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

  • Halo375 on 29/09/2017 - 13:09
    +14

    If you want to promote - have a good loyalty card system. Try to push food and snacks - not just the coffee. Have a welcoming sign outside with different specials each day.

    You know its time to sell when you've run out of money, in debt or find something better. If your business isn't running well you may find it hard to sell it. Try to reduce your costs and really understand how long you can keep going - work with a financial adviser.

    • oztite on 29/09/2017 - 17:24
      +2

      That's some of the feedback we get, that we should offer more food than what we currently do (we currently have muffin, basic pastry etc) but that is what's keeping the running cost low. If we were to offer hot food then we need a kitchen, a chef etc, which would blow the budget out of control. I am a bit scared at investing more when we are doing so badly… Of course, we may be doing so badly because we haven't invested more. Dunno how to decide which is right.

      • p1 ama on 01/10/2017 - 23:40

        I think this line of thinking is why you haven't done any better. Maybe it sounds a bit stupid initially, but with a business, you really have to "go hard or go home" - if you don't have the risk tolerance to go hard, then that's fine, you're just not cut out for business and perhaps you're better off in another line of work (which isn't a bad thing - I'm in that boat too!). If you want your business to succeed, however, you have to compete and it just sounds like you're not competing as well as the other coffee shop down the road. I'd say revamp your menu, get some food in, get in some new employees, run a more effective marketing strategy and hit hard. If that's not something that sounds appealing, then you should run ASAP before you lose more money because clearly the way it is isn't working well.

      • Lucky13 on 02/10/2017 - 07:29
        +2

        Re the hot food thing, you could just offer simple hot options to avoid the need for a kitchen eg. ham/cheese, tomato/cheese or avocado/cheese toasted sandwiches = would only need a sandwich press, buttered/toasted fruit bread = only need toaster, hot soup = heat in microwave.

        Could also offer breakfasty things like muesli and yoghurt in a cup with a spoon = yummm/simple.

        Also just tried this turmeric latte recently and was pretty nice, just mix it with hot milk. Also have matcha green tea etc. http://www.alchemycordial.com.au/shop/alchemys-superfood-lat…

        Idk just ideas, hope it helps.

  • [Deactivated] on 29/09/2017 - 13:13
    +33

    I'd quit right now.

    That sounds really awful. So little potential for any real profit, what's the point?

    You're holding down a job to supplement your business.

    Sorry to tell you, it's not a business but a really shitty hobby. Unless you enjoy spending so much money just so you can play barista twice a week.

    • oztite on 29/09/2017 - 17:26
      +1

      You've got a point… I didn't think this would be so bad I guess. I am 70% leaning towards quitting, but have to pay out the lease still…

      • T1OOO on 29/09/2017 - 21:41
        +3

        See if you can lease it to someone else.

  • Adz81 on 29/09/2017 - 13:14
    +33

    Have you actually reached out to those in the building?
    Given that the closest coffee is a 7-10 minute walk away, the coffee drinkers have likely built a rapport with their current caffeine fix supplier. If I had an established coffee fix place from my work, and it was already ingrained in a routine, I wouldn't just switch coffee shops because a new one appeared.

    Also, you'd planned on 50ish x customers/day… If these customers were only buying a coffee for, say… $4? That gives you a $200/day turn over… or $50k/year (allowing for a perfect 50 persons per day, 5 days a week, 50 weeks of the year (that's without discounting for any other quiet potential quieter periods other than two weeks over Christmas/New year)… Even if you had your planned 50 customers/day… How was this going to be viable, given you've already mentioned $53k of expenses?

    • humdingaling on 29/09/2017 - 13:26
      +8

      ^^along this theme
      how did you even come up with 50/day number

      before your shop came along
      did you sit there one day and count the amount of people carrying coffee cups into the building? or did you suddenly expect since there was a coffee place that people would gravitate to buying from you just because ?

      or did you just know the amount of people in building and just assume x% would be coffee drinkers and that would be the amount of people going to your store

      • oztite on 29/09/2017 - 17:33

        I looked into the total number of people in the building plus talking to a few people that work in the building. I also tried to work out a number based on the coffee shop down the road's number.

    • oztite on 29/09/2017 - 17:31
      +2

      Well, we were thinking 50 was a conservative estimate, and if we can pull maybe 10 from outside, plus the pastry and muffin we sell…

      I admit the profit margin isn't high, but I thought this would have been a good "learning" experience before investing more in the next project. Probably a bad way to start a business but I would have been happy to break even and learn how to run a cafe.

