Coffee Shops Closing Within Six Months Are Everywhere, Yet No One Sees the Real Reasons for Failure!

Opening a coffee shop is a dream that almost every young person has had. Sitting in someone else's café, imagining running your own coffee shop, playing your favorite music every day, brewing coffee, and chatting with different customers... just thinking about it feels wonderful!

Suddenly! A voice comes from beside you, "Hey, I heard that xxx café is being transferred, and it's only been open for half a year..."

Whenever you're planning to open a coffee shop, hearing these discussions can be quite discouraging, or even feel a bit unlucky... But perhaps, these discussions are, in a way, heaven's way of advising you to think carefully before opening a shop.

Do you think that those who failed in opening shops simply didn't rent the right place or opened at the wrong time? Not renting the right place is indeed one of the reasons many shop owners fail, but it's not the only reason. Whether before the pandemic or now, the reasons coffee shops can't continue might seem to be problems of the era, but in reality, they stem from not making adequate plans and preparations for the coffee shop's present and future.

Opening a coffee shop is easy, but making it "survive" and earn money is not a simple task, nor is it something that can easily make you rich by casually opening one. Opening a coffee shop is like opening a company - it's a business activity with the purpose of making a profit. If you think you can live a relaxed and comfortable life just by having a coffee shop, then you really shouldn't open one. Whether it's money you've worked hard to save or given by your parents, it's all hard to come by.

The profitability of a coffee shop runs through its preparation, daily operations, service level, innovation capabilities, and more. Nothing is as simple as it appears on the surface, and every coffee shop has its own operational difficulties. Many failed coffee shops are because their owners only saw the present, not the future, and initially set their shop's positioning and investment costs too high, making it difficult to sustain when operations began.

Therefore, throughout the planning process, you must act within your means! Your budget should not only cover rent deposit, (transfer fees), renovation costs, equipment expenses, and raw material costs, but also reserve more than 6 months of operating funds (rent + labor (even if you're alone, you must calculate labor costs) + utility bills, etc.).

If you're a new entrepreneur with no business experience, the first thing to consider is not how artistic life will be after opening the coffee shop, but how to operate it without losing money. If you want to build your coffee shop brand bigger, you should control costs even more at the beginning. Wait until the shop is actually making money and the brand has some recognition before further expansion.

Common Reasons Coffee Shops Fail Within Six Months

"Opening in a Bustling Area Right from the Start"

"Of course, you should choose a bustling area for foot traffic!" But for a new independent coffee shop, even in a bustling location, there aren't many attractive points to draw people in. Coffee shops established in bustling areas usually don't have low product prices. As a newly opened shop with high prices, what would convince consumers to come and spend? If they do come, will these consumers become repeat customers?

Therefore, it's recommended that the initial rental location doesn't have to be on a bustling street. You can choose a community near office buildings that isn't too far from bustling areas. Compared to opening in high-traffic areas, community shops' rent will be significantly lower, and people in nearby bustling areas will have more exposure to your shop when using apps to search for food or nearby options.

The shop doesn't need to be too large. A small community shop + delivery can meet the needs of a small group of customers for space and specialty coffee, while still attracting attention and consumption from the general public. During the pandemic, coffee shops need to be "small and efficient," while also having standardized operating procedures to improve order efficiency. This not only reduces operational pressure but also strengthens risk resistance.

"Spending Too Much on Renovation"

Unless you work in a related industry, it's not recommended for new entrepreneurs to excessively pursue trendy internet-famous styles. Not only do they easily become outdated, but they also fail to inspire consumers to visit because they're similar to other coffee shops.

If you're not confident enough, save as much as possible on renovations. For a 30-40 square meter coffee shop, renovation costs should be controlled at 30,000-40,000 (excluding equipment). Renovations don't necessarily require large investments. First, get the basics done to provide customers with a comfortable and clean environment. When you gradually build up operations, it's not too late to add improvements where you find shortcomings.

"Investing Too Much in Equipment"

Don't feel embarrassed to open a coffee shop without an EK or La Marzocco machine. Expensive coffee machines aren't the only ones that can make good coffee. Whether a product tastes good depends on the quality of coffee beans and the barista's skills. Therefore, for coffee equipment, choose what's right, not what's expensive. The price of one La Marzocco/EK could renovate a beautiful coffee shop. If a cup of coffee is priced at 25-30, how many cups do you need to sell to recoup the equipment costs...

"Blindly Pursuing Specialty Coffee Without a Proper Understanding"

The definition of specialty coffee is maintaining the highest quality at every step from selecting green coffee beans to presenting them to consumers. Besides the coffee beans themselves meeting quality standards, the roaster and brewer must have sufficient understanding of the beans to extract reasonable flavors through appropriate methods, showcasing the unique characteristics of the coffee's origin.

More expensive coffee beans aren't necessarily better. Many coffee beans that people consider ordinary have their own shining points. Not only expensive beans extracted through pour-over can be called specialty coffee. Espresso and creative coffee can also be called specialty coffee when the barista has a thorough understanding of coffee beans and brewing principles, combined with innovation.

"Too Individualistic, No Service"

Don't think of service as "humble" or behavior that allows customers to "take an inch and want a mile." After all, one of the hardest things in the world is getting someone to willingly pay for your service. Everyone considers whether what they're paying for is worth it.

No matter your personality, the basic principle of serving customers is enthusiasm and generosity, truly making customers convinced and satisfied. Believe it or not, in any industry, service determines whether a shop, company, or brand can survive long-term.

"Product Quality and Pricing Are Not Proportional"

Yes, being unable to maintain consistent quality for every cup of coffee while having high prices is why many coffee shops can't get repeat customers. You don't need to use the best, most expensive beans, but you must ensure every cup of coffee is consistent and worth its price. Product reputation is key to whether a brand can survive long-term!

"Not Offering Delivery Because It Lowers Product Quality"

In this era where most people want coffee delivered to their doorstep without leaving home, how much brand exposure can you get without offering delivery? How many people would really walk into a completely new coffee shop for no reason? Although delivery platforms take high commissions, they're more effective than spending money on advertising. During bad weather, for newly opened coffee shops, delivery platforms play a crucial role.

Product quality will inevitably decline after some jostling during delivery, and it certainly won't be as good as drinking on-site, but it won't be vastly different. Consumers who order coffee delivery understand this point. If you're worried that pour-over coffee's flavor will change during delivery, then focus on espresso, cold brew coffee, and other products that won't significantly change in flavor due to small temperature variations.

Although the threshold for opening a coffee shop is low, the operational challenges are high. As long as it's a business, it requires dedication to sustain long-term operations. Impulsiveness is always the devil; only thorough planning can lead to successfully running a coffee shop.

Image source: Internet

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