Choose the Best Coffee Shop Location
As you search for a coffee shop location, take into consideration the value rather than the price.
Which of the following coffee shop locations is a better value?
A) $1250 per month location that attracts 150 customers daily.
B) $2500 per month location of same size that attracts 300 customers daily.
C) Both make the same amount.
If you said “B,” you’re right. In this scenario, that extra $1,250 you commit to pay each month will generate approximately $5,000 extra gross income each month. This calculation is made at reasonable coffee prices and conservative profit margins — ordinary 2012 wages in a small town. Rent in first tier cities can easily be ten times as much. Be aware that expensive commitments can be more profitable, so don’t short change your business prospects. Go where the people are when you choose your coffee shop location.
Even considering extra staff hours and demands such as electricity and water, most of that money will end up in your pocket at the end of the month. That’s a good value for your investment dollar.
So how exactly does one estimate the number of customers that may visit your coffee shop location?
Texts recommend that an average retail coffee shop visited by .2% to 1% of proximate vehicle traffic. This figure is higher for pedestrian traffic and areas with better visibility or access. As the law of averages goes, this is reliable.
For the better accuracy, you must make adjustments for:
- local area demographics
- visibility of the location
- traffic patterns
- accessibility, and
If a coffee shop location has nearby competitors, take a seat and count the volume of customers they serve at high and low times of the day. Check out different days of the week too.
Create projections for low, moderate and high volume scenarios. Develop a response to each of these situations and be prepared to act. The stress and uncertainty often associated with financial planning of a new business will be reduced when you have a response readied.
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