He told me they make an overwhelming amount of money off of the tasting room attached to their physical brewery because the beer itself is effectively water in terms of cost so they make profit by not having to pay any middle men in the tasting room.
My suspicion is that in the coffee world, if you source and roast your own beans and serve them direct in a venue you own you get a similar effect. I think it must be essential to run the roastery yourself to make it work. That work goes well beyond what is required to just open a cafe and serve someone else’s coffee.
Starbucks has simply insane process automation, training, branding, marketing, custom drink labs pushing out new flavors every two weeks, complete control of their global supply chains.
It would be more accurate to ask: “How the F can anyone make any money when Starbucks is on every other street corner and has the advantages of scale they have.”
Source and roast your own beans, don't overroast the beans, charge a premium over Starbucks for not producing crap coffee from overroasted beans. Starbucks does some impressive work with the candy flavors it adds to distract from their coffee, but...
Curious then why Starbucks doesn’t adjust.
Is it something in the scale manufacturing, such as, more margin for error in the overroasted side, so taste will be the same signature burnt at every Starbucks in the world?
Is it that their market is former fast food coffee drinkers used to bland and burnt drips from McDonalds who will try a Starbucks, find it so ‘robust’ (ahem) as to be obvious, and that’s the end of the experimentation?
There has to be a data driven reason.
Poor quality beans and robusta are ‘hidden’ with a dark roast as the flavour moves to bitter. This also lasts a long time and doesn’t go stale for ages. As a general rule in coffee, light roasts have a variety of tastes and dark ones are just bitter. This saves a lot of money. Low quality arabica beans are less than half the price of good ones, and that’s for me, purchasing a few kg at a time. Starbucks will be using a lot of low grade robusta and that stuff cheaper again. Combine this with a brand which makes coffee where the dominant flavour isn’t the coffee but the milk (if you can call miscellaneous juiced nuts etc that) which is often flavoured. I don’t think the coffee will be their primary cost in consumables, I’m guessing milk is. If you want to have a play, get a heat gun and a kilo of beans. Have a play about with different roast styles. It’s a slippery slope but it isn’t an expensive one.
Edit: Here is a link with a breakdown of Starbucks costs. Not sure how accurate it is, but it puts the coffee as 16c per cup, and the milk at the same. The cup itself is about 32c according to the article. http://coffeemakersusa.com/pricing-breakdown-cup-coffee/
Like, once a Starbucks drinker goes out and buys a heatgun to roast their own beans they will discover the truth that has been hidden from them all along.
I always just assume that someone who drinks Starbucks regularly would be the most aquainted with how it tastes and might not need someone to tell them.
Making a consistent product year over year with inconsistent raw materials, in high volume with wide distribution, and maintaining prices most people can afford is very difficult.
Sure you can get better coffee if you spend time doing research and sourcing beans and roasting equipment, but that doesn't mean there is no place for Starbucks in the world.
On the other hand, Starbucks keeps spreading to smaller cities. So they seem popular with someone at least.
The people complaining here aren't the average Starbucks customer.
For example, burned coffee is more of a caricature of its normal taste unlike, say, burned popcorn which tastes like charcoal. You could probably tell most people including me that some burned coffee is some local artisanal roast and I'd chalk up any changes in its flavor to that and move on.
People clearly just aren't making coffee purchases based on taste, so you have to liken the whole thing to people going to bars. At which point Starbucks is simply the well-known bar in town with no surprises. You know their hours, you know where it is, you know you can get a table and dominate it shamelessly for hours, and so do all the other people in your group.
Sure, you'd like to try one of those lil cafes around the block sometime, but it's something you procrastinate just like anything else that will introduce the slightest change in your life.
That said, Starbucks is obviously popular with a lot of people. Personally, I think their coffee and some of their other drinks are fine. I don't always go there (not that I'm a coffeeshop regular) but that's for reasons other than their coffee quality. (I admittedly tend to use darker roasts when I make coffee at home as well.)
> It would be more accurate to ask: “How the F can anyone make any money when Starbucks is on every other street corner and has the advantages of scale they have.
Specialists stores have specialist profits - they wont be hitting the mass market, because the mass market taste profile is different.
If you try to grow, then you may as well give up to starbucks which has the money to taste test and advertise enough to ride the wave of human attention.
...
Starbucks coffee tastes like crap to me and the reason is they chose crappy quality beans and then over roast them.
$15 lattes, anyone?
You can have a preference of reds or whites but anyone who's trained can taste when a wine has oxidsized or turned sour and those are pretty objective statements of fact.
Overroasted coffee is definitely a thing if you've done coffee tastings and actually know what coffee tastes like and how the roasting process affects flavor profiles.
