This week: Coffee shops have horrible failure rates, often exceeding the 60% in the first 5 years, with the Toronto cut-throat market, the margin of error is very tiny.
We asked this gentleman, who owns 13 successful coffee shops in Canada ( per his request, he doesn’t want to share his name), and he gave us 5 steps that he would consider if he were to open a new coffee shop in Toronto.
The 5-step process to opening a Cafe in Toronto:
1- Start with a casual Pop-up to try it out
Don’t start too fancy, as the goal is to try your menus, pricing, products, coffee-making process, and to get the fear out of the way, he even said that many people will be surprised by the amount of things they get out of the way during this. He added it’s perfectly tolerable to make a mistake on a $2,000 month rent, but mistakes on a $30,000 month rent are too expensive, and often, deadly.
2 - Pay 20 Cafe owners $100 for 30 minutes of their time
He said this is one of the most underrated ways to get insider info from people doing it in the arena; these conversations will give you more insights than any Bay Street analyst could ever give. He said cafe owners are more than happy to share their knowledge and the mistakes to avoid, as well as any hidden tricks around pricing, menus, taxes, location, and more.
3 - Rent a temporary Cafe for 2-3 months
Once you have decided, you have a very clear idea of how to run a coffee shop, slow down a bit. Now, the goal is to have an idea of how to run a location. So the next step is to find a temporary rent for 2-3 months, or even pay a shop to use their space on their off hours; these kinds of arrangements are becoming popular. The goal is to understand the ins and outs of running a store without a 5-year marriage-like lease. Remember, you are still gathering data.
4 - Grow a social media brand by documenting your coffee-making
This is easily the best hack any coffee shop owner can learn. By having an audience, you can start posting polls, Q&A, and build a relationship with the audience, which you can document with them. This builds trust and loyalty with your future customers and partners.
5 - Collect emails for your big launch, and announce way ahead
Last step in his 5-step process is to collect emails, as you can start building offers, pre-sell, subscriptions, special offers, and start a countdown with the email campaign. Man
Decrease the risk approach: He stated that the biggest thing he would focus on is derisking the coffee shop, as many new owners romanticize the business too much; they tend to heavily spend without having market proof early, so the goal is to have micro experiments and losses before jumping all in.