      I made the mistake thinking the customers would be "guaranteed" because of our location. I didn't think people would want to walk that extra 7 min (even sometimes in rain!) Plus, our coffee is $0.80 cheaper for all sizes compared to the one down the road.

      My thoughts were: close location to workers in building + $0.80 saving per cup + no waiting time = guaranteed customers. I am obviously very wrong…

      • pbywater on 30/09/2017 - 14:12
        +1

        When you run a business you need to put in a big effort, when keeping a main job you aren't putting in any real "risk" as you have a fall back, and as such ur not really committing to the business. Also most small business don't break even until basically a year has passed, so you have to keep that in mind too.

      • gk0r on 02/10/2017 - 11:39
        +1

        I can't speak for everyone, but I personally never drink coffee alone and it's never about the coffee itself anyway. For me, it's an opportunity for social interaction. It's either a chance to catch up with a friend or an opportunity to have a quiet word with a colleague. It's a break from the work day to "change my environment", even if it's just for a few minutes.

        If we walk somewhere, that's an added bonus not a hindrance. Most office jobs tend to be sedentary so I welcome an opportunity to stretch my legs.

        As a customer, I can tell a difference between a really "Bad" coffee and really "Excellent" coffee - but that's about it. I can't tell a difference between something that's "Average" and something that's "Good".

        So ask yourself this question. Is your business about a product, or about customer experience? If it's about a product, you're one step away from being put out of business by a mid-range coffee machine in the office.

        [Edit] - Starbucks do not offer free Wi-Fi because it makes their coffee better.

  • JetLi on 29/09/2017 - 13:22
    +26

    You must serve pretty bad coffee if customers rather walk 7-10 mins down the street to buy a coffee or the shop fitout must be kinda dingy. I would definitely support a new start up coffee shop at the bottom of my building if it looked clean and served good coffee and at the same time, save 20 mins of walking in the elements. Cut your losses now, they are only going to grow bigger.

    Maybe do half price coffees for a limited time to get some traffic in, if that still doesn't work, close up.

    • altomic on 29/09/2017 - 13:41
      +5

      Maybe they have a pod machine upstairs in their offices. And they don't want to spend $25 a week on coffee.

      • JetLi on 29/09/2017 - 13:43
        +3

        if the coffee served is bad, then it would be an easy decision to just use the pod machine upstairs and save $25 a week.

    • oztite on 29/09/2017 - 17:42
      +3

      I don't think the coffee is bad, but, there are some issues due to budget restraints:

      • Our fit-out is simple (but clean), although nothing like the "hip" luxurious fit-out of the coffee shop down the road

      • Our food selection is limited, mainly muffins, pastries, pre-packaged food. The shop down the road serves hot food

      • We only have one staff in the shop at any one time. The one down the road has like 5 people working at the counter

      • They have longer working hours, although I am open the whole time when people are working in the building

      The good things about my shop:
      - Very close to workers
      - Cheaper (as mentioned, at least $0.80 per cup cheaper)
      - Better reward program (5th cup free rather than 10th cup free down the road)

      Turns out no one cares about these things for some reason…

      • poboy on 29/09/2017 - 18:33
        +9

        Maybe customers enjoy the walk, or want to get away from the building. Perhaps they like sitting down at the other place. Perhaps they smile more.

        I don't have the answers. I don't even know if your potential customers are walking further afield.

      • kipps on 29/09/2017 - 18:49
        +3

        Maybe your service is bad? Maybe the coffee bad? Surcharges on purchases? Food not good? Have you asked for opinions? Might be good to seek feedback before you throw in the towel.

      • lukira nasimura on 30/09/2017 - 16:59
        +10

        As someone who ignores our "local" coffee shop in our building, your coffee would be either bad or inconsistent in quality. Many of my colleagues feel the same way, we would prefer to walk to the next building, even when we have visitors. Cheaper price and better reward won't win against a consistent, good quality coffee.
        Your limited customers have tagged you, cut your losses and move on.

        • humdingaling on 30/09/2017 - 22:58
          +4

          ^^
          i concur
          i walk past my local all the time
          in fact i walk past 4-5 places that serve coffee to get to my regular fix

          they aren't the cheapest nor is their reward any better
          the main reason i go that "extra mile"…the barista
          they are consistent with the output

          so when the barista changes is not up to scratch i go searching for new place

      • geoffs87 on 01/10/2017 - 11:45

        Yeah. I don’t think Fit-out really matters for a coffee shop inside an office building.

