Franchising vs owning your own shop vs Starbucks

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Date: 12 Sep 2006 20:58:35
From:
Subject: Franchising vs owning your own shop vs Starbucks

Just trying to gather some opinions here while dancing on landmines...

I'm faced with several options and I'm wondering what the pros and
cons are. Scooters is selling franchises across the U.S., but the
initial start-up costs look steep. Not sure if anyone else is selling
franchises as well or how they stack up. Starbucks is hiring managers
and assistant managers, but unless you have specific managerial
experience, you have to start out as an assistant manager in the
$20K-$30K range (which almost goes to pay for apartment rent, but does
little for covering food costs). Then there's the idea of starting up
an independent coffee shop with out-of-pocket cash/loans and the
inherent bankruptcy possibility

What's the alt.coffee consensus regarding entering the coffee market
as a franchiser vs Starbucks employee vs a mom-and-pop?

Date: 12 Sep 2006 20:33:46
From: North Sullivan
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 20:58:35 GMT, choffman@austin.rr.com wrote:

>Just trying to gather some opinions here while dancing on landmines...
>
>I'm faced with several options and I'm wondering what the pros and
>cons are. Scooters is selling franchises across the U.S., but the
>initial start-up costs look steep. Not sure if anyone else is selling
>franchises as well or how they stack up. Starbucks is hiring managers
>and assistant managers, but unless you have specific managerial
>experience, you have to start out as an assistant manager in the
>$20K-$30K range (which almost goes to pay for apartment rent, but does
>little for covering food costs). Then there's the idea of starting up
>an independent coffee shop with out-of-pocket cash/loans and the
>inherent bankruptcy possibility
>
>What's the alt.coffee consensus regarding entering the coffee market
>as a franchiser vs Starbucks employee vs a mom-and-pop?
>

Why do you want to enter the coffee market? What are your goals?
Make money? Create a community asset? Find new friends? There are
lots of businesses. Why coffee? How do you plan to differentiate
yourself from other coffee businesses?

I'm a control freak, so I wouldn't personally choose a franchise. I
do think it's an excellent idea to work in a coffeeshop before you
sink your life savings into starting your own business. I didn't
follow the advice I'm giving you, but my risk exposure due to unique
location and personal circumstances was very low.

There's a bulletin board for coffee shop owners on this site:

http://www.specialty-coffee.com/

I recommend that you register for that bulletin boardr, lurk for
awhile, and learn about some of the daily issues for those in the
business. Then ask lots of questions. The folks there are generally
very helpful, and it won't cost you a cent. Joining the SCAA under
the generous first year membership rates is also recommended.

North Sullivan
(entering my fourth year as an independent coffeeshop owner/roaster)

Date: 13 Sep 2006 15:51:52
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 20:33:46 -0500, North Sullivan
<northwrites@bluebottle.com > wrote:

>Why do you want to enter the coffee market? What are your goals?
>Make money? Create a community asset? Find new friends? There are
>lots of businesses. Why coffee?

Honestly? I've got a background in high-tech (programmer, trainer,
tech writer, engineer), but none of the work I've done really
interests me. My real interests are in food, rock climbing, cycling,
video games and computer animation. I've made a conscious decision to
switch careers to pursue a job doing something that I really enjoy.
I've also trying to get an "in" into Patagonia or one of the other
climbing equipment companies. So, coffee isn't the only thing I'm
focussing on this early in the game. But, I've been putting a lot of
effort into learning about coffee, it's history, how to make a good
cup, etc. And, if an opportunity opens up where I can get into a
coffee shop or franchise, I'm currently in a position to pursue it.
But, I may not necessarily have the experience to avoid making really
big blunders... Bottom line is that I want to make a living doing
something that I enjoy.

> How do you plan to differentiate
>yourself from other coffee businesses?

My first thought is to offer coffee styles that can't easily be found
in the U.S. - Japanese ice and milk coffee drinks, authentic
Vietnamese sweetened coffee and teas, African coffee drinks, etc.
Basically, the kind of coffees that would appeal to ex-pats from
specific countries that can't stand American-style drinks. But, this
would require being in a city with lots of immigrants, such as next to
an embassy in Houston or NY.

My second thought is to emulate something like Stumptown Roasters, and
offer really good coffee, and opportunities to taste coffee samples
from the smaller fincas as a way of increasing customer awareness of
specialty coffee. Austin, TX, may be a bad place to do that, though.

>I'm a control freak, so I wouldn't personally choose a franchise. I
>do think it's an excellent idea to work in a coffeeshop before you
>sink your life savings into starting your own business. I didn't
>follow the advice I'm giving you, but my risk exposure due to unique
>location and personal circumstances was very low.
>
>There's a bulletin board for coffee shop owners on this site:
>
>http://www.specialty-coffee.com/
>
>I recommend that you register for that bulletin boardr, lurk for
>awhile, and learn about some of the daily issues for those in the
>business. Then ask lots of questions. The folks there are generally
>very helpful, and it won't cost you a cent. Joining the SCAA under
>the generous first year membership rates is also recommended.
>
>North Sullivan
>(entering my fourth year as an independent coffeeshop owner/roaster)

Thank you for the advice. I did join the SCAA last year, and have
been reading the magazines they send me from cover to cover. My
membership is coming due, and I have to decide to renew it. I'll
subscribe to the bulletin board next.

Date: 13 Sep 2006 17:07:42
From: Barry Jarrett
Subject: Re: Franchising vs owning your own shop vs Starbucks

would you consider moving to the st louis area?

Date: 13 Sep 2006 21:54:55
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 17:07:42 GMT, Barry Jarrett
<barry@rileys-coffee.com > wrote:

>
>
>would you consider moving to the st louis area?

Well, there'd have to be a good offer involved somewhere. My wife is
Japanese, and is currently in Tokyo taking care of family. Ideally,
I'd prefer to be in Tokyo, or at least somewhere in the Pacific
Northwest in order to reduce flight time to Japan. But, if the
conditions are right, St. Louis might be a stepping stone along the
way. What's the draw in St. Louis?

Date: 13 Sep 2006 22:49:50
From: Barry Jarrett
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 21:54:55 GMT, choffman@austin.rr.com wrote:

>conditions are right, St. Louis might be a stepping stone along the
>way. What's the draw in St. Louis?

low cost of living. ;)

what's the draw in austin, if you want to be in the PNW?

seriously, figure out where you want to be, and then figure out how to
do it. if you really want to do the coffee thing, then you have to
figure you're going to be tied down at least 10 years where ever you
do it. building/buying a store is even more of a committment than
buying a house....

i've got opportunities to build one or more additional shops, but lack
the capital.

Date: 14 Sep 2006 19:13:16
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 22:49:50 GMT, Barry Jarrett
<barry@rileys-coffee.com > wrote:

>On Wed, 13 Sep 2006 21:54:55 GMT, choffman@austin.rr.com wrote:
>
> >conditions are right, St. Louis might be a stepping stone along the
> >way. What's the draw in St. Louis?
>
>low cost of living. ;)
>
>what's the draw in austin, if you want to be in the PNW?

There's no draw in Austin. I just happen to be here right now. My
wife had been attending the University of Texas in Austin, but she's
graduated now. Because she's Japanese, she wants to be able to go
back to Tokyo occasionally, and being in the PNW would mean a shorter
flight for her. That, and the PNW is still a hot-bed of specialty
coffee activity, from what I can see. But if St. Louis looks
attractive enough, I'd consider moving there.

>seriously, figure out where you want to be, and then figure out how to
>do it. if you really want to do the coffee thing, then you have to
>figure you're going to be tied down at least 10 years where ever you
>do it. building/buying a store is even more of a committment than
>buying a house....

