Cafe Startup Question: Self-Roast or Outsource Roast?

[mirx]

Good evening experienced cafe owners/managers, suppliers and the CoffeeSnobs community:

I have been in the corporate world for the past 6.5 years and would like to get out of it and am very seriously considering starting a small business - "hole-in-the-wall" sort of cafe selling coffees that would meet the general CS standards. I dont mind the hours, as the consulting industry is as highly-competitive as the rest of the industries out there.

Because the initial capital outlay is probably a little less than 70k, I would like to keep the shop fittings minimal, maybe only 2-3 tables and chairs, and have a small team (1-2 of wait staff) for support during peak hours, while placing alot of focus on the product that I am selling - coffee. I will also need to think about the food preparation I would like to introduce; hopefully something different to avoid the common "greasyspoon-takeaway" stereotype.

I have minimal roasting experience (just started last month), but hopefully in a year or so, Ill be ready to introduce a blend of my own to the market.

With that in mind, do you think its wise for a small bootstrapper like me to either:
[olist][*]sign a contract with a coffee supplier (e.g. Di Bella, Tobys Estate, Campos) to provide freshly grounded beans (which could get me an espresso machine, grinder, etc.)[*]source my green beans from someone like BeanBay and have it outsourced to a professional roaster
[/olist]

While I do like the idea of introducing my blend and have it professionally roasted, I am just worried of months where my supplier is not able to source me the green beans essential for my blend. And also the possible high upfront cost of equipment/assets. Maybe there is a leasing option for professional coffee grinders and machines?

If I do go contract, is there an agreed amount of coffee I have to purchase every week from my supplier? I understand companies like Di Bella do encourage their business customers to dispose the beans after 5 weeks (read it from Phils debate discussion forum here in CS).

Any other help/feedback will be appreciated.

Thank you,
Darryl.

[rival81]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

It sounds like you need to go talk to someone whos been in the industry for a while to figure out how it all works. Eg. a roaster would not grind the beans for you, you need to adjust grind throughout the day (at your cafe!!) and grind for every cup.

[Fresh_Coffee]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Good morning all, and

Calling a spade a spade as usual......

Re your question about the possibility of whether  your future chosen roaster may not be able to source the beans you require.....Somewhere in a post in the last week I wrote (admittedly to a different question but it seems to be relevant here):

"...We (they) all have access to pretty much the same green / raw coffee beans. But on individual basis they can pick and choose and buy whatever they want, then roast it however they like, and blend it or not however they want to.....resulting in a plethora of offerings...."

Why would you buy greens from bean bay and supply them to a professional roaster? No need to...see above. 

Anyway whetever youve worked out at home on a minimal home roasting set up wont be the same when roasted professionally...also given the above quote.

Re: purchase of assets. Many people open cafes, and the last thing they think of is the equipment. in the scheme of things (total cost of set up), the equipment is actually the least problematic and smallest part of the investment. You can buy an excellent 2 goup machine and grinder, new for under $7500.00.

If you want instead for a supplier to supply the equipment for your use in exchange for making significant purchases from them and most usually covered by a signed Agreement between the parties, then you need to look into the individual scenario and decide whether it will work for you...not to mention the supplier, in a successful "partnership" together.

Yes there are different terms and conditions to be met if you want someone to supply you equipment and they will differ from supplier to supplier so I am afraid that would need to be discussed with whoever you approach. My own CosmoreX Coffee has quite an "intelligent" way of working it all out, its simple & quite transparent (no secrets).

What I would urge you to consider, is how distasteful it is to deal with people who are only interested in "me". When you have two parties each only interested in "me", neither end up getting what they want. EG you have the "me generation clients" that want a supplier to give them $7500.00 worth of equipment, but theyre only a 3 to 5 kilo a week client and want to drain you of all your resources (dont want to pay for anything) time and service, and think that just buying less than a hundred dollars in coffee beans each week is going to return an income to the supplier. And you also have "me generation suppliers" that promise the world to get the client signed up then start backing off.... It happens in both camps.

Re supplier: Are there only three suppliers in Sydney?????  And what about the plethora of others both inside and outside Sydney that can help you (insert plug here for my effort in responding to your enquiry....so including my own company CosmoreX Coffee)?

If you are still holding coffee stock at 5 weeks from delivery you are not in the business of selling coffee "to general CS standards". I would be horrified to know any of my own clients could be holding stock that long. We deliver weekly and do not force clients to buy large and sit on it until it is used up for the sake of satisfying some Agreement that must therefore have been drawn up badly at the beginning......

I say again, you need to ask this stuff of your chosen supplier (and I am afraid not publicly in a predominantly retail based special interest coffee forum, where these types of questions always seem to elicit responses biased from only one side or direction instead of looking from both sides of what really is a serious industry based business discussion).

And of course I will finish off with my usual advice. You want to go into a cafe?  Then why complicate your life with adding coffee roasting which is a completetly different profession, and for which you have admitted you have no experience. There are enough topics in this forum covering that old one, and if you have enough time to roast coffee for your cafe then your cafe isnt busy enough. Concentrate on making your core business as successful as possible and dont get sidelined by....side issues 

Im sure there is a lot more to cover but this post is already long enough and has taken enough time to put together. Its time for you to start talking to suppliers that may be able to help you.

Hope that helps., and if you want to talk please do not hesitate to call.