        I’m not actually a coffee drinker, but I am an analyst in workplace strategy. My assumptions are:
        - employer provided coffee upstairs is greater quality than yours
        - probably should have done some feasibility assessment before buying (like others have said, count the number of people entering the building with coffee cups / watching the types of food people bring in etc.
        - while you say you don’t want to increase your cost base by providing alternate foods, what do people want when they go to a cafe. Maybe your lack of variety is driving customers to other stores?
        - we’ve just opened a cafe in the ground floor of our new building. People come from all around, even though cafes are great elsewhere. They offered a great variety of food and bev options from day 1
        - convenience, what about listing on that ‘hey you’ app, so your customers don’t even need to wait?

      • wozz on 03/10/2017 - 00:59

        What about the taste of the coffee?

    • Harold Halfprice on 30/09/2017 - 00:41
      +4

      Maybe the workers enjoy the walk.

      Gives them something to do on their break instead of sitting in the lunchroom or at their desks. They can justify it as a bit of exercise too, and if they're sitting on a chair all day they may like it.

  • Adz81 on 29/09/2017 - 13:31

    Also, if you've been open three months and it's been this awful, can I ask why are you looking at another commercial lease just a month ago (incidentally, I'd have thought the lawyer you used for this space would've been appropriate, it seems like a similar area).

    • oztite on 29/09/2017 - 17:46
      +1

      I was looking at a bigger space as a second site… My original plan was to use this site as a "learning experience" because customers would be "guaranteed" while looking into a second and bigger branch. Obviously the whole thing is on hold for now. My initial thoughts were that things would pick up. First month we only opened 3 days a week, and I really thought things would start to pick up but after 3 months with no improvement I am not leasing another place until I figure out what went wrong…

  • Ughhh on 29/09/2017 - 13:40
    +9

    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.

    If people rather walk 7 mins to another store, then you haven't done advertising. You're basically expecting people to just hand you their money. You haven't done any marketing. Unless you're a well known brand, you need to go to your customers, rather than expecting customers to go to you. Visit the building during lunchtime or morning tea and give free samples or something.

    • oztite on 29/09/2017 - 17:52
      +1

      Well, my initial thoughts were that advertising is to raise brand awareness, and given that people have to walk past my cafe to enter their work building, for sure they know of our existence. What we sell, and coffee price is on the wall facing the corridor, so I wasn't quite sure what else to say in any marketing material we hand out - it's very unlike people in the building don't already know we are there after 3 months.

      In terms of visiting during lunchtime, I did that after 2 months of no business, and these marketing visits actually went terribly. People didn't really want to talk to me during their break. The whole thing was very awkward. I brought in brochures about our shop, gave out coupons for free drinks, and in the end it really didn't generate much more business at all. I've done this to 5 different companies in the building now - do you think I should keep doing it? Just feel like people don't really want me to be there while they eat lunch that's all…

      • Ughhh on 29/09/2017 - 20:12
        +10

        Imo sales is definately one of those jobs where you need that special personality. My guess is you're not a sales person who can talk your way into anything. People usually love free stuff. If you were able to make it that awkward and people didn't even want a freebie, you must've presented yourself in a certain unlikeable way.

        I suggest getting one of your cute good looking bubbly staff to do the marketing and talking.

        • oztite on 30/09/2017 - 11:37

          That is a very good point… I am not a good sales person I don't think, certainly not bubbly. Problem with this again though, is the extra cost. To hire a marketing person with 5 customers per day of cashflow is very difficult. I don't know how other small businesses do it. The expense is disproportionally higher compared to bigger cafes which probably only need 1 marketing person too, yet with much better cashflow to fund it.

        • Ughhh on 30/09/2017 - 12:16
          +5

          @oztite:

          You don't have to hire a dedicated marketing person. As I said in my previous comment, get your most good looking, cute and outgoing staff to visit the business' (assuming you're not the only staff).

          If the building is mostly men, if you have a cute good looking female staff, all the guys will want to talk to her.

          No offence, but I think you should quit before you get into debt because you're not business minded.

        • oztite on 30/09/2017 - 12:26

          @Ughhh: I have some nice, um, normal looking staff. Unfortunately I don't have anyone that you would classify as "good looking" staff. No one "sexy" or "flirty". They are not ridiculously ugly I wouldn't say, just kind of your "normal" looking people if you know what I mean…

          I do kinda regret not hiring someone more attractive now. I really didn't put much weight on that when selecting people. Also, I didn't really get anyone that amazingly looking to start with. I wonder if I should have put words in the ads to hint on that… is it legal to say "looking for an attractive engaging barista"?? Dunno how people do it…

        • th123 on 30/09/2017 - 14:04
          +1

          @oztite:

          Doesn't sound like the business would stay afloat if it's entirely dependent on whether your FOH is attractive or not.

