Coffee Shop Business Models – The Full Guide Part 1

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Coffee Shop Business Models

This post is the first in a series of articles that will walk you through the different coffee shop business models. Those that are being set up around the UK.

If you’re in the process setting up or running a coffee shop but trying to find a purpose, this guide is well worth a read.

One of the most important aspects of any business, is to have a core purpose and deliver your products or services to a specific target market.

This article takes a deep dive into the business models, that you could choose from, when setting up your coffee shop or café.

We explain the differences between the business models available.

We also provide examples of coffee shops within each model.

We then offer equipment guidance and setup insights for each option. Including menu provisions and opening times.

Also, at the end of each section, you will find out the important constraints, prevalent when attempting to grow your ownchosen coffee shop model.

Along the way, we give you some important links to further reading across the web.

Let’s dive right in.

 

Model No. 1       Community Coffee Shop Business Model

A community coffee shop is there for the benefit of the local community. There are no constraints on what those benefits might be.

A community coffee shop can be a lot of fun to manage and run. You will get to know the people you help. And grow to enjoy having them around your business.

As a community business, you will also be doing a greater good to the people around you.

The difference here is you are accountable to your community and the profits your business generates must deliver positive local impact.

Here are some examples.

 

3 Examples of a community coffee shop business model

 

1.      Charity Based Coffee Shop – It’s Your Donation

Setting up this type of coffee shop means you will be focusing on the support of a specific charity.

You may set up your own registered charity and support that, or choose to support one of the larger charities.

Either way, every decision you make, when setting up and running your charity-based business, will be driven by the focus of your chosen charity.

Memories Tea Rooms is a great example of a charity-based café. The tearoom is part of the Good Deeds trust – dementia buddy charity.

As you can see, their name has been chosen as a direct result of the charity they are supporting.

 

 

2.      Rural Cafe Example – The meeting place

With this model, you will be providing the rural community with a place relax.

In a rural community, it is recognised that people have limited opportunity to meet up and get to know each other. Therefore, a community coffee shop can offer such a space.

Your business ambition might go further – to significantly improve the local countryside.

In that case you would use some of your profits to help maintain & improve the rural settings.

In doing so, your business can benefit two-fold.

Firstly, the area will attract more tourists who want to visit for a peaceful getaway.

Secondly, those tourists are then even more likely to visit your coffee shop. Especially if they see that you are a supporter of the surrounding landscape they visit.

 

3.      Social Enterprise Example – Café’s with a conscience or cause

“Social enterprises are businesses that are changing the world for the better, You aim to make a profit but it’s what you do with the profits that sets you apart – reinvesting them or donating them to create positive social change.”

Source: SocialEnterprise.Org

Many social enterprises aim to be self-funding, they plough profits back into the project and grow. You’re also well-placed to set a visible example of diversity and opportunity.

From the outside, you will need to make your coffee shop presentable and inviting to the customers.

Once they are on the inside, you can explain all about your social enterprise and how you aim to help people in need.

Doing so, should generate repeat business because the customers now know you are supporting a good cause.

Some long-standing Social Enterprises are being dubbed an ‘Essential Enterprise’ because of the significant benefits they have created. Particularly to the people who would be lost without its existence.

 

Important Attributes of a community coffee shop

 

1. Inclusivity is key

Inclusivity is essential to becoming a focal point of the local community.

By making your venue appealing to everyone in the community, you are opening the doors to greater success.

It’s also well known that word spreads fast within a community. So, you certainly don’t want to be that business owner who has alienated one of the local customers.

 

2. Accessibility is essential

Having all forms of accessibility is essential to success. You will need to think about entrance ramps as well as wider doors for wheelchair users to enter.

If you’re on the second floor, there should be accessible lifts that customers can use to get to your shop.

Your toilets will need to be accessible by all and you may even wish to include a baby changing room.

Either way, providing access to anyone and everyone will significantly impact the growth of your business.

 

3. Personal Development is at the heart

Not only are you running a business as a community cafe, you are also helping people develop their own lives.

You are offering a place for the community to grow and thrive with your business being the catalyst to that.

Holding events such as cooking classes and reading schools can all contribute to the personal development aspect of your business.

 

Your Equipment List & Setup Guidance

With a community-based business model, it’s important to keep things simple, while focusing on the needs of your potential customer base.

 

Coffee Machine Type & Equipment

2 group 12 litre boiler.

 

Menus & Pricing

Make your menu simple and easy to follow. In doing so, you are more likely to generate repeat business. Simple menus can even increase word of mouth promotion as people talk about the quality of your coffee.

You really want people saying

“Oh, the Cappuccino I had there was amazing”.

Often, how you set your pricing will depend on the competition in the area, but the best option is to make your products and services good value for money.

Update your menus and prices regularly to reflect what customers want (and of course – inflation).

 

Opening Hours

Your opening hours need to reflect the lives of the community so you can be sure they visit you when they are free to enjoy a coffee and a cake.

Here’s an example of a community cafe opening hours

Monday                      7am to 5pm

Tuesday                      7am to 5pm

Wednesday               7am to 5pm

Thursday                    7am to 5pm

Friday                          7am to 5pm

Saturday                     7am to 5pm

Sunday                       7am to 5pm

 

The Staffing

In any business, you need people around you who are reliable and trustworthy.

Here it’s no exception.

Key managers are essential to the successful running and growth of your business. They will support you during the hard times and be there to celebrate with you when things go well.

Beyond your managers, the workforce in a community business will often be volunteers or people looking for work experience.

You want your volunteers to be passionate about the cause they are supporting. The more passion they have, the more likely they will stay around to help your business grow.

It’s important to realise that you are in a great position to provide perfect employment opportunities to the local community.