I realize that. Right now, I'm just trying to uncover opportunities.
If I can learn from other people here in alt.coffee along the way,
then I'll absorb whatever I can here.

>i've got opportunities to build one or more additional shops, but lack
>the capital.

How much capital are you talking about?

Date: 14 Sep 2006 19:30:56
From: Robert Harmon
Subject: Re: Franchising vs owning your own shop vs Starbucks

There have been openings of many new coffee shops here in the West side of
Pearland (just South of Houston, TX). From talking to the owners it appears
that most have owned & operated other food & drink establishments. They all
have high hopes, some even have business plans, but most will be out of
business within a year. I'm just not convinced that enough Texans will drive
to their stores, get out of their cars, walk in to order, & wait as some
doofus chats with his fellow baristas while ignoring the customer. Texans
love their cars/trucks & are short of time, & are willing to plunk down $$$
for almost anything that doesn't interfere with one or the other, so why not
a drive-thru stand? I know from experience that drive-thru stands work in
Seattle as well (who wants to get out of their warm car when it's cold & wet
outside?).
--
Robert (duck & cover) Harmon
http://tinyurl.com/pou2y
http://tinyurl.com/psfob
http://tinyurl.com/fkd6r

<choffman@austin.rr.com > wrote in message
news:82ajg2d8sltqp9o7imh614uglcfn4c64ku@4ax.com...
> On Wed, 13 Sep 2006 22:49:50 GMT, Barry Jarrett
> <barry@rileys-coffee.com> wrote:
>
>>On Wed, 13 Sep 2006 21:54:55 GMT, choffman@austin.rr.com wrote:
>>
>> >conditions are right, St. Louis might be a stepping stone along the
>> >way. What's the draw in St. Louis?
>>
>>low cost of living. ;)
>>
>>what's the draw in austin, if you want to be in the PNW?
>
> There's no draw in Austin. I just happen to be here right now. My
> wife had been attending the University of Texas in Austin, but she's
> graduated now. Because she's Japanese, she wants to be able to go
> back to Tokyo occasionally, and being in the PNW would mean a shorter
> flight for her. That, and the PNW is still a hot-bed of specialty
> coffee activity, from what I can see. But if St. Louis looks
> attractive enough, I'd consider moving there.
>
>
>>seriously, figure out where you want to be, and then figure out how to
>>do it. if you really want to do the coffee thing, then you have to
>>figure you're going to be tied down at least 10 years where ever you
>>do it. building/buying a store is even more of a committment than
>>buying a house....
>
> I realize that. Right now, I'm just trying to uncover opportunities.
> If I can learn from other people here in alt.coffee along the way,
> then I'll absorb whatever I can here.
>
>>i've got opportunities to build one or more additional shops, but lack
>>the capital.
>
> How much capital are you talking about?
>

Date: 14 Sep 2006 20:14:24
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

I know what you mean. There's one shop down toward Bastrop (can't
remember the name of it, something like "Coffee Dog"), where I met the
owner buying beans at Texas Coffee Traders here in Austin. Got the
guy's card, drove the 45 minutes to get to his place, and waited while
his wife and son finished chatting with each other before bothering to
take my order. Place was in the middle of nowhere, they had no
walk-by traffic, the drinks were marginal and over-priced, and neither
the wife or son knew anything about the quality or types of beans they
were brewing. Never bothered going back.

Drive-thrus seem to be popping up more within Austin. There's one
right across the street from Starbucks that even got mentioned in the
Statesman paper. But, I'm not impressed enough with drive-thrus
myself to use them right now. The same-mentioned Starbucks has a
drive-thru window and there's almost always 3-5 cars waiting in line
when I drive by the area. Don't know about the Texans in Houston, but
in Austin, most of the Starbuck's trade is of the sit-down-and-chat
type, with a sprinkling of the
I've-got-to-get-my-fix-on-the-way-to-work types. Around here, drive
thrus seem to be most popular with commuters, and soccer-moms that
either don't want to mess with getting their kids in and out of the
car, or are too fat to do so themselves.

On Thu, 14 Sep 2006 19:30:56 GMT, "Robert Harmon"
<r_h_harmon@Zhotmail.com > wrote:

>There have been openings of many new coffee shops here in the West side of
>Pearland (just South of Houston, TX). From talking to the owners it appears
>that most have owned & operated other food & drink establishments. They all
>have high hopes, some even have business plans, but most will be out of
>business within a year. I'm just not convinced that enough Texans will drive
>to their stores, get out of their cars, walk in to order, & wait as some
>doofus chats with his fellow baristas while ignoring the customer. Texans
>love their cars/trucks & are short of time, & are willing to plunk down $$$
>for almost anything that doesn't interfere with one or the other, so why not
>a drive-thru stand? I know from experience that drive-thru stands work in
>Seattle as well (who wants to get out of their warm car when it's cold & wet
>outside?).

Date: 14 Sep 2006 09:18:53
From: Dan
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 15:51:52 GMT, choffman@austin.rr.com wrote:

>Honestly? I've got a background in high-tech (programmer, trainer,
>tech writer, engineer), but none of the work I've done really
>interests me. My real interests are in food, rock climbing, cycling,
>video games and computer animation. I've made a conscious decision to
>switch careers to pursue a job doing something that I really enjoy.
>I've also trying to get an "in" into Patagonia or one of the other
>climbing equipment companies. So, coffee isn't the only thing I'm
>focussing on this early in the game.

Someone once told me that in later life you'll not regret so much the
things you've done as the things you haven't done. It proved true for
me, and it sounds you have the chance to consider it now.

Someone else also told me to ask the question: What's the worst thing
that could happen if you do (or don't do) whatever it is you're
thinking of. In your situation, the worst case scenario is that you
spend a few years of your life losing all your money. Not so awful.
You have a fallback profession (even though you're not enjoying it) to
pick up the monetary pieces and start over again. You have a wife to
share your venture and I take it you have no children yet to be
responsible for. What's to lose?

I made a similar kind of change. I was an avid scuba diver, worn out
in my old profession, early thirties, loving wife, no children. I
became a scuba instructor, opened my own dive shop in the Caribbean,
operated it for several years, and had an enjoyable life. My wife
unfortunately got cancer and we had to return to the US for treatment,
but that's another story. We always had fond memories of our
"adventure", and to this day I remain glad that we had done it.

My one tip to you (and the theme that most posters here seem to be
driving at) is to prepare yourself well before you start. Know your
own skills, know your shortcomings and work on them, know your chosen
field, and get the experience you need to break into it as an
independent operator. If it takes three to five years to get youself
into a position to mazimize your chances for success, so be it.

And I do wish you all the success in the world!

--
Regards,
Dan

Date: 12 Sep 2006 15:21:34
From: Randy G.
Subject: Re: Franchising vs owning your own shop vs Starbucks

Rhetorically speaking:
Do you have management training?
Do you have management experience?
Do you have business experience
Do you have experience in the food services sector?
Do you REALLY know coffee?
Do you like people?
Are you the kind of person that people like?
Is the money you are going to invest 'disposable'?

Start up costs can be huge- equipment, lease, insurance, name
registration and search, etc.

