5 Must Know Reasons Why Coffee Shops FAIL In Their First Year | Start a Cafe Business 2022
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- Опубликовано: 28 май 2024
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👀 ABOUT THIS VIDEO
I know A LOT of people have the dream of opening up a coffee shop/cafe business. In my previous videos, so many of you are looking to do so. But I want to let you know that a coffee shop business is NOT as easy as most people think it is...that relaxing calming carefree lifestyle you dream about isn't that realistic - especially for certain cafe concepts.
So I want to let you be AWARE that if you are looking to start a coffee shop business, these 5 big reasons why most end up closing up in their first year. But if you're able to properly work on your business foundations, understand your customers well, create a menu that has a higher average ticket price...you're on your way.
So if you want to open a coffee shop business or a cafe business then keep on watching!
5 Must Know Reasons Why Coffee Shops FAIL In Their First Year | Start a Cafe Business 2021
• 5 Must Know Reasons Wh...
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My videos are based on years spent in the industry building multi-million dollar businesses, including my own international dessert chain (720sweets.com/) with locations spanning the globe. Since my franchise was acquired (2020) it’s been my mission to share this knowledge with people like you who have great ideas, but just can’t seem to break through. If I did it all with no experience, so can you. I know firsthand the struggles and mistakes most entrepreneurs make, and want to show you exactly how to avoid them.
I’ve helped hundreds of restaurant owners and entrepreneurs create explosive Food & Beverage businesses. You don’t have to take my word for it. I’ve been awarded Top 30 Under 30, Young Entrepreneur of the Year, Top 10 Emerging Entrepreneurs, and recently a Forbes Business Council Member.
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Where ?
Hi Lee
My name is Linda
I'm looking for restaurant lease proposal but I don't know where to get it.. can you please help me out.thanks
Here’s a location tip my dad told me years ago 85-90% turns are to the right so Depending the type of type of business you are about to open, Remember the right n left side of the road. If you r opening a coffee shop which I assumed more of a morning crowd , make sure u are located on the right side of the main road that funnels from major subdivisions before enter the highway . These makes more accessible in the morning traffic to turn right vs left and to return on that same street. If you are a lunch n dinner restaurant try to be on the left of that same road as it s a right turn heading back home. Good luck to all future business owners it’s a tough biz we were in it for 25 years.
Brilliant
Makes perfect sense now that I think of it
I assume this is for driving on the right hand side so it would be left turn for countries that drive on the left right?
Why did you stop? Did it get unbearable?
@@intellect3175 my parents retired from it and I didn’t want want to continue the family business which I’m glad I didnt bc the public/ customers r so entitled ,food prices r insane, nobody wants to work etc that’s why i m sending best of lucky who is getting started. So the short answer is yes
TL;DR
1. Poor management (Toxic work culture, high turnover, vendor relationships, etc.)
2. Bad Location (Location, Location, Location. Needs to be in hight traffic area or in neighborhood)
3. No Uniqueness (Specialty drinks, unique environment/staff)
4. Don’t know their numbers (Financials)
5. Bad mindset (Lack of growth mindset)
That just sounds like general advice..?
MVP
@@naitomea_st well that's the basic how toes fnb 101 but still most of people dont know that which is mindboggling
@@naitomea_stcommon sense ain’t common and most people over value their menu without having references of their quality. And if a shop does exude hospitality then people are not returning
you can even overcome problem #2 if you zero in on #'s 1 and 3. If it's your business you need to work there at least the first year before you turn it over to a manager and a bunch o' people working for only minimum wage. They're never going to care as much as you. And if you serve really really good drinks perhaps you could persuade some to go slightly out of their way. Serve really fine coffee, decaf, matcha, and zero caf Teeccino lattes to reach every palate!
I’m surprised you didn’t mention the menu. I’ve seen a lot of businesses in the food industry who have extensive, complicated menus and that made their quality go down. The ones with simple menus can train their employees to have a consistent quality when making the product. Customers know what to expect going in and they come back for the quality.
This is true, if you want to give your customers variety, I’d try a seasonal or special occasion menu.
