☕️ From Green Beans To Green Backs: A Vertically Integrated Coffee Shop! 🤑

🗻 Overview

One of my local coffee shops recently closed down 😞 , and it sent my wheels turning was there something this local coffee shop could have done that would have allowed them to stay open even though the average person loves this place but only buys a single coffee and stays for hours on end taking up all the power, wifi and seating in the process. Thinking as the crazy person that I am, this is how I would structure my coffee shop to maximize earning potential of the space and customer traffic.

💡 Lets start with the concept

Most mom and pop coffee shops in my area close in the afternoon typically around 3pm. This makes me think a few things but all of them are bad and the number one thing this makes me think is they are not maximizing the space and time availability of the fixed location costs. See if you have a fixed location business that is closing early your not maximizing your earning potential. There are a couple ways I would solve this in the coffee shop model, but the one I’m most excited about is “5PM Brew Time”, where we serve local beer on tap after five PM. This simple strategy brings in a new customer in the afternoon and maximizes operating hours. You could even do some in person retargeting where if you buy a coffee in the morning you get 50% off a beer in the afternoon, assuming this is legal.

The next major thing I would do in this coffee shop model is roast my own green beans, this not only allows lower COGS for the coffee sold but also allows extra production to be sold to other local coffee shops.

This hypothetical new coffee shop is now monetized on three major fully integrated channels.

• Coffee Shop Hours

• Brew Pub Hours

• Roasting Wholesale

🫘 Buying Beans, Can we even do this?

Going down this rabbit hole of opening my new hypothetical coffee shop, I started to wonder if we can even even find green beans to roast, so I leaned on Google for help using the term “bulk green coffee beans for roasting” and came across the website Wholesale Origin that shows listings of bulk un-roasted beans for between $4.50-$6.00 per pound when bought in large quantities.

During my research I discovered that roasted beans loose about 15-18% of their weight during the roasting process so 10LB of green beans should become about 8.2LB of usable product. I also found out that 1LB of coffee produces about 24-46 cups of coffee. So this first roasted batch of beans should produce about 287 cups of coffee for customers, and with the current inflation numbers the average cup of coffee cost $4.90 so this $70 bag of green beans should produce about $1400 in top line revenue.

Now this is a lot of numbers but the take away here is not including labor cost, and that could be a big cost, the ROI on a bag of green beans sold as a cup of coffee is 1900% 🤯 .

⭐️ Roasted Beans To Local Coffee Shops

Now that we know we can get beans, roast them, and sell them. Lets take our excess inventory of roasted beans and wholesale them to other local coffee shops. We don’t need to move a large amount of volume here, although we could, we really just want to be able to sell our excessive beans we had to buy in order to get the best price per pound on our green beans, and the amount of roasted beans we have left is directly proportional to the amount of of coffee we move or in this case don’t move.

It looks like wholesale roasted beans go for about $9.99 - $13.50 a pound, this leaves us with a pretty healthy markup on our already roasted beans we have. So this revenue stream could be healthy enough for us to keep the lights on with just this alone however lets keep going down the rabbit hole.

The largest expense here is the cost of a roaster and the space to keep it safe and running. Through my quick research i’ve found that a 3KG gas roaster will cost $20,200 but it seems most sellers are willing to finance this large upfront cost over time so since idk about you but I don’t have 20K I want to spend on a roaster right now lets say we financed this amazing machine.

It’s 5 O’clock Somewhere 🎶

Now for the brew pub part of the business and sourcing costs. The average cost for a keg of beer is $100-$200, now a key thing with this is that we will need a freezer to keep the keg cold and this will add a significant cost to our initial setup, running about $3000 for a 4 tap kegerator. This is our cheapest option to get started and gives us the lowest startup costs. An average keg holds 124 pints of beer and since we are selling craft beers by the pint we will probably be selling for about $7.00 a pint. This gives us about $868 in top line revenue per keg tapped out, again not factoring in labor costs.

Location, Location Location 🗺️

I’ve never run a restaurant or coffee shop before or in fact even worked in one, but I can tell you that the location is going to be very important here, and a better location will always come with a higher monthly price attached. However I actually think in this case we won’t need a prime A location, we will be fine with a B type location since we will have supplemental income from the roasting wholesale effort.

During this deep dive there just happened to be a sublease opportunity in a Prima A location next door to a Whole Foods & Hotel that would be prime for this opportunity, the whole downside on that location was there was already a Starbucks and Bar on site, so back to the drawing board on a location I had to go, leaving me unable to find a location that I loved for this project but that won’t stop me from continuing the research and I’ll just leave it that the average retail space in my area would cost about $18.08 a square foot.

Expected Revenue 💰

☕️ Coffee Shop

The average coffee shop sells 230 cups of coffee a day, so we are looking at an estimated 6900 cups of coffee a month. Using our average cost per cup from above we are looking at $33,810 in top line from our coffee shop a month.

🔥 Wholesale beans

Looking at the area lets assume we have 10 local coffee shops that we can convince to buy wholesale roasted beans from us and they also do the same amount of volume as our shop. This means they will need about 7LB’s of roasted beans a day or about 200LB’s a month. Across all 10 local shops we should do about $23,500 in top line revenue of wholesale roasted beans.

🍻 After Hours Brew Pub

This is really the wild card to me but lets just assume we can tap out a keg a day using offering discounts and retargeting customers to come back in. So we would be selling about $26,040 in revenue from our kegerator.

🟢 Total Estimated Revenue per month

• $33,810 - Coffee Shop

• $23,500 - Wholesale beans

• $26,040 - Brew Pub

The above gives us a top line monthly sales number of around $83,350 while maximizing the space that we have available and ensures that we can get the best possible margins in our coffee shop.

Conclusion 🎁

While its not for everyone if I where to open a coffee shop this would be the play in my mind to ensure we can always keep the lights on and allow those remote workers to work all day off one cup of coffee.