business model. The man took a gamble and it paid big time. He did some time with one of our coffee companies and learnt his business - years prior. Now he has his own and it is unique - and good. The coffee is the Central focus of the model.

    Having worked in this type of building, they are many coffee connoisseurs and they will make their own at work and drink only that. They will walk for miles to get their taste. Many others never leave the building. Not everyone needs a coffee to or from work either.

    Occasionally, they will meet a friend or coworker/s for coffee out of the office. Thus, seating is good - even outside if allowed. Many sit at their desk for everything and work - not healthy but they do! Others go to the lunch room to eat/gather (if there is one).

    Therefore, what I am saying is if the customers don't come to you, maybe you need to go to them, if you have permission to do so. Even just going and collecting a group of orders and then delivering. Find out popular times - mid-morning and afternoon are pick-me-up needed now hours for sure. However, some offices have people who start earlier or later And their pick-me-up time is different.

    However, make sure that the coffee is good. The non-movers (or those who have health issues) will pay a decent price for this service. Do some homework and see if there is potential interest. It may only be a few offices. Some may appreciate it only on meeting days - the refreshments arrive for the meeting. This could be even ordered 2-3 days before at a certain time. Almost catering. In fact you could do savoury/fruit/sweet platters (even wraps/sandwiches) without any need for specific facilities or qualifications. Just a food handling training kept up to date.

    There was saying if xxx won't come to the mountain, then you have to bring the mountain to xxxxx.

    Try sample offers to gauge interest.

  • Punda on 30/09/2017 - 12:54

    Why not ask one of them why they don't frequent your shop? Maybe they offer discounted coffee to them? Could you offer them delivery? Do you push social media? Do you offer anything other than a coffee? Is your shop warm and inviting? Who runs that complex? Why not do some promotions? Ask coffee suppliers to push you on social media. Try!

  • swen83 on 30/09/2017 - 12:59
    +2

    Personally I think the problem isn't just the lack of customers, it's also you aren't running it yourself. A small business like this you need to run full time to see any realistic income from, unless you are just straight up trying to launder money, and you obviously aren't. If you get to the point where you are absolutely killing it, then put someone on and free up some of you own time for other things.

    You either need to: drop the employee and work it yourself full time, promote like crazy in your target market (letter drops, offer meeting catering, meet and greets etc) and provide incentives either loyalty/discount/cheaper than primary competitor.

    or: give it away.

    You cannot keep pouring money from your other job into this without a solid plan going forward. I feel you would be better off investing this money in yourself (Put yourself through the barista course) or some other investment that could provide a return. It sounds like you are going to work to pay your employee's wage at the moment.

    I'll likely get flamed for this, but if i'm completely honest, when i read your post my initial gut feeling was you were not committed and had no idea what you were getting into.

  • mr_fjackson on 30/09/2017 - 13:10
    -4

    I would do free coffees for a month, at the end of the month all the regular customers that used to go to the other coffee shop will be too embarrassed to go back to the original shop and you keep them as your customers.

    Also by doing free coffees alot of the customers will feel obliged to buy something, so they don't feel like a cheep skate (so you don't lose as much money as you might think).

    Also spy on the shop with friends to make sure your staff are doing a good job.

    • serpserpserp on 30/09/2017 - 14:49
      +5

      This is probably the worst advice you could take.

      • meowbert on 30/09/2017 - 17:00
        -1

        +1, worst advice yet

  • HeWhoKnows on 30/09/2017 - 13:33
    +1

    Whilst its till looking like a viable proposition for another person.
    Too many people let it go far too long and go broke

  • serpserpserp on 30/09/2017 - 14:48
    +1

    Some more detailed is needed. How many people actually work in your building? If I moved into a building I'd assume a 5% conversion rate of the number of people in the building, so 1000 people? Where are you situated in the building? Can it be seen from the street or only if you go deep into the foyer? What coffee beans do you use and what is your price on coffee?

    Also probably the most important question, how much money did you think you needed to clear per week to break even?

  • CI on 30/09/2017 - 14:55
    +1

    I think an ozbargain meet up should be in the works!

  • yeahyeah on 30/09/2017 - 15:14

    I think every piece of advice under the sun has been given already but here's my 2 cents. My problem would be your coffee is acceptable and their's is good. I'm not some coffee afficionado but when one of my regular cafes changed baristas and I didn't like the new coffee, I left. Yes I work in the CBD so I have more options but this place could have amazing coffee now, but I'll never know because I'd never go back there for coffee. If I was in your building i'd spend the 80c extra and 7 min walk because acceptable wouldn't make me want to go back.