          And obviously, you don't put it on the advertisement. If that's your criteria (not saying it should be), make that decision during the selection process.

        • Ughhh on 30/09/2017 - 14:20
          +3

          @oztite:

          I wonder if I should have put words in the ads to hint on that… is it legal to say "looking for an attractive engaging barista"?? Dunno how people do it…

          … Just because you interview them, it doesn't mean you have to hire them…
          You gotta think outside the box. If you can't, just quit.

          Btw, Attractive staff with fun personality is just the initial way of the getting attention your business lacks. You still needs the goods to keep the customers.

        • dealman on 01/10/2017 - 10:04

          @oztite:

          Considering that you are NOT Caucasian, is there a staff member who is Caucasian?

        • oztite on 01/10/2017 - 12:15

          @dealman: Not something I was thinking about, do you think that is an issue whether or not my staff are white?

        • dealman on 01/10/2017 - 13:25

          @oztite:

          I certainly wouldn't discount that possibility. I could tell from the first first down that you are not white. I'm sure that is something that your customers also think of.

        • oztite on 01/10/2017 - 13:49

          @dealman: may I ask how you can tell? And what effect having a white barista has on customers? I am curious about this now…

  • geek001 on 29/09/2017 - 13:43
    +2

    Seems a dead end to me to have a food/drink place without foot traffic. How big is your coffee shop? Do you have seating in your coffee shop? Are there no offices around there you can expand your customer base? Maybe splurge a little and use better beans or learn how to make better coffee? Get some friends and have them critique your coffee. You don't need really expensive beans to make good coffee. I use Lavazza coffee from Coles, $15/kg bag when they are on special. It is a lot better than some of the more expensive coffee blends that I have tried.

    Like JetLi said, it might be your coffee if people are willing to walk 7-10 mins to get coffee elsewhere. I know I would walk that far if there is a MUCH better coffee place. Even then, you are probably limited by the number of coffee drinkers in a population of 50 unless you can get new customers from somewhere else.

    • oztite on 29/09/2017 - 17:56

      Hi, the estimated 50 is people that would buy coffee. The building has around 400 workers in. Unfortunately due to the location, there is not much other foot traffic.

      In terms of the coffee, I feel like a lot of the people haven't even tried it to know if it's good or bad… Out of the 5 people on average that come through, 2-3 are actually returning customers… So really, I would say the majority of people haven't even tried our coffee yet to know if it's good or bad…

      • Thenarrator on 29/09/2017 - 22:32

        u dun really need to try to know whether its good coffee or not. sometimes the whiff of roasted coffee smell is enough to entice some people

      • effgee on 01/10/2017 - 10:56
        +12

        word gets around pretty quick in an office.
        "have you tried that new coffee place ?"
        "yeah, the coffee was pretty average, and the staff weren't very friendly"

        End of business.

  • pantsparty on 29/09/2017 - 14:03

    Sounds like a lot of work and worry for very little potential reward

    • oztite on 29/09/2017 - 17:58
      +1

      The idea was that it would be a "scalable" business… I totally agree, it's been an absolute waste of money and time, but if it were to succeed, I could have rolled this out to quite a few commercial buildings that are outside the CBD - which would make it all worthwhile. Obviously I am wrong…

  • Mummy2 on 29/09/2017 - 14:32

    Are you in a residential area where you could get folk on their way to work (early opening) and/or at weekends?

    • xuqi on 29/09/2017 - 15:03
      +2

      "ground floor of a fairly isolated business building in a Melbourne south east suburb."

  • good grape on 29/09/2017 - 15:07
    +2

    people here are generally quite lazy and wouldn't walk that far for coffee unless it's really bad.
    maybe ask somebody to try the coffee and give feedback

  • Ocker on 29/09/2017 - 15:39
    +3

    Based on $3 for a coffee then 50 cups a day is (at best) your break-even. People are very choosy about their coffee and would need a very good reason to change from their current provider - location would probably not be enough.

    To me it seems your business plan was terribly flawed at the outset. I would quit now, and hope you can break your lease without it costing too much.

    • oztite on 29/09/2017 - 18:05

      Honestly I don't think the coffee is terrible, maybe down the road it is a bit better. Their fit out is a lot better, but it is a much bigger cafe with a full kitchen and stuff.