Randy "too much fun to do it as a living" G.
http://www.EspressoMyEspresso.com

choffman@austin.rr.com wrote:
>
>Just trying to gather some opinions here while dancing on landmines...
>
>I'm faced with several options and I'm wondering what the pros and
>cons are. Scooters is selling franchises across the U.S., but the
>initial start-up costs look steep. Not sure if anyone else is selling
>franchises as well or how they stack up. Starbucks is hiring managers
>and assistant managers, but unless you have specific managerial
>experience, you have to start out as an assistant manager in the
>$20K-$30K range (which almost goes to pay for apartment rent, but does
>little for covering food costs). Then there's the idea of starting up
>an independent coffee shop with out-of-pocket cash/loans and the
>inherent bankruptcy possibility
>
>What's the alt.coffee consensus regarding entering the coffee market
>as a franchiser vs Starbucks employee vs a mom-and-pop?
>

Date: 12 Sep 2006 23:17:48
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 15:21:34 -0700, Randy G. <frcn@DESPAMMOcncnet.com >
wrote:

>Rhetorically speaking:
> Do you have management training?
> Do you have management experience?

I recently received my MBA, and I have some hands-on experience
leading small project teams. Otherwise, I'm trying to gain hands-on
managerial experience any way that I can get it.

> Do you have business experience
> Do you have experience in the food services sector?

No. That's what I'm trying to gain right now.

> Do you REALLY know coffee?

I'm in the process of doing what I can to learn as much as I can. I'm
starting to roast my own beans. I've been making my own coffee using
a variety of methods and a variety of beans. I attended a cupping at
Stumptown Roasters when I was in Portland last week, and got exposed
to small-finca beans that I would never have tasted otherwise. I'm
listening to anyone that will talk to me, and I'm trying to get a
"Coffee 101" class set up at a local wine and cheese shop. What I
haven't been able to do is to get a part-time job in someone's shop
working directly with the beans.

> Do you like people?

Yes, with a basil-chive-white wine sauce. and a cold beer on the
side...

> Are you the kind of person that people like?

That's something that I've never been able to determine. I need more
feedback on that question.

> Is the money you are going to invest 'disposable'?

For a franchise - no. Scooters' numbers indicate that I'd be putting
most of my life savings at risk. For buying an existing shop or kiosk
- maybe. A recent newspaper ad had a shop in Houston up for sale for
what looked like 25% to 50% of what Scooters is talking about. For
Starbucks - I was at a manager/ assistant manager open house job fair
this afternoon; I was told that the best I could expect right now is
to come in as an assistant manager at $20K to $30K annually. That's
much less than what I was earning as a technical trainer - it's still
income, but represents a large "cost" in terms of lost wages. So,
Starbucks wouldn't be "disposable" either.

>Start up costs can be huge- equipment, lease, insurance, name
>registration and search, etc.

Understood. Scooters is talking about roughly $200K for a
drive-through kiosk, and at least $350K for a dedicated building. I
expect that costs would be similar if I created my own shop from
scratch.

Date: 12 Sep 2006 21:15:07
From: Randy G.
Subject: Re: Franchising vs owning your own shop vs Starbucks

I am starting to put it together. You were asking not long ago about
learning to roast/starting to roast. Here is my sense of the thing-
although the MBA will be an asset if you learn to apply it, and have
the people skills, then it is a good start. You need two things- some
hands-on experience in the coffee business (even if it means working
behind the counter you-know-where) and some managerial experience.

I say get a two or three year plan started. In that time learn all you
can about coffee including preparation, taste training, and roasting,
etc, and get some real-world experience in the coffee business. Plan
on going to the SCAA Long Beach show next year and taking every course
and training session you can.

At the end of that two or three year time, if you SILL want to go into
the business you will be ready to succeed... maybe.

Oh- and listen to EVERYTHING that Barry tells you. Search through the
archives and read everything he has written about the coffee business.
He has a love and enthusiasm for this business that can't be beat.

And, btw- what I have shared is mostly from what I have learned on
this group. I was an art major, and although I DO have some managerial
experience, I have no formal training in this area. My customers loved
me but many of the folks who worked under me didn't- mostly the ones
who were just putting in the hours. I tended to think that others
would have the same work ethics and desires as I, and expected of them
what I expected of myself- a mistake on my part.

Good luck!

Randy "taking all the fun out of it" G.
http://www.EspressoMyEspresso.com

choffman@austin.rr.com wrote:
>
>On Tue, 12 Sep 2006 15:21:34 -0700, Randy G. <frcn@DESPAMMOcncnet.com>
>wrote:
>
>>Rhetorically speaking:
>> Do you have management training?
>> Do you have management experience?
>
>I recently received my MBA, and I have some hands-on experience
>leading small project teams. Otherwise, I'm trying to gain hands-on
>managerial experience any way that I can get it.
>
>> Do you have business experience
>> Do you have experience in the food services sector?
>
>No. That's what I'm trying to gain right now.
>
>> Do you REALLY know coffee?
>
>I'm in the process of doing what I can to learn as much as I can. I'm
>starting to roast my own beans. I've been making my own coffee using
>a variety of methods and a variety of beans. I attended a cupping at
>Stumptown Roasters when I was in Portland last week, and got exposed
>to small-finca beans that I would never have tasted otherwise. I'm
>listening to anyone that will talk to me, and I'm trying to get a
>"Coffee 101" class set up at a local wine and cheese shop. What I
>haven't been able to do is to get a part-time job in someone's shop
>working directly with the beans.
>
>> Do you like people?
>
>Yes, with a basil-chive-white wine sauce. and a cold beer on the
>side...
>
>> Are you the kind of person that people like?
>
>That's something that I've never been able to determine. I need more
>feedback on that question.
>
>> Is the money you are going to invest 'disposable'?
>
>For a franchise - no. Scooters' numbers indicate that I'd be putting
>most of my life savings at risk. For buying an existing shop or kiosk
>- maybe. A recent newspaper ad had a shop in Houston up for sale for
>what looked like 25% to 50% of what Scooters is talking about. For
>Starbucks - I was at a manager/ assistant manager open house job fair
>this afternoon; I was told that the best I could expect right now is
>to come in as an assistant manager at $20K to $30K annually. That's
>much less than what I was earning as a technical trainer - it's still
>income, but represents a large "cost" in terms of lost wages. So,
>Starbucks wouldn't be "disposable" either.
>
>>Start up costs can be huge- equipment, lease, insurance, name
>>registration and search, etc.
>
>Understood. Scooters is talking about roughly $200K for a
>drive-through kiosk, and at least $350K for a dedicated building. I
>expect that costs would be similar if I created my own shop from
>scratch.

Date: 13 Sep 2006 15:31:11
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 21:15:07 -0700, Randy G. <frcn@DESPAMMOcncnet.com >
wrote:

>I am starting to put it together. You were asking not long ago about
>learning to roast/starting to roast. Here is my sense of the thing-
>although the MBA will be an asset if you learn to apply it, and have
>the people skills, then it is a good start. You need two things- some
>hands-on experience in the coffee business (even if it means working
>behind the counter you-know-where) and some managerial experience.

Thanks, Randy. I think you've figured me out. I like coffee a lot,
but don't have the experience to start up my own shop without
introducing a lot of outside risk at the same time.

>I say get a two or three year plan started. In that time learn all you
>can about coffee including preparation, taste training, and roasting,
>etc, and get some real-world experience in the coffee business. Plan
>on going to the SCAA Long Beach show next year and taking every course
>and training session you can.
>
>At the end of that two or three year time, if you SILL want to go into
>the business you will be ready to succeed... maybe.
>
>Oh- and listen to EVERYTHING that Barry tells you. Search through the
>archives and read everything he has written about the coffee business.
>He has a love and enthusiasm for this business that can't be beat.
>
>And, btw- what I have shared is mostly from what I have learned on
>this group. I was an art major, and although I DO have some managerial
>experience, I have no formal training in this area. My customers loved
>me but many of the folks who worked under me didn't- mostly the ones
>who were just putting in the hours. I tended to think that others
>would have the same work ethics and desires as I, and expected of them
>what I expected of myself- a mistake on my part.

