Bitter Brew is a short story about a couple that opened their own coffee shop in New York City and closed it within just 6 months. The failure of a small cafe is not a question of competence. It is a sad given. The logistics of a food establishment that seats between 20 and 25 people (which roughly corresponds to the definition of “cozy”) are such that the place will stay afloat—barely—as long as its owners spend all of their time on the job. There is a golden rule, long cherished by restaurateurs, for determining whether a business is viable. Rent should take up no more than 25 percent of your revenue, another 25 percent should go toward payroll, and 35 percent should go toward the product. The remaining 15 percent is what you take home. There’s an even more elegant version of that rule: Make your rent in four days to be profitable, a week to break even. If you haven’t hit the latter mark in a month, close. I wonder how typical this story is of most independent coffee shop startups. It’s something I think most consumers don’t think about: that the person on the other side of the counter might not be making any money.
larry (liftoff) In the case of most coffee shops, consideration should also be given to what percentage of of daily sales is “take-out” or “to-go”. This generally makes up a good portion of a coffee shops total sales. 0 Reply January 5, 2006