How can extensive menus make the quality go down? If the coffee itself is good, I don't think a long menu would deter customers from returning. Also, younger or inexperienced coffee drinkers are the ones who are tend to order the more complicated drinks, whereas experienced drinkers stick to their usual, so I doubt an extensive menu is going to bother them. There are hundreds of combinations of coffee drinks a barista can make, and they don't have to be explicitly stated on a menu in order for a customer to order it. They just describe how they want their coffee made (no ice, less ice, sugar free, add flavored syrup, more foam, ======================================== ============================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================================
@@nissan_skyline The extensive menu makes it harder for the employees to make good quality products because they’re stretched too many ways. The customers might get overwhelmed with so many choices, but really it’s the employees that it makes things difficult for. It also makes training new employees difficult because they have to learn so much and, therefore takes longer for them to produce good quality products than if they had a smaller menu to master.
So true.
From the customers PT if view, too many varieties and length menu is the waste if time. Too tiring to read.
I’m starting a coffee shop hopefully in a few months. I gotta be honest, these videos have been very helpful. They’re giving me the tools and confidence to get it done. I’m scared asf, but I know I’m gonna make it.
Glad to hear the videos have helped! My masterclass will give you a little bit more info as well. Everyone who has attended it felt way more confident on what their next steps are. Best of luck Julio!
@@WilsonKLee Done! See you soon..!
Make a lot franuchinos & slushes coffees also get the little ice 🧊 too
How is going? Have you alteady started?
Hows it going so far??
A loan officer told me that some coffee shops fail based on hygiene. Customers have eyes, and can see if the tables and chairs are clean. If they find the bathroom to be dirty, they assume that things are equally dirty throughout the shop. A shop’s reputation is made or broken by word of mouth.
Great advice
Me one of customers that judge the cafe based on toilet and their table cleanliness 😂 also I am a chef so hygiene and cleaning is a basic for someone who want to run business and give example to another staffs.
Anyone looking to start a coffee shop. Take this from a 10 year barista - Treat your employees with dignity and respect. You need to pay them well because especially in 2022 people are over service jobs. Baristas deal with so much every day so it is very important to show empathy and help when ever you can.
Being over demanding or implementing ridiculous rules will defiantly turn people away from your business.
Agreed. Happy staff in a good business will pay dividends.
As a barista who used to work in a coffee shop but now had his own, I agree with this 100000000%.
This is so true. As someone who often visits cafés, I don't have a problem with a small menu, but I hate when they can't serve multiple things. I also hate small claustrophobic cafes with poor heating during winter and drafts. I hate cafés that don't have comfortable chairs or, even worse, have those "aesthetic" folding chairs. I know multiple successful cafés and restaurants with a "bad" location but everything about them was flawless enough to attract guests regardless.
I don’t know why I’m watching this at a nursing student but damn you have inspired me start my own coffee shop. I always wanted to start a business and never really wanted to go into healthcare, so thank you - will continue to follow your channel!
Appreciate it Marian! I think your situation isn't all too uncommon. I have a lot of people who DM me about want to switch over to the hospitality industry because that is truly what they like doing. Best of luck if you do make this leap!
Good luck Marian!
I'm in the same situation, current nursing student but have a love for coffee, I don't really plan on starting a cafe or anything but after watching this video, I'd love to own one lol
I'm a physical therapy also plan to open an cafe 😅
My boyfriend works at a coffee shop near a hospital. Let me tell you that is an excellent location!
The one thing I would state - being in the Pricing world for the better part of 30 yrs - DON'T get too hung up on individual product margins - i.e. I have to make 30% on every product, etc... Instead, think in terms of the complete offering and overall profits - not individual margins.
You can make a smaller individual product margin and generate the same revenue / profits - it's about volume.
It's about being flexible - ex: make smaller margins on a higher unit volume Vs higher margins on lower unit volume.
Both can generate the same profits, but not the same revenue.
Oh and something to keep in mind - pricing has almost nothing to do with how much it costs to produce the product - I know - counter-intuitive, right? BUT, pricing is all about what someone is willing to pay - not it costs me $2, so I'll sell it for $4. Actually, it may cost you $2, but you will sell it for what someone is willing to pay for it - and they demonstrate that with their business.
CAN you make a profit - given the reality of your COGS (Cost of Goods Sold) and the price dictated by the environment you are in?
