Starbucks opened its first shop in 1971, with a total investment of $20,000 (approximately the price of a nice house), and today it is a multi million dollar company. So, should you start your own coffee shop franchise operation?
Well, before I answer that, let me ask you a question. When you spend Online shopping a day shopping, whether it be willingly with your best friend, or reluctantly, being dragged around the shops by your partner, where do you always spend at least half an hour of your time and at least £10 of your hard earned cash?
I’m willing to bet it’s in a coffee shop.
In times of recession, when the designer shops are empty and people switch to the cheapest supermarkets around, you will find the nearest coffee shop full of paying customers on any day of the week.
So it is no wonder that coffee shops are one of the few retail sectors in the UK to have grown consistently in excess of 15% year on year, over the last 8 years. And forecasts show that the number of branded coffee shops will double over the next decade, according to market research by the Allegra Consultancy company.
Therefore budding coffee shop entrepreneurs may wish to consider planning ahead so they can move from a single coffee shop into a fully franchised operation. Here are 7 simple tips to point you in the right direction:
- Once you have opened your first coffee shop and have traded profitably over a sustained period, you will have a successful blue print to open more shops. You will be able to bring all the personal touches that have attracted your customers to a second shop and third shop. With your third shop you will know exactly what works and be in a position to pass that knowledge on to others.
- With this third shop you are approaching the point when you should start planning your own franchise operation. This would allow you to expand much more quickly and your company would be run by management who are under your direction, abiding by strict guidelines that you have set down. Take advantage of all the knowledge you have gained to focus on this third shop as setting the parameters for your future franchised shops.
- Switching from one shop to a franchise operation means you will need to widen your knowledge base consult experts in their various fields. You will need the help of more specialised professionals and you may have to change your bankers, accountants, estate agents and suppliers in order to move your business on. You will have to look at your business on a national rather than local basis.
- Contact various franchise companies, not solely those involved in the coffee shop business, and request their information packs. The principles of franchising are similar whatever the product, and you can learn from this information how to put your own franchise package together and ensure that you protect yourself with legally watertight contracts.
- With a proven track record of running successful shops, you are more likely to be offered better sites by landlords looking to lease their commercial properties. A landlord will always prefer to lease property to a business which is already successful rather than to a new franchisee, so you would have to take on the lease and sub-let to your franchisee. Therefore you should ensure that the right to sub-let is always written into any lease you sign.
- When your business can afford it, consider hiring a consultant to liaise with all the affiliate bodies, including bankers and estate agents, on behalf of your franchise company and the franchisees. Whilst your franchise operation is quite new, you would need to take on the role of property consultant yourself, until you can afford to employ a specialist. Although this adds to your workload, it can be a benefit as you will then know every detail of your business and this will help you to judge whether any full time consultant you eventually hire is of the standard and quality you require.
- Once you have a number of franchises up and running you may wish to consider offering territories to the best operators.