Barista Magazine

DEC 2018 - JAN 2019

Serving People Serving Coffee Since 2005

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$5–$6 per square foot in smaller towns, to $8–$9 per square foot in high-demand cities. Examples of rent based on location in the United States: • Small town in rural Midwest: $6–$20 per square foot depending on area of town • Newer developments in or around Denver, Colo.: $22–$36 per square foot + $6–$9 for NNN fees • Locations with high foot traffi c in Chicago: $40–$46 per square foot (including NNN fees) PRO TIP: NEGOTIATE WITH PROSPECTIVE LANDLORDS. Ryan Hoban, owner of Pilcrow Coffee in Milwaukee, Wis., encourages new shop owners to ask landlords to push lease agreements until the business is ready to open. The hefty cost of rent prior to the business's ability to generate revenue does not set the business up for success. A lucrative business will increase the worth of the rented space, which will in turn benefi t the landlord. Don't underestimate the value of your business. Julia and Ernest Minayev of Sonder Coffee in Aurora, Colo., advise new owners to "take a class on lease negotiation and ask for tenant allowance, which means keeping lease payments at or under 10 percent of operating costs. A good landlord will care that you succeed because it is in their best interest as well." PRO TIP: IT'S OK TO CHOOSE VISION OVER VOLUME. Ria Neri, co-owner of Four Letter Word in Chicago, envisioned an atmo- sphere that would foster intentional community. She knew that the higher- volume areas (with more expensive lease agreements) of the city would hinder this vision, so her team settled into a sun-soaked space in Chicago's Logan Square neighborhood. "What is important to us is a sustainable business that is part of a lovely community, and we were lucky to be able to fi nd an area with great neighbors and an amazing landlord that believed in our vision," she says. Ria and her team serve coffee across the street from Diversey Wine and Cellar Door Provisions. The three businesses share a mutual vision that has transformed a typical city intersection into a relational epicenter, winning over Chicagoan hearts while also maintaining sustainable business models. B: Build-out Build-out includes cost of construction, contractors, consultants, equipment, furniture—in short, every element required to set up the atmosphere of the shop. This expense relies less on location and more on the business's brand and the owner's priorities and resources. The total cost of build-out can vary from $70K USD (DIY or minimalist shops) to $400K+ (built from the ground up with more elaborate furnishings and equipment). Most shop owners choose to lease out a retail space already fi tted for a café, which eliminates the bills required to set up electricity, plumbing, etc. Nationwide, the suggested budget for this approach averages between $150K–$250K. However, some shop owners cut this cost in half through the purchase of used equipment, DIY interior construction, and minimalist aesthetics. BREAKDOWN OF BUILD-OUT: Equipment: An equipment package depends upon equipment quality and whether the equipment is bought used or new. Used: $10K–$18K New: $54K–$100K PRO TIP: USED EQUIPMENT CAN BE A GREAT WAY TO SAVE MONEY AT YOUR LAUNCH. Though most owners and consultants do not recommend buying used equipment due to the cost of repairs and sacrifi ce of quality, some owners interviewed for this article chose to utilize gently used equipment until profi t allowed for the purchase of new replacements. (P.S. They succeeded.) If the risk of a used espresso machine sounds too dicey, purchasing used equipment of less importance (e.g., refrigerator/freezer/blender) can still cut costs at a lower risk. • Contractors, electricians, HVAC, etc.: The extent of build-out and the shop owner's own experience in DIY will determine the cost of interior construction and setup. • Minimalist/DIY build-out (before cost of equipment): $50K–$70K • Hired contractor (before cost of equipment): $100K–$200K PRO TIP: CONTRACTORS ARE EXPERTS FOR A REASON. Consultants and shop owners alike all give warning: One man cannot do it all. A good general contractor will outsource an electrician, plumber, etc. Beware of contractors who say otherwise. PRO TIP: BE AWARE OF WHAT YOU'RE WORKING WITH. Matt Milletto, director of the American Barista & Coffee School in Portland, Ore., advises new shop owners keep in mind a coffee shop requires a 96 barista magazine

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