The KEY - as mentioned in the video - is Value. What makes it worth it to buy @ $4 - what makes it different? The product? The ambience? The staff? The Loyalty program, etc?
A lot of good points in the video - just wanted to expand on the pricing / profit aspect a bit.
Yes! Think about bundling, cross selling and total ticket averages. McD's makes almost nothing on burgers, 60%+ on fries and 80% on Cokes. If they raised the price of the burgers they couldn't sell the high margin stuff because people would not come in.
A customer value model is VERY useful in setting prices and finding high margin items for your overall mix. CVM looks at what the customer THINKS they are paying for, not what they are really paying for, so typically things like "local, organic, fair trade, gourmet, fresh roast" etc are perceived as making up much more of the cost than they do. CVM helps you speak and price in language that makes 100% sense to the customer. Helps you add and price the right "premium" level items.
Great point!!
LIFO , last in first out. POV , point of view . 401k, allows an employee to set aside tax-deferred income through buying company stock for retirement purposes. United Non-Compliance, is about taking the message person to person, city to city and province to province to help wake people up to what is happening in our country.
I really want to open up a bookstore/cafe/game store with some kind of unique theme.
Love those concepts!
Did you open your bookstore cafe? I found your comment after 2 years, and now I'm thinking about it. 😊
I would also like to point out that "bad management" can mean that YOU are a bad manager. The say is "people quite managers, not companies" and you have a primary say in the culture you create. It's not just hiring the "right" people, but making sure you are the right person to manage them.
Vendor relationships are accurate. We had a truck driver delivery meat. 600km trip last minute notice. We give him free food every time we see him for years and it saved us upwards of $10000 over 5 days.
Me and my husband are trying to open a coffee shop, and the thought of failing is terrifying because we're investing a lot in it. Thank you for the video. It really feels good to act on knowledge and not ignorance. Commented for a boost on your video. 🙂
this guy to you young to give business advice .he talking just common sense ,no offence just saying.
@@greggregorich8048 don't worry I'm not stopping here. He may be young but any advice that can open my eyes just a little bit more and give me better ideas and better angels to think on is appreciated.
@@mohadese8586 thats the best advice i can give you that idea of drive-thru in this video its no brainer good luck ruclips.net/video/HvQt2wbj7DE/видео.html
@@greggregorich8048 thanks. Appreciate your concerns.
@@greggregorich8048 what an absolutely idiotic thing to say.
Im opening a second cafe and Lee is right. Make your staff and vendors happy, bring something unique to the table and keep up with the numbers. PS. I would add to focus on solving a problem or need instead of selling a product.
Did you get a loan to open up your first?
I'm a coffee industry vet and point number one is that CAFES DO NOT MAKE MONEY OFF COFFEE ALONE. Lots of shops fail thinking coffee alone, even in coffee saturated cities, pays the bills. IT DON'T. You better open multiple shops, serve up more than just coffee at your one shop and or work the shop with minimal stafffing. And.... You better choose your location wisely (hint: with foot traffic or high viability) like what was said here.
Yeah, a good shop needs something special other than good coffee. There are so many cafes that are copy and paste and serve amazing coffee. you need a gimmick or something to make people come back.
I'm opening up a coffee bakery shop on 12 acres that I purchased with a really nice creek. I'm also opening up a bar b que resturant and a bar for the night life. Eventually there will be more options to choose from. I do already have a successful construction company that will help support these businesses if times get tuff.
Sounds like an exciting project, have you opened the coffee shop yet?
@@officialdanleoactively in construction
In Greece coffee shops don't fail, the only business that never does ,no matter what they always thrive and they are *everywhere* . Not because we are geniuses that do everything right and know everything about how we should act, but because we are obsessed. From 15years old to 70 years old Greeks, we always spent every day at coffee shops for hours and the price of coffee is too low . Even coffee delivery thrives ,they'll drive to your home for 1,70€ .
I dont want to start a coffee shop, but the points about do you speak are relevant in other companies too, so thank you :)
Most of the time it is all about business fundamentals and those are relevant across industries :)
true enough. i have several businesses and the most difficult factor is human resource management because you have a bunch of people coming from different backgrounds with different interests.
