How to Open a Coffee Shop with the Right Business Model

There is a great appeal for coffee…worldwide.  You can go almost anywhere today and find a coffee shop.  (I tried a Starbucks latte in Xion, China recently, and it tasted just like it does back home!)  But, just because it may feel like the big franchises have dominated the coffee retail business, believe it or not there is still plenty of business for you too. It all starts with the right business model.

A coffee shop business model is defined as the style in which coffee is served in order to meet certain customer expectations.  All coffee customers buy coffee in the first place to enjoy coffee.  However, their expectations for how they enjoy the coffee experience can vary, and not everyone wants the mass market experience.  So choosing the right business model begins by thinking about how to create a customer experience along with the enjoyment of coffee.  It doesn’t have to be unique, but it should be thoughtful, professionally done in a pleasant environment.

Let’s discuss the 5 different models customers can experience in the coffee industry:

  1. Mass Appeal model
  2. Fast and Friendly model
  3. Craft and Comfort model
  4. Café Style model
  5. Morning & Late Night model

Mass Appeal model

The most common business model in the coffee business is the Mass Appeal business model.  Franchises such as Costa Coffee, Starbucks, Pete’s Coffee and more tend to take this business model approach, and many of us are already familiar with this type of coffee experience.  However, the underlying approach may be something you have not thought much about.  

First, the primary idea is that you do not have to wait long to get your coffee.  The experience is about speed and now most of these franchises offer order & pay via their mobile app before you even walk in the shop, allowing you to pick up your coffee without standing in line.  Second, there is also the idea that you can get the same taste no matter which franchise you visit.  This approach ensures that the customer’s expectation is met and encourages more frequent visits in different locations.  

Speed and consistency tend to be the two primary ideas of a Mass Appeal business model, but there is also the idea that customers want a comfortable place to sit to enjoy their coffee, either to do some personal work, or chat with their friends or family.  So many Mass Appeal coffee business have at least some area to relax.  The Mass Appeal business model goes bad if any one of the three ideas do not work well.  In other words, if it takes too long to get your drink, if there is inconsistency in the quality of the drink, or if the place lacks seating or too crowded, customers will turn away.  Certain franchises have mastered the Mass Appeal business model to serve coffee, but it is not the only business model you can consider.

The Fast and Friendly coffee business model  

Becoming very popular in America, and in regions where the car is the primary, if not the only, means of transportation, the Fast and Friendly business model works great.  The primary idea is that you only can get your coffee drink from your car in a drive-up option – there is no “walk inside” option.  Usually multiple car options are offered in order to serve more than one person at a time, and the facility is often very small; just enough space for the barista, and their equipment.  

Other than making it very easy to get a coffee, there are other ideas too that define a Fast and Friendly coffee business model.  First, there is the idea that it must be price competitive.  Usually you get a better deal that the Mass Appeal business model, because the customer believes that they are not paying for all the overhead of and inside experience.  

Second is the idea that it must be convenient.  The location and the ease of driving up must be very easy, with the option that if there is a queue of cars that there is no impediment to traffic.  The location also must be on a main traffic route as nearly all customers will want to swing by to get their coffee rather than drive to you.  So if you believe you have the right combination of ideas for a Fast and Friendly business model, then you should find success.

Craft and Comfort model

As the name implies the quality of the coffee drinks is one of the primary ideas and centerpieces of this business model.  Good tasting coffee with plenty of coffee drink options, perhaps even an option with one of your own recipes, can help differentiate from the Mass Appeal business approach.  But the other primary idea behind this business model is the setting.  You will want tables for your customers to sit and enjoy the coffee experience.  Also include table service offering some light foods such as salads, soup, and/or sandwiches to make it not only an experience available all day long but to also attract customers during morning or lunch meals.  A focus on coffee as your experience, in a warm, comfortable environment, gives your customers the ability to chat and relax in a lovely sitting where foot traffic is king.

Café Style business model

There is always the everlasting coffee experience that started the craze in coffee; the Café Style business model. Though we still see old-fashion coffee shops all around America today, this coffee business model remains popular.  This business model is still about the coffee, with table settings that always include the coffee mug along with the silverware and napkins.  Food is important too, as there are an unbelievable number of customers that drink coffee with their meals.  Offering breakfast and lunch only often takes second place to the coffee, but must be good enough to get a cheap meal.  

Another characteristic of a Café Style coffee shop is fast service, either at a bar counter, or table service, but always fast relative to restaurant speed. What is also happening today is a renaissance in Café Style business model.  New entrepreneurs are starting a coffee shop that is modern, clean, and crisp, but following the service models of their history.  Perhaps you can give the Café Style business model a go in your area.  Easy parking, low-key atmosphere, and in a popular location; these, along with the other ideas listed above will help you succeed.

Morning & Late Night

The last coffee business model you may want to consider is the Morning & Late Night. Usually experienced as an upscale coffee-house in metropolitan areas, this business model often serves an outstanding breakfast, offers great coffee, and delivers fabulous service.  Classy interiors, perhaps even tablecloth tables or high tops, gives customers the total coffee experience.  As part of the business model perhaps it includes a wall of wine, or rows of “select your own wine” option, which is advertised to all the breakfast patrons.  Then in the evening, it turns into a specialty coffee and wine bar, perhaps with wine tasting, and a casual place for dinner serving great food if food is an option for you too.  The Morning & Late Night option is a fast growing trend in large cities, where nightlife is active.  So if you find yourself in this mood perhaps a Morning & Late Night business model will fit your bill.