Bitter Brew: dream of opening a small coffeehouse

[Gifted Gourmet]

article from Slate online

The dream of running a small cafe has nothing to do with the excitement of entrepreneurship or the joys of being one's own boss ...  The small cafe connects to the fantasy of throwing a perpetual dinner party, and it cuts deeper—all the way to Barbie tea sets—than any other capitalist urge. To a couple in the throes of the cafe dream, money is almost an afterthought. Pastries, for instance, are a monetary black hole unless you bake them yourself. We started out by engaging a pedigreed gentleman baker with Le Bernardin on his résumé. Hercule, as I'll call him, embodied every French stereotype in existence: He was jovial, enthusiastic, rude, snooty, manic-depressive, brilliant, and utterly unreliable. His croissants were buttery, flaky, not too big, and $1.25 wholesale.

Did you ever have a dream of opening a food establishment, either large or small?

Ever actually take steps to give it a try? What happened?

Did the dream materialize or was it finally just a mere fantasy which you had to discard?

Ever have a "Hercule" in your culinary life?

[cdh]

I entertained thoughts of providing decent caffeination to an underserved spot , but never got very far into the business planning.

What that article says to me is that if you are going to serve pastries, then you should learn to bake... If, as an owner, all you have to offer is labor of the $8/hr variety, then it shouldn't be too surprising that making the money is tough. The author recognized that, but appears to have thrown in the towel rather than take the steps needed to start a line of "house made artisinal" cookies and pastries that weren't a cash sink. How different are health code regulations and compliance costs for someplace that bakes their own stuff? Is there a huge cost of getting a special permit to bake on your own premises, or was it just that this guy didn't?

How many croissants could somebody bake with a $6300 monthly budget and the knowledge of how to do it well? The flour and butter in the croissant are certainly a tiny percentage of that $1.25 cost of the thing. Hercule is probably still in business, given that he's selling his skills, and probably making an 800% markup on the ingredients at least.

Mental note- perfect pastry skills before entertaining the thought of caffeinating anywhere again.

[TheFoodTutor]

How many croissants could somebody bake with a $6300 monthly budget and the knowledge of how to do it well? 

The thing is, he didn't actually have $6300 per month to spend on pastries. The guy in the article was actually answering his own question backwards, that question being, "How much business would I have to do to make a 25 seat coffee shop profitable?" He started answering that question by figuring the absolute minimum labor cost, given that the coffee shop would be open 10 hours a day (an absurdity, actually, since coffee shops tend to be open a lot longer than that).

But, absurd or not, he starts with those 10 hours a day, figures employing 2 people at $7.50 per hour (or perhaps one at $8 and the other at $7), one front and one back, then figures how much business they would have to do if that cost were the ideal 25% of total revenue. Based on that total figure (18K), he gives the budget figures for rent and ingredient cost.

Working backward from that, one can figure that this relates to about $600 in coffee and food sales per day, $60 in sales per hour. That's actually a heck of a lot for a small coffee shop to consistently sell, and I'm not even sure which 10 hours out of the day I'd pick to be open. 6 a.m. to 4 p.m.? But what about the after work crowds? But if you stay open longer than those 10 hours, and you're trying to save on labor by doing all the work yourself, doesn't it get tiring? And how do you go home after a 10 hour or longer day and make croissants?

Feel free to open a shop for yourself, if you envision a potential gold mine in turning flour and butter into profit, and I'll certainly stop in to buy your wares, but having managed restaurants for other people, and running the numbers several hundred times through my head, I'm perfectly fine with my decision never to open a place of my own.

[cdh]

Where did I say I saw a gold mine turning flour and butter into profit? I'm not quite that naive... but if the pastries were not a continuing loss to the shop but rather a gain, the numbers may turn out looking a little more positive, no?

My observation was that an owner who needs to outsource half of the value-added manufacturing is foregoing potential profit... the more value adding that goes on in the business translates into more profit for the owner. Reselling is a thin margin business generally.

[TheFoodTutor]

Where did I say I saw a gold mine turning flour and butter into profit?  I'm not quite that naive...  but if the pastries were not a continuing loss to the shop but rather a gain, the numbers may turn out looking a little more positive, no? 

I didn't mean it to sound like you're naive. Sorry. What I don't know, given this person's theoretical business, is when he'd make those croissants and other pastries. That would be a full time job in itself, in addition to the 70 hours a week that he's just putting into operating the coffee shop. That makes for a pretty long week, don't you think? And he can't combine the two by doing them both at the same time, because he'll need at bare minimum one person running the front and one in the back, which amounts to 70 hours a week each from him and his wife. Of course, they're cutting out that 25% labor cost in the hopes of making more money, but they still have to have enough sales to make it happen, first.