Agree. Managing a diverse team is most challenging and I found that a key approach is to foster a culture of open communication and mutual respect.
Im 13 and want to start a cafe when I'm older with my family
Thank you, man. I am learning a lot from you! Being someone from a third-world country and someone trying to start a restaurant, your insights are priceless! This channel deserves so much attention!
I love this video. It’s exactly what I think but in an organized and summarized format
Thank you for great information! I look forward to learning from the rest of your videos!
im a teen (14} and i want to open a coffee shop when im an adult so i looked up some stuff and found this video. this video was helpfull, clear with no confusing terms, im definantly gonna check out more from them
You know why your so unique? You explain things for noobies, for most of the people i've seen and tried learning but they all told me the same things, over and over again, you ACTUALLY told me really good examples and i don't understand very easy so i appreciate it very much
Thanks William K. Lee. Keep up the progress, all of us at Midnite Espresso will continually be highly tubed in.
You definitely know what you are talking about. Great points. Thanks.
Very good sense, great marketing awareness! Well done!
Hello Mr Lee. I’m looking to start a coffee shop in Missouri and am starting on business plan. Thanks for your videos! They’re very helpful.
I had a favorite coffee place but on two instances I was treated rudely. First because the barista didn't want to make their fall special drink 30 minutes before closing and the second being another barista was rude to me because I didn't say 'good morning' loud enough (masks really muffle my voice). I do not go to this place anymore even though they have good coffee.
Thanks so much for making these videos. My dream is to open a coffee shop and you have been my most helpful and honest source.
Wow, thank you! Best of luck!
Stumbled upon your videos and got hooked.
Thank you for sharing your knowledge for small cafe startups 👍💖
Glad you like them Esterlyn! Do you already own a cafe?
Bro this content of yours made me remember my business courses that I took up but better and not boring lol. Keept it up man, I love your thoughts and ideas!
What a wholesome host, couldn't help but leave a like
Helpful and insightful video. Thank you!
Golden insights here - Thanks Wilson!
I’m 15y and owning a coffee shop has always been my dream, hopefully I can use these tips some day.
Thank you I really enjoyed this video. good info, not overwhelming, and friendly.
I'm so glad I bumped into this
To be honest, a lot of these principles are valuable even for a non cafe business. I'm not in the hospitality or F&B scene but this was very educational. Great video!
Binge watching your videos now!! Thanks for this content!!
Glad you like them Imani!
Can you make a video about cold pressed juice bar? That would be awesome
Wow! What you're saying is so brilliant and actually applies to many other businesses as well! Great advice, thank you!
Glad it was helpful!
Right now I'm planing on becoming a MRI radiology tech, but I would love to open a cafe in the future. When I was little my parents owned a mexican bakery for a little while before having to close it, due to multiple reasons. But now I want to give it a shot and learn from the mistakes my parents made
i have been binge watching so many of your videos there really helpful and theres most if not all the information i need to know to start a place in the future
best of luck!
This was amazing ❤Thank you so much
Thank you very much, I opened a small coffee shop next to a university in China for two years. Due to the epidemic and business operations, it is now closed. But I will try to operate again and renew the concept and management.
Great.
Very Helpful and honest video
Thanks for the knowledge. Im new subscriber here and planning to start a coffee shop business. ❤❤
hi you really make me happy . i was looking for someone like you for a whiel . thank you so much
Excellent video!
Thank you so much for your video!
I keep blaming my self about why my employee keep leaving…but it’s not about me it’s about their value…that they not take the job seriously…
Currently, I’m doing boba tea at farmer market for almost 4 years now…and have a lot of good feedback! I’m dreaming of opening my own shop..(hopefully this year!)
Thank you again for your video that make me realize many things before I open store front 😃
Looking into this myself post military. Great info ty
We are opening up a coffee shop at historical Hamlet North Carolina I've been in the restaurant business for over 30 some years and also household management position I'm listening to your video and I like it.
I'm looking into making a coffee shop and bakery. these videos have helped.
Yaas Im not trying to start a cafe but I am starting a business and already Im building a relationship with my manufacturers getting to know them and letting them know me so that theyre actually happy to work with me 😊
Very helpful. thanks for this
Amazing content my friend, Keep it up!
thanks for tuning in!
