New Shop in Maryland Initial Planning your advice wanted.

[CoffeeMD]

Hey All, I have just completed my 5th Afghan Deployment and I don't want to deploy again and i am thinking of opening up a small coffee shop and would appreciate some advice on any of the holes I am missing for start-up costs etc. I plan on purchasing most of my equipment used to keep start up costs way down. Yes,I know this is somewhat of a gamble but I would like success stories if you have them.
I will have a expert Barista as my store manager.
Can you please tell me your experiences and your pitfalls and what you would do different? What worked great?

Est. Budget Below:

Coffee/Pastry equipment. ~Price (from what i've seen off of used restaurant equipment sites).
Espresso Machine 2-group $500-$1000 (Yes, I know they sell for waaaaay more new but has anyone had any luck starting a business with a used machine?)
2-Coffee brewers/holders $300
Bulk Coffee Grinder $300
Espresso Grinder $300
Upright Fridge $300
Under cabinet fridge $300
Pastry case $1500
Ice maker/bin $1000
Racks/storage $500
Sinks $300
Mugs/Wares $500
Credit card machine $200
Phone $50
3 compartment sink $250
Sound System $200
Cash register $250
Counter Top ~$2000
Signs ~$1000
= ~$10500

I have friends that will do plumbing and electrical So I figure $2000 in material costs?
Decor I plan on doing cost for around $3000 ( I have reclaimed fire code bricks I am using, etc) I will be doing the labor on this.

That is ~$15050

Rent will be ~ $1400-1500 a month x 3 months startup = $4500
Labor cost will be mostly my family we will say 2x $8.00 an hour 10 hour days (does that sound right) + insurance ~$2 an hour on top = $10 an hour x 10 = $200 a day =$6,000.00/month x 3 months = $18,000
Utilities = $500 a month x 3 = $1500
= $39050
+ Advertising =~$3000 Start up
=~$42,050

+Start up product
How much product do you estimate I would need for start up? Market = 150 customers a day?

What else am I missing?
How much can I expect to pay for licenses and inspections?


Thanks All!
Andy

 

[John P]

Andy,

Thanks for your service, it's much appreciated. One of my best friends just retired after he put in his 20 years, most of which was over thereabouts and he vowed to never set foot there again. Sounds like a miserable place.

So let's talk numbers...

It looks like nobody has had the courtesy to tell you to save your money. So, "Save your money." Or at least save more money.
Depending how much labor you/friend can do regarding plumbing, I would (conservatively) add $20 to $35K to your total number.

A dirt cheap, used commercial espresso machine --- the kind that I would advise against even taking for free would be at least $3K. The Grinder and espresso machine (grinder being the single most important piece of equipment) are the heart and soul of the business. You can't be cheap, nor nickel and dime on those. There is a HUGE difference in quality of build, and the ability for the machine to produce consistent excellent espresso time after time in a machine that is $7K vs one that is $12K (for a 2 group). In the scheme of things a $6-$10K price difference for a better espresso machine is nickels and dimes. If your budget is that tight that you can't buy proper equipment, you need to save/create/find/borrow more money.

I am sure that there are SBA Loans or equivalent for former military. Maybe there is something attached as a benefit to the GI bill.

No reason to break down every price at this point, but What I will say is that if you try to find equipment at the prices you've listed, you will either A) Be woefully disappointed. B) End up with sh!tty equipment. C) Both

Develop a clear and reasoned plan.
Assess whether that plan is reasonable in the real world and not just in your head.
Execute said plan.
Evaluate. Adapt. Succeed.

 

[CoffeeMD]

Andy,

Thanks for your service, it's much appreciated. One of my best friends just retired after he put in his 20 years, most of which was over thereabouts and he vowed to never set foot there again. Sounds like a miserable place.

So let's talk numbers...
.

John,
a big thank you for your advice. I definitely have my concerns about used equipment. I see a slew of high end grinders and espresso makers, etc.. That many shops that went under and are liquidating. I very much like your suggestion about checking out the GI bill. I'll definitely start looking into that.