As far as the pastries being a continual loss to the shop, there are many businesses that operate knowing that one of their products will cost them money to sell, while another will bring in enough profit to cover for that loss. In cinemas, the products that lose money are the actual films, and the product that makes up for it is the popcorn and soda. In fast food, the products that usually lose money are the sandwiches, which is why you're encouraged to buy "value meals" with fries and a soda. And in upscale restaurants, most of the food loses money, and they're really only serving it in hopes that you'll buy some wine or cocktails.

So the idea that the croissants are a money loss does not, in itself, make this a poor business model, and if they turn a potential 120+ hour week into just a 70 hour week, it might be worth outsourcing it.

I've never run a bakery, personally, so it could be easier or harder than I imagine, but I tend to think that if it were fairly easy and profitable, I wouldn't hear so many complaints about how there aren't any good ones around here.

[Mayhaw Man]

You know, I'm not so sure that I have the same take on the guy and his business as you do. Sure enough, it's a tough row to hoe, this building and running a small business stuff, but the guy as much as admits that he wasn't suited to it. He hated it, seemingly hated his customers (please, if he has a moment, let me, a son of the South, explain the joys and wonders of a well made ice coffee-what a moron), those laptop toting louts that populated his place (if he doesn't like laptops, don't provide the service).

If you are going to be angry at your clientele for not doing whatever it is that you expect them to do-even though you have provided the opportunity for them to do it-you probably should be doing something else.

Serving the whim of the paying public is not something that everyone is cut out to do-no matter how good everyone tells them their "special recipe" is or how much better they think that they can make coffee (or anything else, for that matter) and serve it than their competition can.

And, come to think of it, in this day and age of "on the go" jolts of much needed caffeinated beverages (in my case, it's a pathalogical, probably medical, need) how could you set yourself up, especially in NYC, as somewhere that discourages on the go consumption of that black manna that is coffee? The guy was doomed to failure from the start, I think.

But I'm glad to see that he was able to bail himself out and save his marriage by declaring bankruptcy. At least he won't have to suffer the continual pain of having to pay for his mistakes for years to come. That's a good thing for everyone, I think.

[TheFoodTutor]

You know, I'm not so sure that I have the same take on the guy and his business as you do. Sure enough, it's a tough row to hoe, this building and running a small business stuff, but the guy as much as admits that he wasn't suited to it. He hated it, seemingly hated his customers (please, if he has a moment, let me, a son of the South, explain the joys and wonders of a well made ice coffee-what a moron), those laptop toting louts that populated his place (if he doesn't like laptops, don't provide the service).

If you are going to be angry at your clientele for not doing whatever it is that you expect them to do-even though you have provided the opportunity for them to do it-you probably should be doing something else.

Serving the whim of the paying public is not something that everyone is cut out to do-no matter how good everyone tells them their "special recipe" is or how much better they think that they can make coffee (or anything else, for that matter) and serve it than their competition can.

And, come to think of it, in this day and age of "on the go" jolts of much needed caffeinated beverages (in my case, it's a pathalogical, probably medical, need) how could you set yourself up, especially in NYC, as somewhere that discourages on the go consumption of that black manna that is coffee? The guy was doomed to failure from the start, I think.

But I'm glad to see that he was able to bail himself out and save his marriage by declaring bankruptcy. At least he won't have to suffer the continual pain of having to pay for his mistakes for years to come. That's a good thing for everyone, I think.

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No, I more or less agree with you most of the time, Mayhaw Man, though I don't always post here, because my job doesn't always allow it.

I also like iced coffee, on occasion, but I think he was expressing that it seems like a no-brainer to offer day-old coffee, iced, at a premium price to gullible customers, in line with the overall retail selling point of giving something to somebody that they could get virtually free somewhere else, for a high price, because they are in a place where one is a captive audience. Airports are exceptional at this, but coffee shops do pretty well for people who don't plan well enough to have proper equipment at their offices.

It's also a useful help to folks thinking of opening up their own shops to consider whether it's worthwhile to have available seating to consume a 2 or 3 dollar beverage for upwards of half an hour, or possibly even 3 hours. The business owner is paying rent on that space, rent that one could assume equals more than the profit on a $2 cup of coffee per every 3 hour interval. When one adds WiFi and its fees into the mix, things get considerably more dicey, and it becomes obviously only profitable if there are other coffee shops in close range that can provide more services for less money.