I'm currently reading "The Spirit to Serve", by J. W. Marriott. While
it is a pretty useless book from a management or company history
viewpoint, Marriott does emphasize people skills when dealing with
employees. As do Jack Welch (GE) and Richard Brannigan (Virgin). I've
got job experience with, but I do understand it on an intellectual
level. I just need the opportunity to put theory to practice.

Date: 13 Sep 2006 03:22:05
From: Barry Jarrett
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 23:17:48 GMT, choffman@austin.rr.com wrote:

>Starbucks - I was at a manager/ assistant manager open house job fair
>this afternoon; I was told that the best I could expect right now is
>to come in as an assistant manager at $20K to $30K annually.

that's not too bad, from my perspective. being able to make $30k
essentially w/o risk is tempting. if you're making more and liking
it, then you have to consider if going out on your own in coffee is
really what you want to do. iow, if you're in it for the money,
you're barking up the wrong tree.

>Understood. Scooters is talking about roughly $200K for a
>drive-through kiosk, and at least $350K for a dedicated building. I
>expect that costs would be similar if I created my own shop from
>scratch.

it *is* possible to do it for considerably less, but you need
experience & connections & time to make it happen. if you want to
wave a handful of cash and have a store appear, then yeah, figure
$200k *minimum*.

franchising is supposed to provide that "experience & connections" and
support to get you up on your feet. that's what you pay them a
franchise fee for... also name recognition, if that's a factor. if
the name is meaningless, and they franchisor is just learning the
ropes themselves, then you're setting up for a world of hurt.

Date: 13 Sep 2006 11:20:11
From: Jack Denver
Subject: Re: Franchising vs owning your own shop vs Starbucks

"Barry Jarrett" <barry@rileys-coffee.com > wrote in message
news:8pteg21uoo0rjbgidu50v3fj8rs6sdkkdt@4ax.com...
> On Tue, 12 Sep 2006 23:17:48 GMT, choffman@austin.rr.com wrote:
>
> >Starbucks - I was at a manager/ assistant manager open house job fair
> >this afternoon; I was told that the best I could expect right now is
> >to come in as an assistant manager at $20K to $30K annually.
>
> that's not too bad, from my perspective. being able to make $30k
> essentially w/o risk is tempting. if you're making more and liking
> it, then you have to consider if going out on your own in coffee is
> really what you want to do. iow, if you're in it for the money,
> you're barking up the wrong tree.

It depends on where in the country you are - in the rural Midwest, $30k may
be a living wage, in NYC it won't pay the rent on a studio apartment.

It doesn't strike me that being an assistant mgr. at *$ really is good
training for running your own business - too many aspects of the business
are taken care of by HQ, so you will never learn key aspects such as
supplier relations, financing, cash flow mgmt, etc. And you won't learn much
about making coffee either, now that they have delegated that to superauto
machines. So what will you learn, other than picking up trash from the floor
and "tall, grande or vente?" How to keep a staff of transient 20 somethings
in line (a skill akin to herding cats). A valuable skill but just one aspect
of what's needed.

>
>
> >Understood. Scooters is talking about roughly $200K for a
> >drive-through kiosk, and at least $350K for a dedicated building. I
> >expect that costs would be similar if I created my own shop from
> >scratch.
>
> it *is* possible to do it for considerably less, but you need
> experience & connections & time to make it happen. if you want to
> wave a handful of cash and have a store appear, then yeah, figure
> $200k *minimum*.
>

>
> franchising is supposed to provide that "experience & connections" and
> support to get you up on your feet. that's what you pay them a
> franchise fee for... also name recognition, if that's a factor. if
> the name is meaningless, and they franchisor is just learning the
> ropes themselves, then you're setting up for a world of hurt.

I don't know where the poster is located. I'm in the Northeast and I've
never heard of Scooters - the name means nothing to me and I wouldn't pay
one nickel for it in this market. Looking at their web page, they seem to be
centered in Nebraska with a few outposts in Iowa and Kansas. Not exactly
known as hotbeds of espresso culture. If your in Omaha, the name probably
means something, but then again the best locations may already be taken.
Outside of Nebraska, I doubt the name means much.

They seem to have enough locations that they should know what they are doing
by now though they've only been in business since 1998. OTOH, their home
page features a Toffee Nut Mudslide Latte. Is this what you really want to
be involved with?

http://www.scooterscoffeehouse.com/index.shtml

http://www.scooterscoffeehouse.com/franchise.shtml#history

http://www.scooterscoffeehouse.com/locations.shtml

Personally it seems to me that the name is the important thing - if it is
one with high recognition and loyalty like McD's - that's a franchise I'd
pay for (and even then you have to have the right location ,territory,
royalty structure, etc.). As far as "know how", paying tens of thousands
of dollars up front and a continuing royalty for a few loose leaf "operating
manuals" and being pressured to spend a lot of money to build the
"prototype store" and constantly "upgrade" your operation (you pay the
increased costs, the franchisor reaps the increased sales) seems like a bad
bargain. Franchising is like most other "pyramid" type operations - the
people at the very top get rich - this includes the owner of the franchise
brand and a few top operators. Everyone else thinks that they can be like
the top operators and make as much as them, but 90% are deluding themselves
and will never make a cent.

Date: 13 Sep 2006 17:03:54
From: Barry Jarrett
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 11:20:11 -0400, "Jack Denver"
<nunuvyer@netscape.net > wrote:

>royalty structure, etc.). As far as "know how", paying tens of thousands
>of dollars up front and a continuing royalty for a few loose leaf "operating
>manuals" and being pressured to spend a lot of money to build the
>"prototype store" and constantly "upgrade" your operation (you pay the
>increased costs, the franchisor reaps the increased sales) seems like a bad
>bargain. Franchising is like most other "pyramid" type operations - the
>people at the very top get rich - this includes the owner of the franchise
>brand and a few top operators. Everyone else thinks that they can be like
>the top operators and make as much as them, but 90% are deluding themselves
>and will never make a cent.

you may recall that we started out as a franchise years and years ago.
it literally crippled us from the start. looking back, we would have
been better off if dad had said, "let's get into the coffee biz.
here's $40,000, take a year or two and learn everything you can."

instead, he paid the $40,000 to a franchisor that apparently felt ken
davids' first edition was a sufficient coffee training manual, and
that a looseleaf binder with ALL CAPS dot matrix printouts qualified
as an operations manual.

--barry "my operations manual is written in crayon"

Date: 13 Sep 2006 15:44:10
From: Jack Denver
Subject: Re: Franchising vs owning your own shop vs Starbucks

I knew that you were a franchise but the looseleaf binder thing was based
on other (bad) experiences clients of mine have had. All these crappy
franchisors seem to operate from the same playbook . My advice - if you see
a looseleaf binder, run for the door. Franchises are like these weight loss
programs, where in the ads they show the one person out of a hundred who has
actually lost 40 lbs. on the program and don't tell you about the other 99
who didn't except in the small print.

There are a few legitimate and extremely well known franchises (e.g. Mc
D's) where most franchisees have done extremely well but I wouldn't pay 5
cents for most of them. Rarely does a franchisee have enough leverage to
establish an adequate exclusive territory, etc. so that if you happen to
chance in on a profitable territory, the franchisor will just keep giving
out more franchises in the neighborhood until "equilibrium" is restored,
meaning that you'll be back to making minimum wage or less for your time.
Very rarely do the interests of franchisees and franchisors align - they
make money from selling more franchises and from upping the chainwide gross
sales, on which royalties are based. Whether or not you can bring anything
to the bottom line from these sales is not their problem. Ideally you'll
just eke out enough of a living to not close your doors - that's the ideal
situation from their POV. Even McDonalds, which once was considered the
creme de la creme of franchises, has lately been accused of pushing
franchisees against their will toward the unprofitable "dollar menu" on
which the franchisees make little or no profit.