 

The Constraints of Community Coffee Shop Business Model

While we mentioned at the start about a project like this being fun and exciting, it does come with some constraints.

It’s a competitive market out there. You need to have a clear purpose and be sure that the people in the area care greatly about the cause you want to support.

If there is a disconnect between you and the community, you simply won’t be able to generate the results you hoped for.

The menu above shows 7 day opening times. Opening 7 days a week can take its toll on you. So, make sure you get management staff you can rely on to provide a great experience to customers when you are out.

What’s more, volunteers will have limited commitment, which often creates a high turnover of staff. Therefore, training new team members each time you hire can also be difficult, as your business grows.

Finally, here are some useful reads if you’re setting up and running a community coffee shop business model.

https://www.socialenterprise.org.uk/

https://mycommunity.org.uk/help-centre/resources/getting-started/tips-community-cafes/

 

Model No. 2      Mobile Coffee Shop Business Model

A mobile or popup coffee shop is a great way to start your own business without the need for an extortionate investment.

The combination of low-cost stock and minimal overheads makes it extremely cost-effective.

It’s often low risk, because if your venture doesn’t work out, you can always sell your equipment and move on.

This business model basically consists of a vehicle holding a coffee machine and any other important equipment needed for serving coffee.

The best part is that there is no limit to the type of vehicle you can use. The industry has attracted ideas that include 3 wheelers, transit vans, VW campers and even golf buggies.

Let’s look at a few examples of locations for mobile style coffee shops.

 

3 Examples of Locations for Mobile or Popup Coffee Shop

 

1.      Festivals

One of the most popular choices, is to take your mobile store to festivals around the country.

Festivals are the perfect place for obtaining foot traffic and selling your goods at a profitable price.

It can be hard work getting into the biggest UK festivals. So, you can start by applying for small festivals, that are close to you, then grow from there.

 

2.      Roadside Mobile Vans

You have probably seen them around. Roadside coffee shop and food vans are often found in places where people congregate on mass.

For example, outside football stadiums, on the road lay-by’s where lorries or trucks park up. Even outside universities.

The roadside option is a good choice if you want to get your mobile store into the public domain easily.

Remember though, there may be some competition between businesses who already occupy a spot at the side of the road. So, it’s important to check you’re not trying to compete directly with another company, who offers the same as you.

 

3.      Private Events

If you want to get your mobile coffee shop into private events, you will need to have a solid marketing plan. Otherwise, how will the event managers know you exist?

Private events can be extremely lucrative. However, they may also take time and effort (as well as persistence) to really make a success of your new ‘events’ coffee shop idea.

If you have a great offering and can find a niche, it will help a lot towards getting into events and private parties.

 

Important Attributes of a mobile coffee shop

 

Quick Service is essential

People don’t like waiting. It’s even more true with popup coffee shops.

your profitability is driven by how many people you can serve in a short space of time. Even more so at busy festivals.

If you’re service is too slow and a queue builds up quickly, people may avoid you and go to the next popup store.

They will be happy to buy something else to quench their thirst or hunger, even though they may have looked at your menu first.

It could be said, that at events and festivals, people are generally less fussy about what they drink and eat. They are probably more interested in getting back to their friends.

So, if they can get in and out of your queue super quick, then your business will likely be the one they choose.

 

Travelling is necessary

It probably goes without saying, that as a mobile coffee shop, you need to be prepared to travel all round the country. Maybe even cross border.

Travelling becomes even more important for festivals and events – as you’ll need to “go where the sales are”.

That’s very different from a brick and mortar coffee shop, whereby you know where you need to be, every day.

Unless you choose to occupy the same spot every day e.g. locally or roadside, then you could be required to travel long distances with overnight stays.

Now let’s take a look at some of the essential equipment for a mobile coffee shop.

 

Your equipment list and setup guidance

 

Machine Type

The best coffee machine for this type of business should have features such as duel fuel and low wattage.

The low wattage is important because the machine will be fuelled by your vehicle.

Costs can therefore increase fast just from the running needs of your equipment.

To enquire about our coffee machines and get advice from our experts, simply send us a note using our contact form here.

 

Mobile Coffee Shop Menu

In relation to the need for fast service, your menu should be very simple to read and easy to serve.

It should also use common, international language. Language that enables anyone from around the world to buy from you.

customers usually want to check your menu out before choosing to buy. So, you don’t want to put them off because they don’t understand your product offerings.

 

Pricing

If you want to make a reasonable profit, your pricing should be on the premium side.

Festivals are a good place to allow for increased pricing because of the enclosed areas and monopolies of the businesses within that area.

 

Staff

The most profitable mobile coffee shops are owner operated. If you decide to grow to multiple vans, then do expect profits to decrease in the short term while you look to grow your fleet and require more staff to help you deliver the services.

If you need more than one person on your van, then hiring a student can be very cost effective in the short term. Of course, be prepared for them to leave when they find a job that’s more inline with their career ambitions.

 

Hours

When running a mobile coffee shop, it’s highly likely that you’ll be required to work evenings and weekends. That’s when most people are holding events for the general public.

 

The Constraints of a Mobile Coffee Shop Business Model

Festivals and events are most popular in the summer months. Meaning all your business opportunities might be during June, July and August.

This leaves a gap in your calendar, for periods when you will need to create an income via other ways

The mobile catering industry can be very competitive. Therefore, understanding and promoting your unique selling point is vital to success.

Here are a few useful links for you to check out when setting up your mobile coffee store.

 

Useful links

https://www.premierline.co.uk/knowledge-centre/mobile-coffee-business-plan.html

https://www.ncass.org.uk/mobile-catering-home/content/starting-up/start-up-guides/by-product-type/how-to-start-a-mobile-coffee-tea-business


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