Good luck in your venture.
Rgdz,
Attilio
very first CS site sponsor

[emckissock]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Seems to me your plans are in the early stages. Talking to Attilio or one of the other sponsors would help, but you should also seriously consider finding a business mentor. Here in Victoria we have the small business mentoring service www.sbms.org.au - I am sure other states have similar services.

[mirx]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Good morning Attilio (Ive read great things about you in the other discussion topics in CS forums) - I have jotted many of your points down (along with questions) on my Startup Checklist of todo items. So Im glad you addressed some key topics there, especially your last point on separating roasting from the core business. Thanks for your feedback.

Seems to me your plans are in the early stages. Talking to Attilio or one of the other sponsors would help, but you should also seriously consider finding a business mentor. Here in Victoria we have the small business mentoring service www.sbms.org.au - I am sure other states have similar services.

Good point, who me? I tried participating in the Sydney Young Entrepreneurship forum, but everyone seems to want to come up with tech-ideas. Most of the startups these days are all about coming up with the new tech ideas like Facebook, or coming up with an iPhone app that allows you to buy something off the cafe counter. While they are all good idea, its quite a different direction where a small business person like me want to move for now. Maybe a small business mentoring program is the right direction for me. I wish there was a forum where people from various areas within the industry can come together and chat (e.g. roasters, retailers, cafe-owners, Nabi Saleh, packagers, start-uppers, etc.).


On another note - where is a good place to research commercial realestate for lease? Do businesses do the same as private home renters via www.realestate.com.au or domain.com.au or is there a different channel they go to?


Thanks for all of your kind assistance so far, guys.

[Koffee_Kosmo]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

On another note - where is a good place to research commercial realestate for lease? Do businesses do the same as private home renters via www.realestate.com.au or domain.com.au or is there a different channel they go to?


Thanks for all of your kind assistance so far, guys.

I think its a sister site but its called Real Commercial
http://www.realcommercial.com.au/for-lease


As for your original post
At the moment I cant offer any more input other than to follow Fresh Coffees advise

KK

[Dimal]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Another great and informative post Attilio.... [smiley=tekst-toppie.gif]

Mal.

[cuppacoffee]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Hello Darryl

Attilio has offered excellent advice. With respect, Id like to add a few observations/remarks.

Running a cafe, or hole in the wall is often romanticised. You will lose everything if your formula isnt spot on - everything from choosing the right location to your choice of takeaway cups.

You dont need wait staff for a hole in the wall. You need a whole lot of people passing by, speedy, efficient service, and a coffee that is good enough to make you stand out from the next hole in the wall down the road.

Two or three tables will serve you no purpose and cost you money.

Seriously, beg and/or do whatever it takes to get some work experience in the places that have inspired you to consider investing in this venture. After that, if you think you can do it better (and you really need to believe that) then and only then may it be time for you to take the next step....looking for a location.

Cheers
Den

[Fresh_Coffee]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Thank you to all who enjoyed and or thought my reply was informative

I would also like to congratulate Dennis for being on the money

What a team ;D

Rgdz,
A.

[wholeshotalove]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

sign a contract with a coffee supplier (e.g. Di Bella, Tobys Estate, Campos

Just a quick point, Tobys Estate Coffee does not have supply contracts, not sure about the others specified.

Here are some options for coffee to think about:

Roast your own: Higher financial outlay, and time dedication to mastering how to roast great coffee.

Buy from a supplier: You may have to sign a contract of supply for a certain period of time ( bad option...). You can get machinery out on loan from the company that supplies you, the type and quality of machinery often depends on how many kilos of coffee you are selling ( often forecast if new business). You can buy your own machinery, can be expensive though.

Use a contract roaster: Locate a contract roaster, design your own brand labels, and have your own brand of coffee. Often used by coffee companies when starting up. A contract roaster will roast (sometimes create a blend, depending on kilo volume ordered) coffee for you in clear skin packaging, and you can brand it yourself. Gives the impression that you are a coffee roasting comapny. The downside is you may have to order a minimum amount weekly, and this can cause issues if you are not selling the kilos (may be left with old stock).

[joz]

Re: Cafe Startup Question: Self-Roast or Outsource Roast?

Hi Mirx I know it many have weighed in with great some great advice.
So Ill give some of my own great or not!
Imo stay away from contracts from suppliers,sure its their machine and will be fixed by them but...
I had the same machine for over ten years running 7 days per week, it broke down I think twice?
Then had only some minor servicing along the way.
I think I spent about $1-1.5k in this whole period on the thing.
As mentioned to machinery is only a small part of the overall set up.
Now if by chance you end up buying 10/20 or 30+ kgs of coffe/week at possibly a premium of even $5/kg due to a contract.Well you do the sums of extra cost per year to the supplier.
I bet you could buy a new machine, banners (with your name not theirs on them) crockery and anything thing else brand new yearly with the savings.But you wouldnt youd just bank the savings.

Now from someone looking at moving from coporate to cafe think about what you hope to earn per week/ per day.
How many coffees sold would that take?
Now picture if you can how many that is per day/hour/minute.
Now remove add the cost of any outgoings from finance repaymant, insurance, rents ect..
oh dont forget the cost of the coffee and milk and even take away cups.

Remember that in any contract the freebies are never free!
The coffee companies are there as a business and to make money from you,they are not a charity.
Tread carefully!