      I really thought a good location, acceptable coffee, cheaper coffee, and better reward program would be enough to get me some customers after convenient coffee. The plan was never to replace the big cafe down the road. Quite happy for people to go there for lunch when they need hot food, but I am not even getting the morning walk-in coffees.

  • Slippery Fish on 29/09/2017 - 15:53

    Coffee with happy ending, $50 EA.

    Enough said.

    20*50=1000 a day.

  • Donaldhump on 29/09/2017 - 15:57
    +2

    are you allowed to sell anything you want in this space?

    maybe sell sell cigarette lighters, cold cokes, umbrellas, hats, pens, sunglasses from a servo. i dunno know, these r the things i always need.

    • oztite on 29/09/2017 - 18:02

      Not sure to be honest. I could look into it, but that's quite different from what the cafe is intended for.

    • Harold Halfprice on 30/09/2017 - 00:43
      +10

      when youre at work, on your lunchbreak - you suddenly need a hat or a pen or sunglasses?

      the only thing worse than setting up a coffee shop that caters only to like 50 people is setting up a convenience store that caters to 50 people.

      • nickj on 30/09/2017 - 11:07
        +3

        Yeah I have to agree. Although cold soft drinks could be good though, and seems compatible with a café to me. Check there's not a drinks vending machine in the building first. And I assume that coke may lend a cabinet fridge if you stock their product? I'd see what options are available to keep the outlay low.

  • Donaldhump on 29/09/2017 - 15:58
    +11

    for the record ill work in your shop serving 5 customers a day for 40k

    • oztite on 29/09/2017 - 18:01
      +8

      Yeah, the barista said to me he is feeling a bit guilty getting paid to do nothing… and offered to do some cleaning for me so I can save on cleaners… sigh…

      • bathuu on 30/09/2017 - 16:22
        +1

        your barista is a guy? why did not you hire a girl? it could have helped a bit.

        • Aneurism on 01/10/2017 - 00:00
          +3

          Yet if you ask why they didn't hire a guy instead of a girl, the feminists would be out in droves.

        • Agret on 02/10/2017 - 02:17

          The best coffee shop in my town is owned by a guy who is also the barista and everyone flocks there. The coffee is just really high quality and consistently so. He also does that leaf shape art on the top if you get a cappuccino which is a nice touch.

  • [Deactivated] on 29/09/2017 - 15:59
    +11

    • Have a free coffee Day to draw them in.
      Advertise this the day before - so people don't walk in with a coffee in their hand.

    • survey the customers - quick tick and flick

    • have a decent rewards card - 4 coffee = 1 free.
      Change it later if you need to - you need to change habbits.

    • Do cheep coffee and banana bread/bacon egg roll specials in the morning

    • are your staff any good when you are not there.
      They could be the reason no one buys coffee from you!

    • Discount if customers bring their own mug.
      Show that you support the environment.

    • Happy hour/s 2-4pm - when you are not that busy, or the trade is staggered.

    • print single use discounted coffee vouchers - people love a bargain AND you are directing them to you.
      Leave them in the lifts, deliver them to reception, hand them out if you need to.

    • Don't overcharge - how do your prices compare to the 7 minute away place?

    • oztite on 29/09/2017 - 18:09
      +1

      Hi, some good suggestion re: free coffee day. I could give that a try.

      I tried some survey forms on my few customers, all ticked "good" for everything. Either they feel bad for me, or they really were happy but it's just there are only 5 of them per day…

      My staff may not be the best, but at that cost, it's not easy to get a good staff…

      My coffee is at least 80 cents cheaper than down the road.

      • centrelink on 29/09/2017 - 21:29

        Tbh I don't think having free coffee will work unless you have some wonderful coffee out there I do not think it will improve the situation at all. Does your store and staff look like hipsters?

        • oztite on 30/09/2017 - 11:40

          No they don't. And that, is one of the honest feedback I got from some customers… that we don't look "hip" enough. Problem is the hipster baristas cost a lot more, and demand a lot more like must be full time and generous leaves which as a small business we simply couldn't afford.

          I certainly don't look hip either, and I work there to offset cost.

      • jeffr on 30/09/2017 - 14:03
        +11

        hi
        I've been watching this thread and can offer a few suggestions from a new local business. Being hidden away is a challenge. Boostjuice always positioned their stores which had high foot traffic. As you dont, the challenge is to attract somehow.