"Barry Jarrett" <barry@rileys-coffee.com > wrote in message
news:qqdgg212pe1bngfbfhdtv2kee5bn2sfs5u@4ax.com...
> On Wed, 13 Sep 2006 11:20:11 -0400, "Jack Denver"
> <nunuvyer@netscape.net> wrote:
>
> >royalty structure, etc.). As far as "know how", paying tens of
> >thousands
> >of dollars up front and a continuing royalty for a few loose leaf
> >"operating
> >manuals" and being pressured to spend a lot of money to build the
> >"prototype store" and constantly "upgrade" your operation (you pay the
> >increased costs, the franchisor reaps the increased sales) seems like a
> >bad
> >bargain. Franchising is like most other "pyramid" type operations - the
> >people at the very top get rich - this includes the owner of the
> >franchise
> >brand and a few top operators. Everyone else thinks that they can be like
> >the top operators and make as much as them, but 90% are deluding
> >themselves
> >and will never make a cent.
>
>
> you may recall that we started out as a franchise years and years ago.
> it literally crippled us from the start. looking back, we would have
> been better off if dad had said, "let's get into the coffee biz.
> here's $40,000, take a year or two and learn everything you can."
>
> instead, he paid the $40,000 to a franchisor that apparently felt ken
> davids' first edition was a sufficient coffee training manual, and
> that a looseleaf binder with ALL CAPS dot matrix printouts qualified
> as an operations manual.
>
>
> --barry "my operations manual is written in crayon"

Date: 13 Sep 2006 15:16:01
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 03:22:05 GMT, Barry Jarrett
<barry@rileys-coffee.com > wrote:

>On Tue, 12 Sep 2006 23:17:48 GMT, choffman@austin.rr.com wrote:
>
> >Starbucks - I was at a manager/ assistant manager open house job fair
> >this afternoon; I was told that the best I could expect right now is
> >to come in as an assistant manager at $20K to $30K annually.
>
>that's not too bad, from my perspective. being able to make $30k
>essentially w/o risk is tempting. if you're making more and liking
>it, then you have to consider if going out on your own in coffee is
>really what you want to do. iow, if you're in it for the money,
>you're barking up the wrong tree.

That's a good point. Assuming that they invite me to the second round
of interviews, it would be worth it to think of Starbuck's as a
risk-free entry to the field. I'm not in this for the money, but I do
want to make a good living at it. I was making a lot more money at my
last job, and having to drop down to $30K for a year would mean that
I'd have to live off of savings, to afford rent and food. BUt, that
would be better than to go into debt for a franchise and then watch it
go belly up after a year...

> >Understood. Scooters is talking about roughly $200K for a
> >drive-through kiosk, and at least $350K for a dedicated building. I
> >expect that costs would be similar if I created my own shop from
> >scratch.
>
>it *is* possible to do it for considerably less, but you need
>experience & connections & time to make it happen. if you want to
>wave a handful of cash and have a store appear, then yeah, figure
>$200k *minimum*.
>
>
>franchising is supposed to provide that "experience & connections" and
>support to get you up on your feet. that's what you pay them a
>franchise fee for... also name recognition, if that's a factor. if
>the name is meaningless, and they franchisor is just learning the
>ropes themselves, then you're setting up for a world of hurt.

This is a good point. Scooters has a number of shops across the U.S.
now, but they're just getting their feet wet in the Austin market.
They tried taking over the two local Triannon's, but for some reason
gave up on the idea of atually turning the Triannon's over into
full-blown Scooters shops. One dedicated Scooters is supposed to have
its grand opening on the other side of Austin this weekend, and to
other Scooters locations are on the planning board according to their
webiste. I talked to one person at Triannon who had only good things
to say about the Scooters franchise, But, I'm reserving my opinions
until I can get more information.

Date: 12 Sep 2006 15:18:20
From: daveb
Subject: Re: Franchising vs owning your own shop vs Starbucks

Marshall wrote:
> On Tue, 12 Sep 2006 20:58:35 GMT, choffman@austin.rr.com wrote:
>

> There are advantages and disadvantages to all three options and no
> ready-made answer to your questions. You will be much better off
> taking advice from people who know your experience, your personality,
> your expectations and your finances than a bunch of strangers on the
> Internet.
>
> Good luck.
>
> Marshall
in other words -- go away?

Date: 12 Sep 2006 18:16:47
From: Dan Bollinger
Subject: Re: Franchising vs owning your own shop vs Starbucks

> What's the alt.coffee consensus regarding entering the coffee market
> as a franchiser vs Starbucks employee vs a mom-and-pop?

If you haven't already, I suggest you investigate and research that question by
searching at the coffee organizations and trade magazines. Oh, and you
neglected to list one alternative, buying an existing coffee shop, whether a
franchise or independent.

Dan

Date: 12 Sep 2006 22:03:54
From: Marshall
Subject: Re: Franchising vs owning your own shop vs Starbucks

Date: 12 Sep 2006 23:01:31
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 22:03:54 GMT, Marshall
<mrfuss@ihatespamearthlink.net > wrote:

>There are advantages and disadvantages to all three options and no
>ready-made answer to your questions. You will be much better off
>taking advice from people who know your experience, your personality,
>your expectations and your finances than a bunch of strangers on the
>Internet.
>
>Good luck.

Thanks. But, I'd rather learn from "strangers", then just simply
listen to friends that don't have experience running coffee shops
themselves. In this vein, I want to talk to franchisees as well as
Starbucks managers, on top of the mom-and-pop coffee shop owners.

Date: 12 Sep 2006 23:06:39
From: Marshall
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Tue, 12 Sep 2006 23:01:31 GMT, choffman@austin.rr.com wrote:

>On Tue, 12 Sep 2006 22:03:54 GMT, Marshall
><mrfuss@ihatespamearthlink.net> wrote:
>
>>There are advantages and disadvantages to all three options and no
>>ready-made answer to your questions. You will be much better off
>>taking advice from people who know your experience, your personality,
>>your expectations and your finances than a bunch of strangers on the
>>Internet.
>>
>>Good luck.
>
>Thanks. But, I'd rather learn from "strangers", then just simply
>listen to friends that don't have experience running coffee shops
>themselves. In this vein, I want to talk to franchisees as well as
>Starbucks managers, on top of the mom-and-pop coffee shop owners.

I was thinking of your lawyer and/or your accountant.

Marshall

Date: 12 Sep 2006 14:37:00
From: daveb
Subject: Re: Franchising vs owning your own shop vs Starbucks

first, learn the business. you may not like it.
If at starbucks -- fine.

you have to decide whether you want to be self employed!! do you want
that??

who is "scooters"? why do any franchises have a chance? and you could
go just as broke with a franchise!! maybe even faster!

there are shop owners in this group look at their responses.

dave
115

Date: 12 Sep 2006 20:33:37
From: Dan Bollinger
Subject: Re: Franchising vs owning your own shop vs Starbucks

> who is "scooters"?

