Everyone Wants to Open a Coffee Shop, But It's Not Easy for Anyone Who Does!

"How to Open a Coffee Shop?"

"What Type of Coffee Shop Do You Want to Open?"

"Coffee Shops Have Types?!"

Yes, "coffee shop" is just a general term - any place that sells coffee can be called a coffee shop. What kind of positioning you choose for your coffee shop is something many aspiring coffee shop owners overlook.

What is Positioning?

Positioning means understanding why you want to open this particular coffee shop and what customer base you plan to target. Currently, coffee shops on the market can be roughly divided into: super-large coffee shops (such as exhibition hall coffee shops), large-format coffee shops (like Starbucks), small-format coffee shops (like Manner), trendy coffee shops, and specialty coffee shops. Their respective positioning focuses are: providing venue rental, satisfying the third space concept, focusing on takeout sales, offering light meals and simple food, and exclusively selling specialty coffee.

If you want to open a coffee shop, what you need to do isn't just imagine how artistic and relaxed life would be after owning one. Reality is often cruel - you need to consider how to make the coffee shop successfully survive. Even with sufficient funds and clear positioning, without good business planning and some luck, uncertain factors will always overwhelm you. That's how business works, so before opening a coffee shop, set aside your beautiful fantasies and think carefully about the coffee shop's positioning, the pros and cons of this positioning, and the losses you can tolerate.

Case Study 1: The Super-Large Coffee Shop

For example, there was once a super-large coffee shop (hundreds or even thousands of square meters) positioned to package events through venue rental, with coffee sales being just one way to attract customers. The target customer base was mainly companies and organizations. Since the main focus was venue rental, the interior decoration of the coffee shop was very sophisticated. The rent for such a large space, renovation costs, labor costs, and equipment costs made the initial investment for this coffee shop reach over 5 million yuan.

Fortunately (and also because they had capability), the owner of this coffee shop was excellent, very clear about the shop's positioning, and effectively managed the team, breaking even in less than two years. Unfortunately, the pandemic later caused significant losses for this shop. When the pandemic first began, they closed for three months, and the lost rent and labor costs were a substantial figure. Additionally, regulations against gatherings led companies and organizations to reduce the number of events they held.

Facing this situation, the owner tried to focus on retail, but because they had previously mostly dealt with group customers, they had neglected the accumulation of individual customers. Therefore, even when they later focused on new coffee products, dessert development, product promotions, and online sales, they still couldn't cover the monthly fixed costs, and eventually closed the shop to cut losses in time.

Although they chose retail as a way to save themselves, the pandemic continued to bring cruel and uncertain problems. When business continued to lose money, they had to face reality and minimize their losses.

Case Study 2: The Takeaway-Only Coffee Shop

Another example was a takeaway-only coffee shop that opened in an inconspicuous location in a small alley, surrounded by older residents. Because the shop was small and in an obscure location, the rent was very cheap (1500 yuan for 15 square meters in downtown Guangzhou). They only did takeaway business, didn't need much decoration, didn't need to consider equipment appearance, and had only the owner as staff. The advantage of this shop was low investment and operating costs, so the initial investment was only about 15,000 yuan.

However, when they actually started operating, they only had three to five takeaway orders per day, and those were from the owner placing orders themselves or support from friends. The money earned in the entire month wasn't enough to cover the takeaway platform's commission, coffee bean costs, rent... The owner initially thought it was normal to have no business when the shop just opened. After persisting for two months, they closed the shop.

Due to the remote location, no customers came for takeaway coffee. Also, because they didn't promote to the surrounding area or invest in promotion on takeaway platforms, besides the owner and people around them, nobody knew about the existence of this coffee shop, and no one else could provide feedback on the coffee quality.

Operating a coffee shop this way certainly saves money and results in smaller losses, but coffee shops thrive on reputation. Without customer visits for pickup, no word-of-mouth promotion between people, and without more people to provide feedback and suggestions, it's difficult for a coffee shop to continue operating. Even if it could survive, with only one person busy in the shop every day, a coffee shop without visible customers seems to lack some soul.

Case Study 3: The Specialty Coffee Shop

Another example was a specialty coffee shop where the owner paid great attention to coffee quality. Every cup of coffee, from ingredients to preparation to serving, was meticulously crafted, thus earning a rare local reputation. Although it had some recognition, business wasn't ideal because the pricing was too high, and few people were willing to return as repeat customers.

The shop's rent was reasonable, but the investment in coffee equipment and the cost of materials like coffee beans were very high. Combined with labor costs, all these were reflected in the product pricing. Americano cost 30 yuan, latte was 40 yuan, and pour-over started at 50 yuan. For average consumers, not everyone could afford such prices daily. Although the quality was excellent and greatly satisfied coffee lovers' demands for specialty coffee, how could a coffee shop sustain its business relying only on coffee enthusiasts?

Later, due to the pandemic, people coming for in-store consumption decreased, and visitors coming specifically to "check in" also decreased. The shop also hadn't joined delivery platforms. After maintaining this state for a year, the store closed. Because the spoilage of coffee beans was too high and rent was a small but accumulating expense, they cut their losses while they could still break even.

Key Lessons

From these three cases, we can see that coffee shop operations truly cannot rely on a "single-minded approach," as this reduces room for growth and opportunities. Coffee shop business needs reputation and foot traffic. Being unwilling to invest won't get you attention, while excessive investment requires consideration of future risks. Too targeted investment also misses many opportunities for brand promotion.

If you want to open a coffee shop, there are many things to consider. Opening a shop with passion is easy, but operating it is truly not simple. There are many successful cases and many failed ones. Analyzing cases and conducting market research before opening a shop is really important!

Whether in business or opening a coffee shop, having a broader perspective will be key to your success. Only by looking at things long-term will you have a chance of success. Although effort doesn't guarantee success - which might really be a matter of luck - not trying will definitely not lead to success. No business comes automatically knocking. When business does come knocking, you need to find ways to seize it and turn these people into loyal brand customers.

Image source: Internet

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