        1. Free coffee in exchange for a "Like" and a friend on your facebook page - limit the time for free coffee outside of your "busy" time eg 2-2:30pm or 9:30-10:00am. Make sure you have enough staff at that time. Give customers a small free v tasty biscuit with your free coffee
        2. Take photos of your great food and coffee and put on your facebook page and make it front of house so people can see when they first walk in
        3. Staff have to be friendly - not there just to get paid. They need to be happy and upbeat - not monotone.
        4. Get some "A" frame advertising signs with photos near where people walk so they can see your happy hour signs and photos of cakes
        5. While cost difference with a competitor is a driver, no one really likes bad coffee or bad or average food - you can get that at 7 Eleven.
        6. Up sell with coffee and cake deals - this may be all the time or only at happy hours.
        7. An example I have seen is that local businesses sell Chicken katsu curry and rise with a small salad for $5 before 12pm. There are queues of people and its busy as all crap. Once people realise how tasty the food is they will come back at any time and pay full price. Now I see that an adjacent business is doing the same - key that I have seen are both have prices and times very prominent with photos. It's a bit different from you as they are near food traffic in a food court, still its a competition to attract a very limited customer group at the same time every day.
        8. Getting people in - the business is about coffee, cake and food. It's about appeal to taste and colour. Years ago we used to always visit a small cafe who baked fresh scones on Sunday afternoons. The smell in the cafe was amazing and it had quite a following. Whether it is fresh scones or fresh biscuits or fresh coffee. Great smells really attract people.
        9. Having eye appealing cookies or muffins on the counter next to the cash register is a good selling point - ever notice at Woolworths how the checkouts are lined with small things like batteries, sweets and other useless "last minute" things…
        10. Staff have to be engaging - customers come in all shapes and sizes, some are tired, some happy and some sad, coffee and cake makes everyone happy.
        11. Work with the staff in nearby buildings - some have social clubs or admin staff who are happy to place a notice on the notice board. You may be able to hand out "specials" list or promos about coffee happy hour with a brochure - dont forget about photos, phone, Facebook on the brochure. Even catering for morning teas - might be challenging with one staff but if you work with them it make increase your turnover.
        12. Dress - you need to look the part / hipster / modern. Even a basic uniform such as a t-shirt with the name of the coffee shop looks the part + white apron. You can get short run t short printers v reasonable priced now as they print t-shirts on an inkjet printer.
    • Stan1912 on 29/09/2017 - 23:50
      +2

      I agree. Give bradn's suggestions a go straight away and if you still don't see a significant improvement in sales very soon after (ie. within 2 weeks) then cut your losses and move on as it is going to cost too much money and involve even more risk to redo your fit out. You could also get an affordable electric baker oven to make the banana bread on site without a full kitchen, so when people are coming through in the morning they smell it cooking and want it. I know the smell of freshly baked bread and cakes makes me cave in to buying treats, and many others are the same. Just make sure you get the recipe/product right before you start selling things. Most people want quality as well as affordability, so don't go cheap and nasty and think people can't tell the difference because often they can.

      • oztite on 30/09/2017 - 11:43

        Good idea, i'll give that a shot.

        Your last point is the killer though, people do want quality as well as affordability. Balance sheet just won't work if I keep increasing expense with such a small setup… sigh..

        • Fobsessive on 30/09/2017 - 14:52

          You mean P&L statement?

  • [Deactivated] on 29/09/2017 - 18:23
    +10

    how did you even get into such a shit situation anyway

    • oztite on 30/09/2017 - 03:02
      +1

      Someone mentioned coffee is a v high margin product. Thought I'd start a small chain. Bad idea obviously…

      • Sweetnsour on 01/10/2017 - 22:52

        High margin when you only factor in cost of goods. 30c coffee beans for $3.50. However there are overheads such as rent, staff, electricity, machinery, fridges, list goes on. So it's no different to all other businesses. That's why majority of small businesses don't survive the 2 year mark.

        Small chain of cafes? How will you be different to the ones already established and have marketing teams. Business is cut-throat. You need that energy and passion.

      • mooboy on 02/10/2017 - 11:39

        Someone mentioned coffee is a v high margin product. Thought I'd start a small chain. Bad idea obviously…

        There's lots of advice here on the business side, but can I ask are you actually passionate about coffee? Can you judge a good from bad coffee yourself? Even working in Melbourne CBD, there's lots of poor coffee around. If the coffee down the road is significantly nicer, I would walk 7 mins in the rain and pay more myself. Not for the funky/hunky baristas or cool environment, but just for the good coffee.

        There's little worse than paying for a mediocre coffee.

  • No on 29/09/2017 - 18:36
    +2

    Have you considered internet / app ordering?

    I would be more likely to go get coffees if it was a in and out in 20 seconds.