What about anyone else? Any success or failure starting out with used equipment?

Thanks!
Andy

 

[slurp]

An average coffee shop build out cost is around $150k to $500k including equipment. Not saying it can not be done for less BUT this is the average. Hope this helps.

 

[John P]

Andy,

It's not necessarily whether it's used or not, but what make/model, WHO used it, and was is maintained properly?
I always caution people to not get caught up with the romance of owning a coffee shop. Undercapitalization will kill you.

Also 150 ppl a day is not realistic in the beginning... not without a busy area and effective use of PR and Marketing.

Take your time. Keep asking questions. Do it right.

 

[slurp]

Andy,

It's not necessarily whether it's used or not, but what make/model, WHO used it, and was is maintained properly?
I always caution people to not get caught up with the romance of owning a coffee shop. Undercapitalization will kill you.

Also 150 ppl a day is not realistic in the beginning... not without a busy area and effective use of PR and Marketing.

Take your time. Keep asking questions. Do it right.

+1 well stated John P

 

[CoffeeMD]

Ok got your ideas on machines...it probably pays in the long run to go with known quality machines/equipment rather then gamble with equipment of unknown quality/condition.
What about product? How often do you order product? How much did you order for start-up? Obviously, one can adjust but i would love to get your experences.

My location has great pedestrian traffic, shops, small chain restraunts and large outside seating with a population that likes to do so. Not to mention a thirst for a good coffee shop, with none in the area. I would think 80-150 a day would be very doable. Most surrounding shops have much more then that. My model has a break even of around 70 ppl a day.
Thanks,
CoffeeMD

 

[HillofBeans]

My question to everyone out there is how do you know your location is going to be good? Assess the town and block your on? How do you check how the proximity of other places
How do you market and advertise?
I don't own a shop, I am wholesaling but always thinking about it. And actually I have had customers ask me to take over part of their operations.
But my two cents...
From what I see, people who frequent coffee shops want to know that its good and special and that has to be said with the equipment, staff, layout and hopefully the coffee. You can't look mom and pop, naive or desperate. I say learn all you can talking to salesmen while shopping for equipment and looking at other places. If your location is really good you could maybe afford leasing equipment if you haven't happened on some good clean stuff.

 

[Bardo]

CoffeeMD,I am recently retired, 25 years Navy. Thanks for your service! I am a roaster located in MD, but don't own a shop. Perhaps we should talk about product if you get to that point. This isn't a sales call, but there may be synergy, and always happy to talk to and work with fellow vets.Freeman

 

[CoffeeMD]

Bardo/Freeman,
thank you for your offer. I have been talking to wholesalers and I am definitely intreated. I'm prior Marine Corps so I hope you won't hold that against me . I'll send you a pm with my contact info.
Thanks!
Andy

CoffeeMD,I am recently retired, 25 years Navy. Thanks for your service! I am a roaster located in MD, but don't own a shop. Perhaps we should talk about product if you get to that point. This isn't a sales call, but there may be synergy, and always happy to talk to and work with fellow vets.Freeman

 

[Bardo]

CoffeeMD,
That's okay, I have marines in the family. Everyone has a dirty little secret, and that's mine.

 

[CCafe]

I was seriously thinking of writing a big long reply here. Instead I'm going to recap a bit. Used equipment in my opinion should only be purchased from coffee shops who can show you the service record of that piece or from a Importer/Dealer/Service Provider. Ebay, Craigslist, and those wholesale kitchen outlet places who want to sell you cheap used equipment should be avoided unless you go into the sale with the understanding that after you purchase the item you will ship it to your nearest service provider for a thorough inspection.

When possible lease the stuff that has highest potential for failure aka dishwashers and ice machines. I would suggest calling Ecolab and talking to them about those two items. My reasoning for this really is simple. If you lease the repair should be built into the lease so every time these items break is one less time you have to pay for a service call.

