Starbucks opened its first store in 1971, with a total investment of $20,000 (about the price of a nice house), and today it is a multi-million dollar company. So should you start your own coffee shop franchise operation?
Well, before I answer that, let me ask you a question. When you spend a day shopping, either willingly with your best friend, or reluctantly being dragged around the shops by your partner, where do you always spend at least half an hour of your time and at least £10 of your earned? with so much effort? cash?
I’m willing to bet he’s in a coffee shop.
In times of recession, when designer stores are empty and people switch to cheaper supermarkets, you’ll find the nearest coffee shop full of paying customers any day of the week.
It is therefore no wonder that coffee shops are one of the few retail sectors in the UK to have grown consistently in excess of 15% year on year for the last 8 years. And forecasts show that the number of branded coffee shops will double over the next decade, according to market research by Allegra Consultancy.
Therefore, budding coffee shop owners may want to consider planning ahead so that they can go from a single coffee shop to a fully franchised operation. Here are 7 simple tips to point you in the right direction:
- Once you have opened your first coffee shop and traded profitably for a long period of time, you will have a successful plan to open more shops. You’ll be able to bring all the personal touches that have drawn your customers to a second store and a third store. With your third store, you’ll know exactly what works, and you’ll be in a position to pass that knowledge on to others.
- With this third store, you are approaching the point where you need to start planning your own franchise operation. This would allow him to expand much more quickly and his business would be run by management that reports to him, adhering to the strict guidelines he has set. Take advantage of all the knowledge you have acquired to focus on this third store as the one that will set the parameters of your future franchised stores.
- Switching from a storefront to a franchise operation means you’ll need to expand your knowledge base and consult experts in your various fields. You will need the help of more specialized professionals and you may have to change bankers, accountants, real estate agents and suppliers to get your business off the ground. You will have to look at your business nationally rather than locally.
- Contact a number of franchise companies, not just those involved in the coffee shop business, and request their information packs. The principles of franchising are similar whatever the product, and you can learn from this information how to put together your own franchise package and make sure you protect yourself with legally impermeable contracts.
- With a proven track record of running successful stores, you are more likely to be offered better sites by landlords looking to lease their commercial properties. A landlord will always prefer to lease the property to an already successful business rather than a new franchisee, so he will have to take over the lease and sublet to his franchisee. Therefore, he must ensure that the right to sublease is always written into any lease he signs.
- When your business can afford it, consider hiring a consultant to contact all affiliated agencies, including bankers and real estate agents, on behalf of your franchise business and franchisees. While your franchise operation is fairly new, you’ll need to take on the role of real estate consultant yourself, until you can afford to hire a specialist. Although this adds to your workload, it can be a benefit as you will then know every detail of your business and this will help you judge whether any full-time consultant you eventually hire is up to the standard and quality you require.
- Once you have several franchises up and running, you can consider offering territories to the best operators.