No, it's an actual answer of one way that a number of relatively small and some fairly large coffee shop chains can and do survive when Starbucks exists and is ubiquitous.
It includes, of course, an endorsement of the taste to which those shops appeal as part of that strategy.
Coffee snobs like those downthread notwithstanding, most people don't care. I don't care most of the time although I try to frequent local shops for the variety. So anything that gets a lot of people to default to Starbucks, especially for a morning caffeine fix habit, is a win.
They tend to sit out over a heat source and, if the coffee wasn't lousy to begin with, it is after it's been burning over a flame or other heat source for an hour or two.
(not a native English speaker myself, and I tried my best to interpret your difficulty).
This is also true in the United States and yet here we are.
I don't know what to take from that though with regard to what y'all are arguing about, I can't really explain the economics of it all. But I think it's a fact that at the point Starbucks was expanding to be national, it was not true that most places it was expanding to had plenty of places where you could get a much better cup of coffee at a comparable price. Starbucks actually brought "coffee culture" to most of the U.S. (if it wasn't them it would have been someone else, this was when "foodie" culture in general was becoming a thing, people with enough money to were becoming more interested in 'gourmet' everything).
The fact that now, in 2018, it's possible to easily get high-quality coffee in Australia is not a complete explanation of why Starbucks is not popular there, since the same is true of the United States.
It's worth pointing out Starbucks has several competitors in the cafe-chain space in Australia. There are cities in Australia where Starbucks tried opening & then closed down because they were unable to beat the local incumbent cafe chains.
I suspect some Aussies haven't heard of this cafe chain, even though they have twice as many stores as Starbucks, and now have cafes internationally.
I'm particularly excited that Gloria Jeans is launching 40 stores in Germany soon [1], and also 13 stores in the UK next year [2].
(We don't have Starbucks in my city and I loved Gloria Jeans so much that I bought shares in the parent company, that's why I'm so interested in information about coffee shops & competitors. So far it's been the worst share investment I made though, the shares have crashed 90%!)
[1] https://www.insideretail.com.au/news/gloria-jeans-to-open-40...
[2] http://www.rfg.com.au/2018/05/22/gloria-jeans-coffees-open-f...
Why the secrecy?
But my general point was less about this specific chain, and the idea that your profits may come from a part of the business that you're not known for. You then use that money to subsidize the other parts of the business. A bit like how Sony Corporation's profits come from life insurance & medical insurance, while their electronics division makes a loss.
[1] https://www.nytimes.com/2013/05/28/business/global/sonys-bre...
I bought a toothpaste from a store but I feel like I shouldn't disclose the name of the store for their privacy. They're a private company!
A poet / artist space will be lucky to have a few dozen people come in every day.
[1]: https://www.quora.com/How-many-customers-does-an-average-Sta...
They also have regular musical acts. The Athens/metro Atlanta area has a lot of cover bands.
> That's 3.65 million a year- that's absolutely enough to support rent, part time employees, and a nice profit margin (~10 - 15% on average).
Exactly this...which means Starbucks can then negotiate exclusive volume pricing from their provider/vendors anywhere in the product chain and force them to sell cheaper to Starbucks.
After you have best spots in city where a lot of people come add optimizations of supply chain or owning a supply chain.
Moderate stores are doing around 25k/week. Stores below 10-15k/week tend to be at risk of shutting down or having the location changed. A 15k/week store can become a 30k/wk store just by getting a drive through.
There is also a distinction between “community” stores and higher volume profit stores (eg by highway entrance). Community stores get to be a little less profitable but build a “second home” for those in the community to hang out at, while non-community stores bring in profit by being in a high traffic area.
There is a new coffee shop in the Digbeth area of Birmingham UK that appears to be family run and independent. I shall keep an eye on how they are going. Already there is a '10% student discount' sign on the window in felt-tipped pen (Birmingham City University have their Steamhouse project nearby).
Also, martial arts schools.
I think at this point is almost a rite of passage - if you want to teach you do it because you like it, not because you expect to profit from it.
Of course, the economics of your area also apply.
A reason for getting into sports coaching is the same as for any other addiction, you reduce your own costs by becoming a pusher.
Now I have my inlaws teaching taekwondo in rural Michigan and that’s definitely not a profitable endeavor. More a labor of love.
This means that, unless you want to be a slave to your own business, you'd better have $50k a year minimum passive income in a cheap town to "give" to the business, plus $100k-$500k to set up the space, plus enough money to live on for yourself, or it's not worth it.
And forget about ever making a profit, even if you do work there every hour it's open.