Coffee brewers tend to be overlooked a lot. I would avoid the low end Bunn line such as CWTF's and Axiom brewers. They are designed more for your diner experience then say a specialty coffee shop. I do however like the Bunn ICB's its well thought out and easy to use. Other manufactures to look into would be Fetco, Newco, Curtis just to name a few.

The espresso machine is considered to be the bread and butter machine. Going cheap on this will only hurt you in the long run. Even if you buy a low end 2 group Casadio Dieci A2 for around 5 to 6000 you'll be light years ahead of any used machine. You can upgrade to a higher end toy once you get the hang of things and you feel out how your business is doing. Plus if you do choose to upgrade in the future you can still keep the low end machine as a back up.

Lastly you need to look into water filtration. Don't over look it. I would say that about 90% of my service calls are water related. You just paid all that money for that equipment why not protect what you invested in. If you take the time to plug your electronics into a surge protector to protect your investment then you need to take the time to invest in proper water filtration.

 

[JitteryMonkey]

There is some good information being posted here and I commend you for desiring to keep costs down by doing much of the work yourself and buying used equipment. CCafe makes some excellent points about being aware of getting used equipment and the idea of proper water filtrations. That being said, I'd like to give you a little bit of feedback on this subject because we are smack in the middle of setting up an espresso bar and roastery in a historic downtown setting in small town Rutherfordton, NC.

I will be brief and to the point. Give yourself LOTS OF TIME to build your business. Especially if you are doing much of the work yourself. We purchased a 1300 square foot building back in December of 2013 and here we are August of 2014 and have yet to open our doors. Things could have gone quicker if we had more capitol to hire other crafts to do the work. Yes, we have hired plumbers to cut into the concrete floor and add lines not only for an adjoining apartment that I will be living in, but also HVAC and building contractors to put in a firewall separating the residential from the commercial space with the addition of the cooling system and fire protection. That being said, my son and I have been doing everything else. If you want to see the beginnings of our setup, here's a link to the blog entry to Sustainability At Its Roots – The Start of a Specialty Coffee Business.

The major thrust of the work is done. We are currently repurposing office furniture that came with the building into a classy espresso bar. We are also putting back together our Royal #1 coffee roaster that will be used to micro roast specialty coffees in-house. Our espresso machine - a Sorento Michelangelo 3 group head, was purchased used from a local roaster/coffee shop that was going out of business. Thinking that we were getting a good deal and that since this guy had over 20 years of experience and is an avid SCAA member, we thought all was well. Guess what? The espresso machine was working when we first got it, but after 3 months of lite use, the machine died. There is no one locally that can service these machines. We are tech savy and know that we can fix it given time, but I have to say that you need to be very careful buying used equipment and if you do not have the ability to fix this equipment yourself, then you are better off buying new.

Here are a few pictures of where we currently are repurposing our office furniture to make a classy espresso bar and finishing the interior of the space with a wall mural...

 

[CCafe]

That stinks, do you know what died on your machine? Have you tried contacting Burgess Enterprises, manufacturer of Espresso, Food & Beverage Carts and Kiosks yet? If they can't help you could always call ECM but that too may be a lost cause. Seems like ECM just dropped all the old lines of equipment and called it a day on support.

 

[JitteryMonkey]

That stinks, do you know what died on your machine? Have you tried contacting Burgess Enterprises, manufacturer of Espresso, Food & Beverage Carts and Kiosks yet? If they can't help you could always call ECM but that too may be a lost cause. Seems like ECM just dropped all the old lines of equipment and called it a day on support.

We haven't had the time to diagnose the espresso machine. What I do know is that we had what we thought were two electrical spikes and later found the machine had died. Not sure if it was an electrical spike because the lights did not flicker or go out. My computer screen did blink as each loud crack came from the area where the machine was at.

We are also aware of Burgess and have been in touch with them. Yes, parts for this model are hard to come by and they are the ones that told us a repair technician is in South Carolina. So it looks like we will be diagnosing and doing the repairs ourselves. I just hope the espresso machine can be fixed and not a total loss.