What Do You Need? - Tips for Stocking a New Café

Wednesday March 4, 2015 by Matthew Moseley, Marketing Representative @ Barista Pro Shop

Opening a new coffee shop or café can be a daunting venture, you must first find an ideal location that’s within your budget, remodel the space to meet your needs, and then you’re faced with the overwhelming task of creating a checklist for stocking that new store.  From the vast number of brands available to the breadth of offerings that now seem standard items at coffee shops and cafés, how do you choose what you will serve at your shop? At a bare minimum, you’re going to want to offer coffee, tea, and either deli or baked goods to accompany your beverages.  Even with these basic product offerings, there are many decisions to make such as: what will be the protocol for drink preparation, which brand of tea or roaster for coffee will you choose, and how many different offerings should you serve?   Before you let this discourage you from opening a shop, brew yourself another cup sit back and follow these tips to help you take the guesswork out of building a menu that will align with the desires of your customer base and, ultimately, sell!

What you need is a plan…

In this Ask the Pros article, we will highlight considerations which are often overlooked yet critical when determining the products and supplies that are best suited for your customer demographics, your shop’s location, and overall mission. After reading this article, you will be able to properly analyze your surroundings and select the necessary products for your menu based upon your retail location and the competitive landscape from the new café checklist.  These considerations will help you make the foundational decisions that will help you to keep your business focused and operating efficiently.

In today’s economy, too many businesses try to cater an offering to every customer in the market which leads to an organization spreading itself too thin and sacrificing quality or consistency, in areas they once held a competitive advantage.  Although the ‘something for everyone’ model seems very profitable, the additional organizational costs outweigh the benefits of additional customer segments.  That’s why we recommend starting with a hyper-focused menu and product offering; then, once you’ve become accustomed to this routine experimenting with additional drink categories and introducing signature recipes.

Thus, before you do any product comparisons or menu planning, it is imperative you decide who your intended customers will be.  These customers are your target market, or the group of individuals you will be marketing to and expecting to convert into loyal customers.  Once you have an idea of who you will be serving, then you will know what attributes to look for when selecting the products you will offer at your shop.

Who will you serve?

There are two basic ways to determine who and what you will serve.  Both of which require understanding the demographics of your customers in order to be aware of how you can satisfy their preferences.  Some people know they want to open a coffee shop because they love coffee and want to share their excitement for coffee with others.  Some people open cafés because they want to engage and serve their local community while working their ‘day job.’  As you read on,  be sure to think about the reasons you decided to open your shop and the goals you intend to achieve.

If you have already signed your lease and have your retail location finalized; the best place to start determining your target market is asking yourself the following questions: (If you don’t have a physical space already, answering these questions will help to guide your search toward the specific areas that will be the most valuable for your retail location, based on  the density of potential customers.)

Who is my target market? Who is my ideal customer? What will I need in order to satisfy this customer base?

or

Do I want my business model to accommodate the preferences of the consumer already present in the area surrounding your retail location?

Once you can answer these questions, you will be able to identify the key product attributes that your customer base will find as valuable.   These attributes will be based on unique factors which differ between the various customers and their individual preferences.  Although every consumer is unique, we can attribute certain purchasing preferences to groups of individuals if they ordinarily behave in similar manners.  For example, if you serve daily commuters, speedy service and convenience will be valuable.  On the other hand, if you have a larger physical space and intend to focus on in-house service, you will find more value through focusing on quality or providing new, unique options that separate you from your competition or introduce the community to an entirely new experience.  

What is around you?

Begin by taking note of who or what occupies all of the buildings around you.  Many times this will reveal your competition.  When you identify competitors, too many people will only consider other coffee shops as competitors.  Although this the most specific example, there are drastic repercussions for performing this narrow of an assessment.  Not only will you need to recognize all the places that serve coffee, but you must also think about what need your shop’s products fulfill, which is sustenance and energy whether that’s via snacks, food, or caffeinated drinks.  This idea of need fulfillment is crucial for accurately identifying the competitive businesses that offer comparable goods which your intended customer base might choose as a substitute for visiting your shop.

For example, if you serve smoothies or blended ice coffees (frappés), you must now consider any businesses that offer smoothies such as a fast food restaurant, convenience store, grocery store, or smoothie bar.  Are you considering serving food options?  Again, you must include any business that offers coffee, or any other caffeinated beverage, alongside breakfast, lunch, or grab-n-go snacking options.  The main point is that you will want to identify ALL of the businesses in your immediate area that offer a product which is similar or an exact substitute for what you sell.  This research will help you to determine the benefit of directly competing either by offering the lowest price or unprecedented quality; or cutting your losses and deciding not to offer that item on your menu.  A product might have astronomical sales in one location, but stagnant sales in another shop located in a more competitive landscape.  This should solidify the idea that there is no perfect checklist of products or brands to carry.  Even within franchised chains, you will find different offerings and decor across the various regions of our nation.  Further, this also reveals that your shop’s success is more correlated to finding an engaged customer base and properly adapting your business to fulfill their preferences.

However, there’s additional value in identifying what’s around your retail space.  By analyzing the surrounding housing units or organizations, such as a non-competitive businesses, schools and universities, or gyms, you discover who will be your captive audience, or the individuals who will pass by your shop via car, foot or public transportation.  This will determine who your target customer will be or it reveals that the key customer demographic you plan to target typically will not travel by your shop.  Later on, this information will be pivotal as you develop a plan for new customer acquisition.

So, you might be asking how do you analyze what’s around you?  