I did a check: http://www.scooterscoffeehouse.com/

Their newest or signature drink: Toffee Nut Mudslide Latte

Suffice it to say I'm not drinking coffee anywhere THAT is what they are
serving. :(

Dan

Date: 12 Sep 2006 22:59:18
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

Scooters attempted to buy up two of the Triannon shops here in Austin.
I talked to one of the people working at the Triannon's that I've
enjoyed going to in the past, and she did have good things to say
about Scooters. There was an ad in the Austin jobs section
advertising for franchisees.
http://www.scooterscoffeehouse.com/locations.shtml

I've seen some of the comments from shop owners in here in the past,
but I don't remember any of them saying that they were franchisees.

On 12 Sep 2006 14:37:00 -0700, "daveb" <davebobblane@gmail.com > wrote:

>first, learn the business. you may not like it.
>If at starbucks -- fine.
>
>you have to decide whether you want to be self employed!! do you want
>that??
>
>who is "scooters"? why do any franchises have a chance? and you could
>go just as broke with a franchise!! maybe even faster!
>
>there are shop owners in this group look at their responses.
>
>dave
>115

Date: 13 Sep 2006 10:23:40
From: Jasonian
Subject: Re: 'scooters' (With, IMHO, an idiotic name)

Personally, My advice would be to WORK behind the bar of a shop whose
methods you admire, or at least like.

Even if it's part-time.

As far as the idea that you can't learn anything working at Starbucks,
hogwash.

There is a reason they're so successful, and it's not because the
coffee is good. I learned a ridiculous amount in the short time I
worked at a Starbucks Kiosk over a year ago.

The people skills they train you in are like gold for promoting
return-customers.

On the other hand, you will learn next to nothing at all about coffee
and espresso.

While you were in Portland, did you stop by any other shops? The
Albina Press? Black Drop?

Did you talk to people who've been working behind the bar for a long
time to get their insight? (I'd mention a few names, but I'm not sure
if I should)

The American Barista & Coffee School is in Portland, with first-class
hands-on training in espresso training.. for a price.

I agree with Barry about the fact that if you are doing this for the
money, then you're in it for the wrong reasons, and might consider
looking into doing something else.

For a whole LOT of coffee houses.. it can take up to a year or a year
and a half before it is running profitably. Could you handle that?

Alot of coffee house owners are taking little income for themselves to
maintain quality standards, take care of their employees, and keep the
business afloat. For these people, the purpose is not to make a
healthy income.. the purpose is to promote quality coffee.

Barry has been in the business for a LONG time. The man knows his
beans about beans.

I'm far from the stage of it, but my long-term goal is to open my own
shop as well. I've worked (so far) at three different coffee
establishments, and I've learned a lot at each. Alot of what NOT to
do, some of what TO do, and a few efficiency practices at each that
help to make things a little easier, as well as people skills to help
with profitability.

On the other hand, everything I know about coffee I've researched
myself. I've yet to work for a shop that has actually had anything to
teach me that I either didn't already know, or knew to be false. (The
hazards of living in Lubbock)

Do your research. Figure out everything you'll need to open. Make a
list, and add up the costs. Include bills, rent, etc.. for at least 6
months as a cusion. (I often hear of a 50% cushion.. meaning, have 50%
more than you actually need... just in case).

Date: 13 Sep 2006 18:43:32
From: Barry Jarrett
Subject: Re: 'scooters' (With, IMHO, an idiotic name)

On 13 Sep 2006 10:23:40 -0700, "Jasonian" <jason.haeger@gmail.com >
wrote:

>Do your research. Figure out everything you'll need to open. Make a
>list, and add up the costs. Include bills, rent, etc.. for at least 6
>months as a cusion. (I often hear of a 50% cushion.. meaning, have 50%
>more than you actually need... just in case).

for hands-off new construction by someone just getting into the biz, i
generally suggest figuring out what you think it will cost, and then
doubling that number. and then double it again. there's always
something you don't think of beforehand... experience reduces the
number of things. if you have the time (ie, a current paying job),
then spend a year or two working out every detail, in your mind and on
paper.

--barry "seat of the pants planning specialist"

Date: 14 Sep 2006 08:54:04
From: Sheldon T. Hall - DO NOT MAIL
Subject: Re: 'scooters' (With, IMHO, an idiotic name)

On Wed, 13 Sep 2006 18:43:32 GMT, Barry Jarrett
<barry@rileys-coffee.com > wrote:

>On 13 Sep 2006 10:23:40 -0700, "Jasonian" <jason.haeger@gmail.com>
>wrote:
>
> >Do your research. Figure out everything you'll need to open. Make a
> >list, and add up the costs. Include bills, rent, etc.. for at least 6
> >months as a cusion. (I often hear of a 50% cushion.. meaning, have 50%
> >more than you actually need... just in case).
>
>for hands-off new construction by someone just getting into the biz, i
>generally suggest figuring out what you think it will cost, and then
>doubling that number. and then double it again. there's always
>something you don't think of beforehand... experience reduces the
>number of things.

... and then there's the amount of time you think it will take, too.

In the software development business, it's axiomatic that you take the
programmer's estimate of the time required to complete a project,
double it, and use the next larget unit of time.

I.e., if the programmer's estimate is "two weeks," allow four months.

This method also works for renovation contractors, commercial space
build-out contractors, time-to-break-even-day estimates, etc.

-Shel

Date: 13 Sep 2006 00:27:00
From: daveb
Subject: Re: Franchising vs owning your own shop vs Starbucks

CHOFFMAN:

I'd arrange to go meet and WORK FOR North.

Dave b
116

North Sullivan wrote:

>
> Why do you want to enter the coffee market? What are your goals?
> Make money? Create a community asset? Find new friends? There are
> lots of businesses. Why coffee? How do you plan to differentiate
> yourself from other coffee businesses?
>
> I'm a control freak, so I wouldn't personally choose a franchise. I
> do think it's an excellent idea to work in a coffeeshop before you
> sink your life savings into starting your own business. I didn't
> follow the advice I'm giving you, but my risk exposure due to unique
> location and personal circumstances was very low.
>
> There's a bulletin board for coffee shop owners on this site:
>
> http://www.specialty-coffee.com/
>
> I recommend that you register for that bulletin boardr, lurk for
> awhile, and learn about some of the daily issues for those in the
> business. Then ask lots of questions. The folks there are generally
> very helpful, and it won't cost you a cent. Joining the SCAA under
> the generous first year membership rates is also recommended.
>
> North Sullivan
> (entering my fourth year as an independent coffeeshop owner/roaster)

Date: 13 Sep 2006 14:52:07
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

If he was along the northwest coast, or anywhere in Texas, I would.

On 13 Sep 2006 00:27:00 -0700, "daveb" <davebobblane@gmail.com > wrote:

>CHOFFMAN:
>
>I'd arrange to go meet and WORK FOR North.
>
>Dave b
>116
>
>North Sullivan wrote:
>
>>
>> Why do you want to enter the coffee market? What are your goals?
>> Make money? Create a community asset? Find new friends? There are
>> lots of businesses. Why coffee? How do you plan to differentiate
>> yourself from other coffee businesses?
>>
>> I'm a control freak, so I wouldn't personally choose a franchise. I
>> do think it's an excellent idea to work in a coffeeshop before you
>> sink your life savings into starting your own business. I didn't
>> follow the advice I'm giving you, but my risk exposure due to unique
>> location and personal circumstances was very low.
>>
>> There's a bulletin board for coffee shop owners on this site:
>>
>> http://www.specialty-coffee.com/
>>
>> I recommend that you register for that bulletin boardr, lurk for
>> awhile, and learn about some of the daily issues for those in the
>> business. Then ask lots of questions. The folks there are generally
>> very helpful, and it won't cost you a cent. Joining the SCAA under
>> the generous first year membership rates is also recommended.
>>
>> North Sullivan
>> (entering my fourth year as an independent coffeeshop owner/roaster)

Date: 13 Sep 2006 17:03:55
From: Barry Jarrett
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 14:52:07 GMT, choffman@austin.rr.com wrote:

>If he was along the northwest coast, or anywhere in Texas, I would.
>

even better, he's in wisconsin. lovely town. not far from the
people's republic of madison (sort of like austin, with snow).