Brilliant Wilson. This video was incredibly helpful. I am starting a mobile coffee truck in 2 months time.
Oh nice! Where at?
Bump
I like this content. Kudoss!
thanks for tuning in Aqil!
I’m excited to open my own business coffee shop thanks for the tips
Very informative.
Thank you
Thank you for these videos on how to start a coffee shop..
I appreciate the way Wilson hit it hard right in the beginning. Values and corporate culture is something never considered in organizations in Thailand. Gossip and toxicity is the culture. Too often I see people get promoted to supervisor and low-level manager and they immediately turn into monsters. It's bizarre. I have no idea what business colleges are teaching here, but it certainly isn't how to create positive work culture.
Very much appreciate these videos
Really appreciate this video ❤️
very awesome brother thank you so much I love the video
Great... thank you
definitely saving this for future reference
Thank you so much for sharing 🙏❤️
Started mine in April!! All thanks to your videos
Hey Selusiwe!
Would really like to ask you a few questions…planning on opening one lenna.
@@portiamopeli2885 Hi Portia. Sure hey, you may.
Wow that's so awesome! Feel free to share it in our Fb group or if you have any questions!
Gonna use this mindset for cocktail making
Its always been my dream to start up my coffee shop I love how I help complete other people's day with just coffee
I don't know your situation but what's stopping you from starting now?
@@WilsonKLee Wilson how do you manage your time as a owner
Very practical!
These videos are ao helpful!
Glad you think so! My masterclass would be a good supplement to my youtube videos :)
Thanks for the lessons 👍👍
No problem 👍
my dream is opening a coffee shop in my future. i only have a "theme idea" and i'm not sure how unique it is but i had a few people told me it's a good one!
My husband and I would love to open a simple cafe. Hopefully he can get a loan to do so! I've been learning in the meantime. We wont jump into it. We're taking our time with planning and learning the business first
very professinal and helpful :)
Here in the Netherlands we define coffee shops as cafés selling weed lol but great video and insightful tips!💯 Planning on opening my first retail shop this year. More success to you and all people on this page.
You're talented!
Hi Wilson! I am taking my first steps into building my café brand. I have been trying to do this for along time but never really knew where and how to begin. Your videos have been very helpful in motivating me to get started!!
You can do it! Best of luck! Let me know how it goes or if you have any questions feel free to join our FB community
Appreciate, this helps 🙏 💯
Hello how re you doing,hope you are having a wonderful and blessed day?
All five of these from Wilson are very good and not what I expected.
My five would have been:
1. You have never been in a food business before. You like coffee shops and you know what would make yours different and better but you have never run any kind of food business.
2. You seldom work the register. You're in the back doing books or dealing with deliveries and labor. Far better to be in the middle of your business, leading by example and showing customers that you care if they come back. Many of your employees would prefer that your shop is not busy and they may not say it but your customers can feel that "go away" vibe -- don't let it happen.
3. You were undercapitalized going in. Find out what the first year really costs and add another 20%. If this is your first restaurant add another 70% for the learning curve. If you can't handle that dip then don't start.
4. Field of Dreams -- you saw that movie or heard the tagline and it ruined your business sense. It is lazy and wrong to think that "If you build it they will come." Field of Dreams is the most expensive movie ever made because of the damage it has done to entrepreneurs. Find a way to test your business idea -- a cart, catering, sublet, pop up. Spend as little as it takes and be ready to find out that what you have in mind is a bad idea. Learn all you can from the test(s) and make some changes or abandon the idea before you proceed to spend the money in #3
5. If you can raise the $100K+ that it takes to open a food business consider the option of NOT opening a food business. Don't ruin your life and your credit score by opening a restaurant. When you open a restaurant your credit score goes down 200 points. Even your SO or family's credit scores can be affected. Do you really want to get up at 5AM, work all day every day on the hope that someday you make your money back? If "no" then consider taking your $100K and buying a nice safe investment like covered calls on the S&P 500 (QYLD) -- it pays out 1% every month. On $100K that is $1000 every month and your time is your own.