I will disagree with you on the intent of the article, however. He meant to say that, essentially, "he did it for love," and that was the wrong reason. And I'd agree with that. While even people who love providing nourishment to other people will, inevitably, grow to despise the people they serve, because of the very nature of service (the things I have seen would chill you to the very bone, and I honestly and truly went into this business because of the "meaningfulness" of feeding people), there is almost no one who can come out on the other side unjaded.

I honestly believe that the best way to attack a true desire to open your own restaurant, coffee shop, cafe, bistro or whatever is to go work for someone who has already done that, run their books, see how much profit is involved and how much money can be made for however much work, and then scrap the whole idea and invest in a small laundromat.

Really.

[Mayhaw Man]

No, I more or less agree with you most of the time, Mayhaw Man,

Really.

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How could you not? I'm always stunned and disappointed when someone does.

I will disagree with you on the intent of the article, however.

Always with the disagreements. It's all very tiring, but let me say that I actually think that, upon rereading, that you are right. He did it because he loved it-mostly. Then again, I think what annoyed me so is that what I mainly took away from this was that he kind of thought his biggest problem was his clientele-not that he may have made some errors in the way that he chose to serve them. The overall tone of the thing is kind of a, "If people had seen the value in what I do, I would have done much better. I needed smarter customers who wanted the experience to be what I had in mind, not what they wanted to do"

So, ok, this one time I might have been wrong.

[TheFoodTutor]

It's all very tiring, but let me say that I actually think that, upon rereading, that you are right. He did it because he loved it-mostly. Then again, I think what annoyed me so is that what I mainly took away from this was that he kind of thought his biggest problem was his clientele-not that he may have made some errors in the way that he chose to serve them. The overall tone of the thing is kind of a, "If people had seen the value in what I do, I would have done much better. I needed smarter customers who wanted the experience to be what I had in mind, not what they wanted to do"

So, ok, this one time I might have been wrong.

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Wow. At the risk of being banned for one-too-many times being "off-topic," I have to say that you are insanely cool and perceptive.

You have summed up, perfectly, the feelings of nearly every failed business owner I've ever known, succinctly.

Thank you.

[cdh]

This conversation does bring up the interesting distinction between two different propositions-

1) Opening a small food business is economically irrational, and

2) Opening a small food business that I'd want to run is economically irrational.

Big difference, I think. All of the businesses giving us something to talk about on this website pretty much contradicts #1... #2 really depends on who you are, how flexible you want to be, and how good you are at convincing people that your way of doing things is what they want to pay for, etc...

[johnsmith45678]

Going from being a pastry chef at Le Bernardin to a coffee shop seems like a rather drastic career change.

[Megan Blocker]

Going from being a pastry chef at Le Bernardin to a coffee shop seems like a rather drastic career change.

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I think (though I could be reading the article wrong) that the guy they bought the croissants from used to work at Le Bernadin, and is now (or was, when the author and his wife opened their shop) in business for himself, selling pastries wholesale to various businesses - not working in the back of a little coffee place.

[johnsmith45678]

Ah, that would make much more sense. There's a guy Udi here in Denver who seems to do very well selling his sandwiches (and appetizers, desserts, etc.) to lots of different shops. He delivers too (a lot of businesses order for lunches).

I met a woman who owned a coffee shop in Fort Collins and she said she had done well, but was selling it. Competing with Starbucks has got to be brutal.

[purplewiz]

I found the article interesting, because he echoes a lot of the things I learned quickly messing about with the idea of starting my own small (non-food) business.

Most importantly, I learned that the fastest way to turn something you love into something you hate is to start doing it for a living.

(I envy those who successfully make a living doing something they love.)

Marcia.

[eipi10]

I was annoyed by this article. I have frequented popular locally-owned coffeeshops across the country that have been in business for years. Sometimes they serve amazing coffee. Other times they have great atmospheres or tasty food. But from dozens of shops in Berkeley to Tryst and Murky in DC to Greenberry's in Charlottesville, they work. Even chains like Peet's and Caribou are local in a sense, and they are successful.

It just sounds like this guy's shop didn't press anybody's buttons. I want my coffee from someone who knows a lot more about coffees than I do, which is highly doubtful from what I read. I don't want my coffee on a silver platter. And if I do pay for my coffee to be served on on a silver platter, I'm going to take my time and relax there. It doesn't seem shocking that people wouldn't rush in droves to have somebody else's baked goods served to them on a silver platter with Vienna roast coffee at a get-in/get-out establishment.