  • Davo1111 on 30/09/2017 - 16:21

    well that's demoralising. Sorry but i voted .1

  • bl1027 on 30/09/2017 - 17:35
    +7

    You've mentioned that employees in your building walk 10 minutes to go to another cafe which means that, conversely, employees in another building could also walk 10 minutes to come to your cafe, no?

    Near my work, there are heaps of cafes but the one that I go to is always busy - lines 15 -20 deep. They do not have sexy-hipster-big boob-tattooed chicks working there. They are also at the bottom of an office building and the fit out is OK (nothing luxurious or hip). But what I suspect everyone likes about the place is that the guy working there is heaps friendly and he knows the customer's order. He will see me in the queue and already be making my coffee. When I get to the front of the queue he will say "Hey [my name]. How are you? How was your holiday etc" and hand me my coffee. You don't need to be an extrovert or flirt to remember someone's name and coffee order.

    You say you only have have 5 customers per day, do you know their name and coffee order? Nothing more annoying than ordering the same thing time and time again and to be asked "so what will you like?"

    • effgee on 01/10/2017 - 11:13

      good advice

  • MessyG on 30/09/2017 - 18:40
    +1

    How much would you get if you sold the business? And how would you feel? Lots of good advice here but it sounds like your heart isn't in it. You've got one foot in and one foot out and it's either going to take you leaving your job and sinking yourself into this or letting it go. Or finding someone to work there who is super passionate about turning it around.

  • Mr2gt on 30/09/2017 - 19:38

    I would shut the shop up depending if your lease allowed it? If not, consider selling the business, sounds like its more suited to owner operated.

  • Jimothy Wongingtons on 30/09/2017 - 21:23
    +1

    my mate had a coffee shop open up in the suburb of his workplace that is already very saturated with Coffee options (literally at least 4 coffee places you can go to, 5 if you count 7-11). The new shop offered free coffee every day for a week, unlimited. The shop closed up within 3 months.

  • dbun1 on 30/09/2017 - 22:18

    In Melbourne the standard for coffee is high, with many people already settled on a favourite cafe.

    You’re coffee has to be extremely good to get people to change and frequent your shop instead.

    Even then I know I walk past many new cafes to go to my favourite. I’m just not interested in taking a gamble on something else.

  • lookatthesizeofthat on 30/09/2017 - 22:46
    +2

    Hi OP, I'm a chef and have set up many businesses for others and troubleshooted a lot more. If you need any advice just PM.

  • kiitos on 01/10/2017 - 00:17

    Would you be comfortable paying some photos of the setup?

  • 2ndeffort on 01/10/2017 - 00:47

    I work on St Kilda Rd in Melbourne. If you trip over opn the street you end up falling into a coffee shop. Fair to say there is one in every building and it is very competitive. There is obviously one in our building where I often go. The reason I go there is becauser they have a loyalty scheme where I scan a QR code at checkout and after buying a few coffees I get a free one. Recently the coffee shop across the road started 'Coffee Happy Hour' and started offering coffees for .50c cheaper than the place in our building. As a good OzBargainer I had to cross the road and try them out. Their coffee was better so for a while I went across the road for coffee, their stunt worked, even after they stopped the happy hours. I even bought food there. After a while though, when laziness crept back in I ended up defaulting back to the guys int he building. Maybe try coffee happy hour, drop your price by .50c and see what happens.

  • 2ndeffort on 01/10/2017 - 00:54

    Is your shop anywhere near idyllic country roads? I ask because the chain gang of lycra clad cyclists I spend my weekends with always look for coffee shops. Normally not in industrial areas though. We have 1 or 2 coffee shops where the owners love us. I read these stories about customers hating sweaty smelly cyclists coming in and disrupting their tranquil coffee but I think the owners would have a different opinion. On a nice day in the Dandenongs at somewhere near Emerald it can be hard to get a seat in or around a coffee shop for all of the cyclists. I was up there on Thursday morning and we had to ride past 2 coffee shops before we could take the 3rd one over. We literally stayed for 20 mins, all had coffee and cakes then rode off. Owners seemed run off their feet, the queue of us alone was out the door and around the corner. We rode on after that and did the same thing to a place in Gembrook on the way home as well.