    Pay someone on OzBargain $10 to come and try your coffee and post back here what they thought of the experience.

    • original15 on 29/09/2017 - 19:00
      +1

      Realize OP has to change something drastic to try and reverse this nightmare, but given potential customers are walking 7 minutes down the road to a rival cafe im not sure if this is the right direction for him

    • oztite on 30/09/2017 - 11:44
      -1

      I very briefly looked into it. A very basic app was quoted $7000 to make. And when he was doing a demo, the thing crashed and didn't actually send out the order. I thought that would look really bad, when people have ordered and paid, and yet we havent' received the order… so in the end didn't go for it.

      • Fobsessive on 30/09/2017 - 14:55
        +3

        What about registering on Hey You?

  • garetz on 29/09/2017 - 18:39
    +4

    You are competing against an entrenched business, you either need to offer something the other one doesnt, or be so cheap as to blow away your competition.

    Look at the place 7-8 mins away, look at what they do that you do not, then either improve on their strengths, or exploit their weaknesses.

    Do a swot analysis on your business, and theirs. You are obviously doing something very wrong not to have done this even before opening up.

    Personally i would rather walk 7-8 mins away for the perfect coffee than get a shit coffee for cheaper closer by. I think that is probably the majority of your problem right there. ( this is a combination of the barista and the quality of the coffee you use)

    Also people who are indoors all day want to be able to go outside for their coffee and get some sun, since your inside, kind of defeats the purpose.

    • oztite on 30/09/2017 - 11:47
      +1

      OK, the things I can identify are:

      • Much better fit-out. Mixed luxurious and hipster if you know what I mean
      • Much more staff, and they all hipster like
      • Much more range of food. Hot food as well as "special of the day" type of things
      • Longer opening hours into the evening and on weekends

      Unfortunately all of these cost a lot of money. My thoughts were, compared to the coffee shop down the road: spend 1/10 of the budget and get 1/20 of the customers and I would still survive. But I am getting like 1/100 of the customers…

      • nicbaz on 30/09/2017 - 22:17
        +3

        Of the competitors customers, how many are actually just buying coffee?
        Given customers are walking so far, perhaps they’re going for lunch.
        If customers need lunch, then they have to walk to the competitor anyway, so they will just get coffee at the competitor anyway, so you have no chance of taking any of these customers given you don’t sell food. I’m not suggesting you do, just trying to see realistally how big of a market you can tap into?

        On the topic of coffee, I think you’re misunderstanding how important ‘good’ coffee is. People will walk a long way for a great coffee, and will spend a lot on things like coffee machines etc.
        Your coffee needs to be as good as, if not better, than the competitors.

        I see you mentioned you assumed a certain number of guaranteed customers based on the proximity - if quality was second to convenience, people would just get a pod machine.

        • mooboy on 02/10/2017 - 11:41

          Building on what nicbaz said, get a friend who is passionate about good coffee to try that place and yours and see what they make of the difference.

  • Word on 29/09/2017 - 18:47
    +5

    If you build it people will come. Although, not in your case it appears.

  • chumlee on 29/09/2017 - 18:47
    +1

    What would Gordon Ramsay say if he came for a visit and to try your food?

    With 400 people in the building you should be able to make it viable with snacks/coffee/pastries.

    Do you sell juices/smoothies?

    Maybe you need to spend a bit on a small refurb.

    Can you do basic hot food like bacon & egg muffin and coffee deal in the morning? Doesn't require a huge fitout. I see cafes in shopping centre walkways that serve basic hot food with very small cooking setup

  • dylanando on 29/09/2017 - 18:49
    +2

    I'd be looking at a typical customer, Why would they walk much further for something they can get almost instantly. If you believe in your coffee i'd be handing out some free ones for people to try, Maybe even post it here on ozbargain. I find most coffee shops around me are tasteless, bitter garbage and i'd rather have an instant coffee at home and save quite a number of dollars. I know you're only leasing out a small area but are you able to put in seating? Wouldnt most 'business' folks go out to coffee for a meeting and so on?

    I wouldn't give up just because you're having a difficult time unless of course you don't want to continue.

  • AlienC on 29/09/2017 - 18:50

    Start selling cheap small mini pizzas for decent prices and amounts and you will have more customers coming in guaranteed. Expand to stuff like fish and chips and burgers and you might even pull some random residents from a few miles away.

