Barista Magazine

DEC 2018 - JAN 2019

Serving People Serving Coffee Since 2005

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Page 97 of 107

98 barista magazine culture of appreciation and care for her baristas. If the team reaches a certain level of sales for the day, she buys them lunch. If employees feel valued, they will remain loyal to their employer, work hard, and bring in greater revenue. EXPENSES FOR OPENING A: Initial inventory Initial inventory includes the basics such as coffee, milk, condiments, paper goods, etc. Shops that incorporate a food program right from the start will naturally incur higher initial expenses, so coffee pros recommend new shop owners keep their menus simple to start. Costs will also fl uctuate based on price point of coffee, ingredients for specialty drinks (if applicable), and initial training expenses (again, shops with food programs will have signifi - cantly higher training costs). BALLPARK INITIAL INVENTORY EXPENSE: • Smaller shops with a bare-bones menu: $3K • Larger shops with food program: $10K • National average: $4K–$6K PRO TIP: NEGOTIATE AND STICK TO YOUR BUDGET "Start out simple and if possible, negotiate terms with your vendors (e.g. 'net 7 terms' means a seven-day allowance to pay a vendor's invoice)," says Matt of the American Barista & Coffee School. "This will avoid tying up cash fl ow." As the business gains momentum and revenue, inventory costs should average about 30–35 percent of cost of goods. B: Initial marketing/branding Once new shop owners have determined their anticipated brand, priorities, and market, they can decide how they want to invest their money into a mar- keting strategy. Thankfully, social media (Instagram in particular) is effective and cheap, but a website, logo design, retail merchandise, and promotional material can also help build a brand and set a business up for success. BALLPARK FOR MARKETING/BRANDING: • Basic website, small order of merch, signage, logo design: $2,500–$5K • Sophisticated website, social media promotions, radio time, hiring a branding company: $5K–$10K PRO TIPS: ONLY BITE OFF AS MUCH AS YOU CAN CHEW AT THE START. Brad of Stone Bru says, "Use social media promotions, but start small ($50 for a Facebook promo, for example). Find out which promotions are most successful, and put additional funds into those outlets." Ryan of Pilcrow says: "Avoid the pitfall of the 'fi eld of dreams complex.' People build out spaces and spend a lot of money on it before building a brand. Coffee shops should do pop-ups, connect with boutiques and brew- eries in the neighborhood, etc. Let people know you will be there! You need to know who you're going after and what attracts them to you." OTHER EXPENSES TO CONSIDER: A: Insurance Insurance costs can range from $500–$5K depending on policy coverage, with an average of $1,500 per year. The bare minimum includes liability coverage, but shop owners and consultants recommend shopping for workers comp, vehicle and property coverage, and employment insurance, as well. However, the more coverage you get, the higher the cost. Connect with a local insurance agent well-versed in the food-and-beverage industry to help you understand available policy options and whether multiple poli- cies can be bundled together. SUBSCRIBE TODAY AT WWW.BARISTAMAGAZINE.COM Bart Magin Magica!

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