If you have a gym or health club near you, there’s a good chance you won’t become a part of any of their member’s daily routines if you’re serving smoothies that are sugary and high in calories.  This type of product may appeal to them on an indulgence basis, but the product attributes directly conflict with their desire to be fit.  People who have gym memberships are often much more aware of the health and dietary attributes of the product they consume on a daily basis and will avoid products that contain high amounts of sugar, fats, and calories.  However, if you’re serving all-natural smoothies or delicious (low-calorie) flavored teas that are high in antioxidants alongside snacking options with low fat content yet adequate caloric and protein levels your products are more likely to appeal to this consumer.   

On the other hand, if you are located near a high school and you intend to target the students as your intended customer segment you will much different consumer preferences.  For instance, younger consumers will value the experiential and aesthetic attributes of their order, as opposed to the utilitarian benefits.  Bright colored drinks, sweet flavors, and a unique, fun atmosphere will help to drive business among these consumers as they want enjoy the experience instead of just satisfy the physiological need of caffeine for that jolt of energy.  Do you serve students during their lunch hour?  You might want to focus on setting up guidelines that streamline your drink preparation processes and reduce service times, because if you can’t serve them quick enough to return to class on time you will begin to lose customers.

Speed of service is also a critical attribute for the early morning commuter who is in a rush to beat the traffic, but needs to be sharp when they arrive at work.  Both of these consumers value a speedy service because they both have places they are expected at shortly. In this second instance, note that the functional attributes of caffeine or hydration are a higher priority for the commuter than the aesthetic appeal of the final product or the shop atmospherics from which it was ordered.

Cost is one of the main attributes of a product owners typically base their purchasing decision upon.  Although you do need to be aware of and actively monitoring your costs, selecting products since they are low priced is not guaranteed to be the most profitable.  As you’ve just seen, there are many factors that influence a consumer’s purchasing behavior; not just price.

Yes, we typically like to pay the lowest price possible; however, it’s imperative to understand consumers also value factors such as, taste, convenience, quality of ingredients, and, at an increasing rate, socially or environmentally responsible products.  

Although, there are products, such as tape or facial tissues, that we will tend to purchase solely upon the lowest priced option; there are also products that we are willingly to pay higher prices for based the factors listed above and many more.  Oddly enough, there are even times that a consumer will purchase an item based intangible elements. Let’s consider Mercedes-Benz for a moment,  many people would agree they are a premium line of automobiles, but can they tell you why you should accept paying a higher price for their cars?   In this instance, there is an expected social status, or perceived value, attributed to owning a Mercedes-Benz. However, this perceived value will not be a valuable attribute for selling the car to a consumer who just wants to get from point A to point B, and could care less what others think about the brand of car they drive.  At the same time, it is still true that tons of people aspire to own a Benz.

How will they know about you?

If you plan to target customers who regularly pass by your location, you will be able to utilize visible, creative and eye-catching signage to attract business.  Bare in mind, as you’re designing your signs, you must not only have an attention grabbing image, but it will also need to clearly communicate what your business is and what you offer, namely specialty beverages. A java junkie may take note of your awesome sign, but if they don’t know there’s an equally awesome coffee shop in that space they may never stop.  

However, if you are targeting customers who don’t work, live, shop, or travel past your location then you will have to commit more attention and time toward your promotional strategy.  Instead of relying on capturing attention you will have to search out opportunities, or communication channels, to introduce your brand.  The communication channels you rely on to accomplish this could be any of the following, or a combination: print advertising, press releases, posting flyers in the area, as well as virtual channels which means you will want a strong online presence to facilitate discovery via search engines or social media.  Either way, your shop will have to be the main destination; or the main attraction that causes them to visit the area.  When a strong brand leverages the proper communication platforms to reach their audience this can be accomplished; however, it will be important to isolate the customers who will be the most enthusiastic to engage with your brand in order to create an initial base of loyal supporters who will eventually become brand ambassadors for you.  

If you’re going to have a commitment to serving brewed coffee that is of utmost quality and focus on experiencing coffee; then you will have to get an understanding of the local coffee scene.  Search out roasters to find out if there are local barista competitions or events.  These events invaluable because nowhere else will you will find a captive audience which is the perfect opportunity to spread your message and brand.  Or are you located near a university and you know you would like to service the college students looking for a caffeine fix.  Research possible promotional channels Well consider placing advertisements within the school’s newspaper, on housing and dining facilities bulletin boards, or anywhere else that will give you brand exposure. Do they host a welcome event?  Sponsoring an event like this could be a great opportunity to sample products with potential customers in addition to the opportunity for brand exposure.  

As you organize your marketing strategy, be creative!  Don’t allow yourself to believe that in order to market your brand you must buy billboards and run commercials.  Traditional marketing is becoming so prevalent that it makes less of an impression on consumers, which means the more creative you are when promoting your brand to potential consumers, the more of an impact you will realize.

Hopefully, this article gives you an idea of how to begin the decision-making process for stocking your brand new café.  In order to make this decision, you must remember to take an in-depth survey of the area around your location.  Once you know your competitive landscape and the preferences of the consumers in the immediate surroundings, you will be able to select products that resonate with your potential customers as well as those that operationally fit within your business model.  Whether that means, selecting products based upon ease of preparation, nutritional benefits, or specific flavor profiles.  As we alluded to in the opening, there are numerous options to choose from and each has their own benefits; however, those benefits are only valuable for your business if they fulfill the needs or desires of your target market.  

As you run through the New Shop Essentials Checklist, if you are unsure which products are ideal for your business give one of our Pros a call toll free at 1-866-776-5288