  • LeavingTheWheel on 01/10/2017 - 09:42
    +1

    Firstly, good on ya for giving it a go.
    Given you have a lease there is a financial overhead you must consider if you quit. But as this is a learning experience then keep learning and testing.

    First thing I would do is let your staff know that this isn't working and he probably should begin to look for another job. If he finds one before you're ready to close the doors then you've got an option to hire that casual 'cute' barista everyone is talking about ;-)

    Or given you are paying for the lease anyway, you could always close the doors and re-open in a month after a rethink/refit.

    BTW: You should have been offering a soup of the day (The best recipe you could find), being in chilly Melbourne. But you haven't told us what type of business is run in the office. Only then would we understand the types of food, service or experience they might be looking for.

    Now if people see you aren't busy then they might assume you don't serve good coffee, it's Melbourne and that is your number one priority. Have you considered offering a free coffee and donut day here on Ozbargain? It might cost you a little, but you could get some traffic through the door and people in the building might start to be a little curious about your offerings. (of course, you'd need to take the day off to work as extra staff on that day) Plus, the OZbargainers could give you some real feedback on the quality of your coffee.

    Now back to that casual staff. What if you headhunt one of the girls from down the road? They would be familiar to your customers and might just help get you over the tipping point.

    Oh and that door has to go for sure. Prop it open so they can walk straight in. Also, are you playing any easy listening music inside? People are getting a coffee for a break and to relax a little. So make it warm and welcoming.

    Again, although you don't have a lot of business sense, this low-cost startup is exactly what you need to cut your teeth on. So head on down to IKEA and grab some funky (cheap) furniture and do a simple refit (I'll even help put it together for ya). And get some Ozbargainers in for foot traffic and go from there. But we really need to know what type of business is in that building, so we can make assumptions about the types of products they may be looking for.

    Good Luck, and make a few changes to see if business picks up, but don;t quit your day job.

    PS: The staff should be keeping busy and cleaning anyway.

    • ankor on 01/10/2017 - 23:10

      You've forgotten the intrinsic values of working in a cool hip place. Better street cred for a hipster is important social currency lol

  • simonjb on 01/10/2017 - 10:00
    +1

    Five customers per day?

    So I drink more coffee in a day than your business sells?

    Time to throw away the 'simple but clean image'

    The world runs on bulldust.

    Give those bored office workers some reason to fantasize about coming down to your shop.

    -Some jazzed up nonsense shop.
    -Obnoxiously detailed menu choices- think triple vetted no fat soy latte with caramel drizzle.
    -Hip skinny chick with skin that talks too much happy to flirt with a serial killer.

    And give them the idea that they part of something much cooler than they actually are. Isn't that essentially what a coffee shop should be…. a scene?

  • hell0 on 01/10/2017 - 11:04

    I'd get business insurance and then have a 'fire'

    Alternatively, maybe go to the other coffee place and then post a review of how awful it was… get the word around of how dirty they are etc…

    • effgee on 01/10/2017 - 11:14
      +8

      new attempt at "worst advice posted here"

  • effgee on 01/10/2017 - 11:27
    +2

    My understanding of your business model:

    $3.00 profit per coffee (after cost of beans and milk)
    x 50 customers/day
    x 250 days/year (office so assume M-F only)
    = $37,500

    Outgoings:
    $53,000 plus your wage. Thats a very long way from profit, even if you reach your projected 50 customers/day.

    Not wishing to be harsh, but IMHO it's clearly a dud business model. You need double the projected customers to make it even vaguely worthwhile. On top of that you appear to have dived in with zero understanding of what will attract and retain customers for the product you sell. As for only opening 3 days/week on the first month ? First impressions are everything, and if people couldn't rely on you even being open consistently it gave the wrong message.

    Hope you can get a good price for your expensive equipment, or if you decide to have another go elsewhere, choose a better location and do the basic maths for the business model before jumping in.

    In the meantime I suggest publishing the business address here, so at least you get a stream of sympathetic ozbargainers past - hey you said the coffee is 80c cheaper so ozb will be there (if convenient) !

    • JimmyF on 02/10/2017 - 10:50

      Don't disagree with everything said, but 50 customers over a 8hr day just seems crazy low!

      I normally buy 2 coffees a day, one in the morning and one early afternoon.

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