;)

Date: 13 Sep 2006 21:52:13
From:
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Wed, 13 Sep 2006 17:03:55 GMT, Barry Jarrett
<barry@rileys-coffee.com > wrote:

>On Wed, 13 Sep 2006 14:52:07 GMT, choffman@austin.rr.com wrote:
>
> >If he was along the northwest coast, or anywhere in Texas, I would.
> >
>
>even better, he's in wisconsin. lovely town. not far from the
>people's republic of madison (sort of like austin, with snow).
>
>;)

I grew up in St. Paul/Minneapolis, and my family would vacation during
the Summer in Wiisconsin. My parents and sister are currently in Eau
Claire. Not exactly near Madison, but it is a nicely little city in
its own right.

Date: 13 Sep 2006 00:24:59
From: daveb
Subject: Re: 'scooters' (With, IMHO, an idiotic name)

SCOOTERS:
One of about, oh, 3 or 4 DOZEN or more coffee 'franchises'

did you know there are that many? If not, go back to square one.

there are ' franchises' out there from a guy who owns (owned) one drive
thru!

and OMAHA NEBRASKA is many great things -- but NOT a hotbed of coffee.

If you can't talk to coffee shop owners, talk to people who own their
own businesses. ( I have for over 20 years)

You will find that REALLY educational, young man.

DAve
www.hitechespresso.com

Date: 13 Sep 2006 15:55:10
From:
Subject: Re: 'scooters' (With, IMHO, an idiotic name)

On 13 Sep 2006 00:24:59 -0700, "daveb" <davebobblane@gmail.com > wrote:

>If you can't talk to coffee shop owners, talk to people who own their
>own businesses. ( I have for over 20 years)

Dave,

Are you open to a phone call sometime this week or next?

Curtis

Date: 14 Sep 2006 13:30:17
From: Danny
Subject: Re: Franchising vs owning your own shop vs Starbucks

choffman@austin.rr.com wrote:
> Just trying to gather some opinions here while dancing on landmines...
>
> I'm faced with several options and I'm wondering what the pros and
> cons are. Scooters is selling franchises across the U.S., but the
> initial start-up costs look steep. Not sure if anyone else is selling
> franchises as well or how they stack up. Starbucks is hiring managers
> and assistant managers, but unless you have specific managerial
> experience, you have to start out as an assistant manager in the
> $20K-$30K range (which almost goes to pay for apartment rent, but does
> little for covering food costs). Then there's the idea of starting up
> an independent coffee shop with out-of-pocket cash/loans and the
> inherent bankruptcy possibility
>
> What's the alt.coffee consensus regarding entering the coffee market
> as a franchiser vs Starbucks employee vs a mom-and-pop?
>
>

I'm the seat of the pants coffee business. My background is not
dissimilar to yours, with one big difference. I spent many years in
I.T., but I had a previous life in catering. This helped greatly with
customer service skills etc - which are possibly more important than
anything when running this business, alongside location.

I started literally almost by accident when I was unemployed and the
girlfriend at the time suggested I take the big lever espresso machine
I was playing with to an event she was one of the organisers for.

I decided to build a trailer and find a spot for it in the long term.

This is key. You'll make a living (but probably not much more),
whether a trailer or a swanky cafe, *as long* as you are in the right
place. I wasn't in the right place (this area is coffee challenged,
with only a Costa Coffee in a town with a large population - but the
population is working class. It meant of course that at least there
wasn't much competition, but also, not many real coffee drinkers. I
suffered for nearly a year (ensure you have funds to survive this)
before trade got better. Local cafe's installed awful push button
coffee machines, but educated people to latte and cappuccino etc.
They come to me for the real thing. Customer service has ensured that
I haven't lost the customers I got - they come back time and again.

The trailer was a learning exercise. What do you need, I thought.
Fridge, sink, espresso gear, counter and menu. Throw it all in. Get
the coffee right - consistently right (there's nothing worse than
getting a great coffee first time, and crap the second visit). Even
now, I'm nervous leaving the staff on their own (and it's not *all*
control freak behaviour, just some).

That's it. Get the coffee right, and get the customer service right,
so people feel welcome. Learn their names, give their kids a biscuit,
know their drinks. As long as there are people walking past
(preferably shopping) you'll do fine. You can either be in a very
busy transient location (railway station etc) where you can get a
(low) percentage of passing trade, or you can be in lesser footfall
area and keep the customers coming back, hence I higher turnover.

When Charlotte started with me I said to her "Do we want to earn �1.50
or �150 from that customer?" She asked what the difference was. I
said "get it right first time".

--
Regards, Danny

http://www.gaggia-espresso.com (a purely hobby site)
http://www.malabargold.co.uk (UK/EU ordering for Malabar Gold blend)

Date: 14 Sep 2006 08:48:26
From: Sheldon T. Hall - DO NOT MAIL
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Thu, 14 Sep 2006 13:30:17 +0100, Danny
<danny@nospam.gaggia-espresso.com > wrote:

>When Charlotte started with me I said to her "Do we want to earn �1.50
>or �150 from that customer?" She asked what the difference was. I
>said "get it right first time".

That's the key to any business.

-Shel

Date: 15 Sep 2006 06:49:40
From: karlseidel
Subject: Re: Franchising vs owning your own shop vs Starbucks

Calif.'s It's a Grind promotes quality, comfort in crowded coffee
Posted by: "Spencer" coffeetaster@hotmail.com coffee_taster
Thu Sep 14, 2006 8:27 am (PST)

Long Beach, Calif.- Marty Cox opened the first It's a Grind
coffeehouse here in 1995 with the goal of finding a new career after
spending years as an office-supply sales representative.

Now that his company is operating and franchising 87 It's a Grind
units - with plans to reach 135 by the year's end - Cox has a much
more ambitious goal for the Long Beach-based company: becoming the
No. 2 coffeehouse player in the United States.

Seattle-based Starbucks, with nearly 8,000 units in the United States
and more than 3,200 overseas, remains the gorilla of the coffeehouse
segment, but the number of regional chains vying for the distant No.
2 slot is becoming increasingly crowded. Minneapolis-based Caribou
Coffee, with 402 units, currently holds that position and plans to
open 105 to 120 units by the end of 2006, most of which will be
company-owned.

Not far behind is Los Angeles-based The Coffee Bean & Tea Leaf, with
315 units worldwide, which recently announced plans to offer coffees
and other beverages at Ralph's grocery store in-house cafes. Coffee
Beanery, based in Flushing, Mich., has more than 200 locations, as
does Diedrich Coffee Inc., based in Irvine, Calif., which includes
the Diedrich, Gloria Jean's and Coffee People brands. Dutch Bros.
Coffee, based in Grants Pass, Ore., has roughly 80 units open and
also is planning rapid growth.

Still, observers say up-and-coming regional players like It's a Grind
have a good chance at moving up the ranks.

"There is no dominant successor to Starbucks," says Andrew Hetzel,
founder of Cafemakers LLC, based in Waimea, Hawaii, a retail-
coffeehouse consulting firm. "The market is wide open at this point
for anyone who is gunning to be No. 2."

Starbucks represents a relatively small portion of the $11 billion
specialty coffee market, Hetzel said. The global chain is taking
the "fast food" approach, offering a powerful brand with strong
consistency, but the product is "mediocre," he says.