  • Azza on 29/09/2017 - 20:34
    +1

    Is the cafe open 5 days a week? I'm assuming the building is a typical 9-5 Monday to Friday working week. If so maybe customers aren't aware of the cafe and if it's only open 3 days then customer habits will kick in and they will go to the shop that is always open, e.g. convenience. Don't worry about the coffee price, in fact you should increase to be on the mark with the competitors but you must offer good coffee, good food and a good experience. The Cafe down the road from my office is about a 5 min walk and it's a trendy coffee shop. Every now and again they have themed lunches, e.g. they will cook a large batch of paella and that is different for customers. Keep the menu tight though, don't have too many options otherwise your costs will be too high.

    I'd also suggest you sit inside the competitors coffee shop and notice what they do well.

    That is assuming you have some energy left in the tank. It can be hard to motivate yourself when the business is not performing.

    • oztite on 30/09/2017 - 11:49

      5 days a week, 8am to 5pm.

      I did visit the competitor coffee shop several times before opening mine. Everything they do better, but all that costs money. They have like 100 times more customers than I would at my site, so I couldn't spend money like they did on fit-out, staff, rage of food (commercial kitchen super expensive) etc.

  • stunspore on 29/09/2017 - 20:48
    +2

    I think the biggest one is providing good space for people to take a mental break from work. Produce some small sitting/standing areas and not making it too crowded.

    If people are willing to walk out - they probably aren't just buying a coffee and walking back. They are making use of some time to take a breather.

  • AndrewK001 on 29/09/2017 - 20:59
    +4

    Coffee shops in office buildings generally get business from meetings. Do you have table and chairs for people in the building to use? Even the worst coffee should be fine as often people just put the expense on their corporate card so it is free.

    • oztite on 30/09/2017 - 11:50

      The space only offers a few seats unfortunately. 12 seats in 3 tables.

  • Hirolol on 29/09/2017 - 21:03

    could it be that nobody likes the coffee?
    you can ask people as much as you want but most will say the coffee is fine to your face.
    if it tastes bitter or slightly different than usual then nobody will want to drink it.

    that being said i dont think its a very good position.

  • potm on 29/09/2017 - 21:11
    +14

    5 people through per day. What kind of building is this, ozbargain head office?

  • FittyFitty on 29/09/2017 - 21:14

    Start doing pancakes/crepes/waffles for breakfast and watch it grow…

  • T1OOO on 29/09/2017 - 21:43

    Time for advice was BEFore starting. It’s sll over red rover. Pull the pin mate.

  • T1OOO on 29/09/2017 - 21:44

    Try a free coffee day. Or $1

  • DonWilson on 29/09/2017 - 22:46
    +5

    For future reference: any business based on a single source of revenue is likely to fail at some point. At some point in the businesses life that source won't deliver - in this case maybe a couple of companies in the building go under and the building has trouble hiring out the space for a couple of years or a trend of becoming ultra thrifty savers sweeps through the building or a couple of the businesses buy a good coffee machine. And your business is gone.

    In this case you not only picked a business plan that meant only one real way to make money - getting a large portion of the building buying coffee. You accepted there was no way of getting money from external customers and you have no other products to sell but coffee. On top of that you weren't buying out an existing business with a proven track record, your business plan was just making numbers up and hoping they'd pan out. Where does that 50 expected customers come from?

    I'd pull the plug, mostly based on the fact you can't really pull in business outside of the building.

    • oztite on 30/09/2017 - 11:53

      That's a very good point, and that was always a risk - if the businesses in the building leave, I'd have zero customers and have to shut down. This was known at the start, and I made a conscious decision to accept the risk given the chance is low and also if they don't leave I would have guaranteed foot traffic.

      The thing is, building is fully leased at the moment, and I am still not getting any customers. That is the painful part…

      • DonWilson on 30/09/2017 - 12:22

        I'm genuinely curious where the assumed 50 people come from. Is this a 500-1,000 person building?

        • oztite on 30/09/2017 - 12:27

          about 400-450 staff based on the numbers given to me at the start. I don't think any businesses have left the building in the 3 months since we got there…

        • DonWilson on 30/09/2017 - 15:17
          +2

          @oztite: 11-12.5% every single day is a pretty bold assumption, especially as you didn't run any kind of opening promotion (?).

        • dealman on 01/10/2017 - 10:14
          +2

          @oztite:

          Agents will say what they have to say get the property leased .

          Have you actually sat outside the building and counted the number of people doing in?

        • danyool on 01/10/2017 - 23:22

          @dealman:

          Indeed. The building could hold 400-450 people, but how many actually work in the building? People might be working from home, out at other sites, etc.

          Was also wondering, is there basement carpark? If so, they might be catching the lift up so they don't have to walk past your shop?

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