Thank you 🙏🏽
Hi, I just wanna say thank you so much for this content am currently studying food and beverage production sales and service but I am leaning more towards opening a coffee shop of my own some day so thank you so much for this content it's really a life saver I hope you'll continue making content about café. 😊
The algorithm sent me here I don’t even drink coffee but man am I intrigued
Uncle Iroh be getting irritated at how few people are starting tea shops...
But great video on good coffee and cafe startup practices!
Working on a student project for a nonprofit hoping to use a coffee shop to attract followers. This offers sound advice on dos and donts for a nonprofit to take heed to
Another great video! Concerning the numbers, how to count the cost of my time for preparing a dish? Eg. 2 dishes have the same cost of food, the same price, but one takes double time to prepare. How to count that? Thanks!
I was thinking of maybe opening a convenience store but with great quality coffee instead of the typical cheap stuff. It would also be very fancy inside, lots of wood surfaces.
I would sell black coffee+a donut for $1 to bring people in , then have more expensive pastries as options.
(Very similar to the Ice cream example)
A few tables with inviting soft lighting for customers and Lotto slips in the middle to make a bit more money from them.
Amazing idea can’t wait for your succes
Dude don't share this so openly on the internet! People will steal this idea before you conquer it
Hey Wilson K Lee. Like your content! 👍🏽 one thing I’d like to say about Poor Management, is to reframe it to Leadership. Owners don’t realise they are the reason their people management is poor and often they blame their staff, not themselves. Your critique gives owners an easy out, blaming their staff. They need to start with them, because they are the ones that hire the staff and as a coffee consultant, this is the recurring issue I’ve seen out in the field. Owners need to understand systems and people.
I agree owners are a big part of the problem too (sometimes the root cause). Afterall, they are the ones who make the hiring decisions, in charge of culture and training.
@@WilsonKLee You're a legend! How do we help encourage owners and leaders to do more self assessments? Would love to see content around that! Something like, "Am I the problem?", you know... with the "finger pointing image with 3 fingers pointing back at yourself" homage. This is a question we all fear asking.
Food for thought. You have a fan in me.
Hey Jude. I’d love to pick your brain about your work as a coffee consultant. I assume it’s a great career for someone like myself, but I actually have no idea what it takes to get into it or what what the day-to-day is like. Is there any way we could chat? Thanks
@@jordankreisher8883 Hi Jordan! I kinda' fell into doing coffee consultancy. I've been a barista for many years, then was a manager of a fast paced high earning cafe, and saw the same recurring issues at so many other cafes. There are solvable issues.
People started asking me to train their staff, but often when I would diagnose the issues inside a cafe, it was more than training. It was leadership, culture and workflow (systems). Sometimes it was branding and positioning. Because I studied graphic design and communications, I would wield these two things together to help people.
So the first thing I'd say is, consultancy is about helping people with advice that can give them a measurable return, helping them achieve something or get to a place in their business that they're happy with. People will pay money if it gives them back lots of time, saves them pain and frustration, or if they just can't do it without the knowledge.
Where are you based?
It’s been a dream of mine for over a decade to start my own coffee shop.
I am planning on opening a coffee shop in a year or so and I’m so excited to run my own business. No business is easy, as you mentioned but I feel I could find enjoyment in a coffee stand so the work doesn’t feel like a burden.
Did you open it ?
Thank you so much
My wife and I are now working on starting a coffeeshop/bookstore. We could use as much help as possible.
I'm considering it in a small rural town Caldwell pariah, Louisiana.
Always wanted to start a cafe business
Welp just got interested in trying to start a coffee shop might be worth it watching this vid
Thank you soooo much . i going to open my own new coffee shop next year in Somaliland , and this video was very useful.
thnks again .
Best of luck Yusuf! I'm sure there are some nuances in your country like specific products and taste so make sure to study that too!
MashAllah 🤩 I thought I was the only somali who is dreaming about this I am thinking 🤔 of this idea tooo
@@WilsonKLee sure
I’ll do that . Thank you dear 😇💜
@@iqramchannel7846 wllo
If you live in Hargeysa I’d like to ask you something, if you don’t mind 😇
i see you've been getting more views :) I'm happy for you
Haha thank you! I'm glad it is picking up :)
He is Amazing 🥰😇