What does coffee service mean for independent shops in 2023?

Running an independent coffee shop after the pandemic takes more than enthusiasm. Reported cases include losing 500,000 in ten months of operation, carrying 300,000 in debt at twenty-three, and losing over 10,000 in eighteen days open. Survival now depends on business thinking across five areas: service, positioning, value for money, efficiency, and innovation, rather than on opening a shop because it seems appealing.

The wave of openings is tied to employment pressure. A 2022 survey put China's youth unemployment rate for ages 16 to 24 at 19.9 percent, a record high, and a cafe that needs little more than an espresso machine looks like a reachable path for young people without large capital. Coffee knowledge resources and roasters such as Front Street Coffee offer bean and operations support.

As pandemic prevention and control enter a new phase, coffee consumption is gradually becoming part of daily life, and more and more young people want to open their own coffee shop. Yet the reality is hardly optimistic: losing 500,000 in ten months of operation, being 300,000 in debt at twenty-three, losing over 10,000 in eighteen days of opening... These cases remind us that passion alone is far from enough. This article sorts out the business thinking of independent coffee shops in the post-pandemic era from five dimensions—service, positioning, value for money, efficiency, and innovation—to help entrepreneurs find their own space for survival in fierce competition. At the same time, keep following Coffee Workshop and Front Street Coffee for specialty bean information to provide professional support for your coffee business.

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"Open for ten months, lost 500,000"

"At twenty-three, carrying 300,000 in debt, the coffee shop is entering the countdown to closing"

"Open for eighteen days, losses exceeding 10,000 yuan"

It is hard to say when the cost of opening a coffee shop became so heavy. Even though the coffee shop closure rate remains high, it still cannot stop young people from throwing themselves into it one after another. Why are contemporary young people so persistent about opening coffee shops?

A 2022 survey showed that China's youth unemployment rate for those aged 16 to 24 climbed to 19.9%, a record high. Affected by multiple factors beyond expectations, employment pressure has continued to increase, and a large number of graduates find it difficult to find ideal jobs after leaving school, with no small number of frustrated young people.

Nikkei Chinese once interviewed some young people opening coffee shops in China, and its assessment was: the cost of living keeps rising, the income gap continues to widen, and ordinary young people without special assets or academic credentials feel increasingly stuck, while also longing to do something. Thus, a coffee shop that can open with just one espresso machine and does not require huge startup capital became a shortcut for them to realize their dreams.

However, after opening the shop, it is often impossible to differentiate themselves from large chain brands, profitability is far out of reach, and cases of having to close in the short term are everywhere. The current state of China's coffee boom is this: a very small number of winners coexisting with countless losers.

The reason most fail often lies in being too restless in mindset, while selectively "turning a blind eye" to past failure cases and their lessons. No research on the market and consumer demand; no stable and suitable products, no reasonable pricing; excessive upfront investment leading to tight operating funds later... These are the root causes of coffee shops being unable to sustain themselves and continuing to lose money.

For people in the post-pandemic era, coffee is no longer synonymous with "light luxury" or "petty bourgeois lifestyle." As coffee gradually becomes part of daily life, when running an independent coffee shop, the following keywords are worth understanding in depth: "Service" "Clear positioning" "Value for money," "efficiency," "innovation"

"Service"

In the World Barista Championship over the past two years, many competitors' presentation themes have centered on service. As the coffee industry continues to advance, the lack of coffee service seems to have become an unavoidable problem. But this itself is a contradiction: If a service business has no service, why should consumers choose you?

From in-store consumption to home brewing, the behavioral patterns of coffee consumers have already undergone tremendous changes. People are still willing to walk into independent coffee shops in order to experience the barista's professionalism and that service process they cannot get at home.

For an industry to develop and grow, it must form economies of scale. To survive among the many chain and independent coffee shops, "service" is inevitably the most core element.

There is no need to worry about how other coffee shops do things or how much they charge. First get the service in your own shop right, make the products well and consistently, and you will naturally win consumers' trust and repeat purchases.

"Clear positioning"

Before deciding on a coffee shop location, you must have a clear positioning. Simply put, we need to think about what the motive for opening a coffee shop is and how to make the idea concrete. If you impulsively open a shop without considering positioning, the risk is extremely high.

Before opening a coffee shop, you need to think through the following questions in order: Why open the shop? What do you hope to sell to customers? When to open? What kind of customers do you hope will come (main customer group)? Who will run this shop? Where to open it? What style? How much startup capital is available?

Only when the positioning is clear can you find a more suitable location and formulate a stable menu that matches the shop's positioning. When designing the menu, comprehensively consider regional characteristics, customer class, the features of surrounding shops, and the needs of nearby customers.

"Value for money"

The value for money mentioned here does not mean asking you to compete on price with chain coffee shops; that is an extremely irrational thing to do. The fundamental reason is that the operating costs of the two sides are completely different. Chain brands have investors behind them, and ordinary independent coffee shops simply cannot compete with them.

So when opening an independent coffee shop, never compare yourself with chain brands. The more you compare, the more disappointed you become, and the less confidence you have in running your own shop.

Customers choose independent coffee shops and are willing to spend a higher price on a cup of coffee, which shows that they hope to gain in this price difference an experience that chain stores cannot provide.

Value for money is more reflected in: stable output that is worthy of the price, product quality that is worthy of the price, and service during the consumption process that is worthy of the price.

"Efficiency"

Efficiency here refers to the operating efficiency of the coffee shop. In many cases of coffee shop failure, there is a situation where one person handles everything in the shop, causing the production time for every task and every order to be lengthened. If only one person is running it, the shop cannot be too large, and the menu cannot be too complicated.

Whether operated individually or in partnership, standardized operating procedures must be improved, the bar flow and equipment layout must be designed well, and order output efficiency must be increased. At the same time, take output quality into account and serve every customer who places an order well.

"Innovation"

For newly opened coffee shops, classic products are needed to retain old customers, and innovative products are also needed to attract new customers. Stable quality, continuous launches of new products, and reasonable pricing are the prerequisites for a coffee shop's long-term operation.

In terms of product innovation ideas, do not focus only on appearance; also consider whether the taste can be accepted by the public, and do not ignore the flavor pairing between ingredients just for the sake of innovation.

At the same time, control the cost of new product research and development: first be clear about what kind of customers you want to sell to, predict the taste and style of the product, and then purchase materials in a targeted way for research and development. Remember, at most two new product ideas each time; too many easily cause material waste and ultimately drive up material costs.

Image source: Internet

The above content is compiled by CoffeeHunters, a coffee news website.