Companies like It's a Grind offer a higher-end alternative: a better
cup of coffee, more variety of flavors, and a more welcoming and
comfortable atmosphere, he added.

Cox and his wife, Louise Montgomery, decided to open It's a Grind
after experiencing poor service at another Long Beach coffeehouse. "I
felt like we could do it better," he says.

Within five years, Cox had five units in the Long Beach area, and the
brand attracted the interest of franchise expert Steve Shoeman, now
chief executive, who had founded the quick-service franchise company
All American Hero.

In 2000, Cox formed a parent company called IAG Coffee Franchise LLC,
and the It's a Grind chain took off.

The concept hasn't changed since the early days, Cox says. It's a
Grind offers high-quality micro-roasted, ground-to-brew coffees from
around the world in a comfortable atmosphere with wingback chairs,
wireless Internet access and hand-selected music. Some units have
fireplaces and live music. A kids' area offers puzzles and games.

Guests order at the counter, but drinks are brought to them once they
are seated. "We'll even toast your bagel and put cream cheese on it
for you," Cox says. "We're not like those places that give you cream
cheese in a little tub and a plastic knife."

The goal is to establish stores as community gathering spots. Not
only does the company seek out operators who are warm and hospitable
by nature, Cox says, they also train franchisees in relationship
building - from simply remembering customers' names and drink
preferences to getting involved in local charities and neighborhood
groups.

Espresso-based hot drinks are the top sellers, but the company also
does well with both hot and cold seasonal offers. This summer, for
example, the chain is offering a coconut-flavored ice-blended coffee
drink called Coconut Crunch, the chain's most popular summer
promotion, for the third year in a row.

There are five corporate-owned units of It's a Grind and another five
planned over the next two years. But growth for the brand will focus
primarily on franchising, with about 100 units scheduled to open each
year over the next five years.

It's a Grind units are currently in 15 states, and the chain will
continue to build out the core market of California, Shoeman says.

Many units are in shopping centers anchored by grocery stores and in
smaller boutique centers. About six units have drive-thrus.

Company officials would not release annual sales figures but say
systemwide sales grew by more than 60 percent in 2005, and they
confirmed that average unit volumes for corporate units are above the
national average of $550,000 in annual sales for coffeehouses.

Rick Kowalski, vice president of operations for the chain, says the
company is looking to beef up sales of whole beans and baked goods,
which includes bagels and pastries.

One marketing effort that has helped improve the brand's name
recognition nationally is prominent placement on the cable television
series "Weeds," which includes scenes shot at an It's a Grind unit.

Still, notes Bill Hulkower, a Los Angeles-based market analyst for
research firm Mintel International in Chicago, It's a Grind has some
pretty stiff competition among other regional coffeehouse chains,
most of which are also rapidly expanding.

Some, such as the 113-unit Peet's Coffee & Tea based in Berkeley,
Calif., have built brand recognition through grocery store sales and
wholesale accounts. Others are co-branding, as Coffee Beanery has
done with Cinnabon in some units.

"I don't see It's a Grind becoming the No. 2 chain anytime soon,"
Hulkower says. But he notes that the brand does tap into the top five
factors
that are important to Americans in choosing a coffeehouse: taste,
location/convenience, friendliness of the staff, greater varieties of
flavors and convenient parking.

For now, Hulkower sees plenty of growth opportunities in the
coffeehouse segment. By 2008, however, he predicts there will be less
room for growth - not because of a drop in demand, but because chains
will have a harder time finding good locations.

Speed of service will increasingly become an important factor,
Hulkower adds, and coffeehouse operators will be forced to offer
something unique "to convince people to drive or walk out of their
way for a cup of coffee."

Hetzel of Cafemakers disagrees, however, saying the potential for the
coffeehouse segment in the United States will grow as Americans
develop a more educated palate for quality coffee.

Giants like Starbucks have a symbiotic relationship with regional
chains and independent coffeehouse operators, he contends. Each
serves a different niche within the segment.

In fact, Hetzel recommends that chain and independent coffeehouse
operators, including It's a Grind, look for locations near Starbucks
units.
"Our independent and small-chain coffee shop clients on the mainland
and elsewhere in the U.S. find their business increases between 10
[percent] to 20 percent annually" as a result of a Starbucks opening
nearby, he says.

"Starbucks educates the local population," Hetzel adds. Once people
get into the habit of coffee consumption, higher-end brands can find
opportunities to show those coffee drinkers "how it should be done."

choffman@austin.rr.com wrote:
> Just trying to gather some opinions here while dancing on landmines...
>
> I'm faced with several options and I'm wondering what the pros and
> cons are. Scooters is selling franchises across the U.S., but the
> initial start-up costs look steep. Not sure if anyone else is selling
> franchises as well or how they stack up. Starbucks is hiring managers
> and assistant managers, but unless you have specific managerial
> experience, you have to start out as an assistant manager in the
> $20K-$30K range (which almost goes to pay for apartment rent, but does
> little for covering food costs). Then there's the idea of starting up
> an independent coffee shop with out-of-pocket cash/loans and the
> inherent bankruptcy possibility
>
> What's the alt.coffee consensus regarding entering the coffee market
> as a franchiser vs Starbucks employee vs a mom-and-pop?

Date: 15 Sep 2006 16:04:47
From: Marshall
Subject: Re: Franchising vs owning your own shop vs Starbucks

On 15 Sep 2006 06:49:40 -0700, "karlseidel" <karl.seidel@gmail.com >
wrote:

>Calif.'s It's a Grind promotes quality, comfort in crowded coffee
>Posted by: "Spencer" coffeetaster@hotmail.com coffee_taster
>Thu Sep 14, 2006 8:27 am (PST)

<snip >

>..., as
>does Diedrich Coffee Inc., based in Irvine, Calif., which includes
>the Diedrich, Gloria Jean's and Coffee People brands. ....

Diedrich announced yesterday it is throwing in the towel on
company-owned stores, which it is selling to Starbucks. Diedrich will
focus on franchising from now on.

Marshall

Date: 15 Sep 2006 19:09:50
From: Jack Denver
Subject: Re: Franchising vs owning your own shop vs Starbucks

Hmmm...they can't make any money in their own stores, but they'll gladly
sell you a franchise. Sure, that makes sense. Right.

"Marshall" <mrfuss@ihatespamearthlink.net > wrote in message
news:rgjlg21toc89pomecmhgfj2g28g1354vvt@4ax.com...
>
> Diedrich announced yesterday it is throwing in the towel on
> company-owned stores, which it is selling to Starbucks. Diedrich will
> focus on franchising from now on.
>
> Marshall

Date: 15 Sep 2006 23:55:33
From: Marshall
Subject: Re: Franchising vs owning your own shop vs Starbucks

On Fri, 15 Sep 2006 19:09:50 -0400, "Jack Denver"
<nunuvyer@netscape.net > wrote:

>Hmmm...they can't make any money in their own stores, but they'll gladly
>sell you a franchise. Sure, that makes sense. Right.
>
>
>
>"Marshall" <mrfuss@ihatespamearthlink.net> wrote in message
>news:rgjlg21toc89pomecmhgfj2g28g1354vvt@4ax.com...
>>
>> Diedrich announced yesterday it is throwing in the towel on
>> company-owned stores, which it is selling to Starbucks. Diedrich will
>> focus on franchising from now on.
>>
>> Marshall

They were probably concerned about lawsuits from breaching their
franchise contracts. Today's OC Register article has more info than
yesterday's press release. Looks like the real focus will be
wholesale.

Marshall