Opportunities for trend-attuned businesses in the cafe industry, like the sources of quality coffee beans, are endless, according to Barista Technology.
Understanding what a future market looks like can be tricky, with most industries and businesses aspiring to be at the forefront of the latest directions. But when it comes to the cafe market, Barista Technology is seasoned at predicting the next big idea or trend in terms and advising on business efficiencies, state-of-the-art technology and shrewd advice.
Consumers in search of a quality coffee brew will soon get to experience such a development with the emergence of the pop-up container cafe, touted to be the next big trend in this space, where they can pick up their choice of coffee brew as well as a spot of brunch, a smoothie or acai, in a spacious and aesthetic setting that’s sure to keep the customers coming back.
Forty per cent of business ventures in the cafe industry have failed, according to Barista Technology CEO Brett Bolwell, which he puts down mainly to owners over-investing in their set-up by spending too much on a fit-out, or not understanding the cost of running a cafe business, especially when it comes to staff and food.
The substantial upfront outlay required is behind most cafe ventures foundering, he says, citing the importance of considering capital investment and rental costs.
“If you don’t get those right, then you’re rarely going to get staffing and food costs right, and understand the business,” says Mr Bolwell.
Whether setting up a cafe in a shopping centre, a retail environment, or an industrial environment, a café business is likely to be up for a minimum $300,000 to $400,000 in initial costs.
“The cost of entry is going to be the most important thing,” says Mr Bolwell.
Mobile coffee trucks, which have been around for 20-30 years, require an investment of around $100,000 to $130,000, he adds.
The disadvantages here are limited space and lack of opportunity in food, juice and snack offerings, while Barista Technology says it can provide both with a container cafe built for a substantial $20,000 less than the cost of a mobile coffee truck set-up.
The feedback from coffee roasters and chains that Barista Technology works with is that people are looking to get into a cafe business without taking a big risk.
“For example,” says Mr Bolwell, “for four pop-up drive-throughs for the price of one normal drive-through – with the average cost of a drive-through about $700,000 to fit out – we can build a drive-through pop-up for well under $150,000. You can have three or four locations for the price of one.”
Real estate prices and commercial rents, which have been extraordinarily high for a long time with many cafes failing to make a profit, are likely to come down.
“A business has to make money and if it’s not, why did you put your million dollars into it?” says Mr Bolwell. “It just doesn’t make any sense.”
With better choices in the market, people will become more informed and savvier with their investment, he adds.
“They’re going to do more research and the smart ones will survive,” says Mr Bolwell. “My personal goal is to see cafe owners understand [what it takes to] run a business or a cafe. I’ve run cafes. It’s not about giving yourself a wage.”
Read the article in full in the latest issue of Convenience World.