It was the winter of 1993 and I was 15 minutes late to work, opening shift at the small espresso cart I worked at part-time located in front of a large grocery store. It was cold out, but I was eager to start working. I loved that little cart. This was my first job as a barista and I often think back to my days slinging coffee at the carts and kiosks where I got my start in this industry with fondness.
In the early 1990s in the Pacific Northwest there seemed to be an espresso cart on every corner. We saw a large amount of small budget entrepreneurs getting into the coffee business with a cart, an espresso machine and an umbrella, lining up like hot dog vendors at a ballgame to supply the increasing demand for espresso beverages and lattes. Now while this surge in espresso cart operations paved the way for many retailers to take it inside and open their own cafés, many carts were short lived due to zoning issues, or the difficulty the owners had with promoting a specialty beverage sold on the sidewalk.
For many years, cart and kiosk operations have been discounted by many and thought of as a thing of the past, not to mention the kind of structure where a top-quality coffee program surely couldn’t flourish. However, we are starting to see a comeback in the cart and kiosk concept as a viable and lucrative business, as well as a quality based retail coffee concept. Customers and baristas alike are realizing it does not always take a 1500 square-foot café and a huge operating budget to make a good cup of coffee or cappuccino. What it takes is a well-trained and passionate barista. Like a third wave minefield, quality based carts, kiosks and mobile operations are popping up in more and more places everyday.
This new wave of smaller retail operations may be due in part to a grow thin what I call ‘career baristas.’ The industry is becoming more saturated with people who have fallen in love with coffee and who want to dedicate themselves to our beloved bean by serving it at its best. We are seeing many young companies and professional baristas starting out, or expanding their retail locations by opening cart or kiosk locations. There are many cutting edge coffee companies that have been successful in creating wonderful retail coffee experiences in small spaces. Think Blue Bottle’s coffee kiosk in San Francisco’s Hayes Valley, Gimme! Coffee’s refurbished 1948 Airstream espresso trailer on a college campus in Ithaca, N.Y., Jon Lewis’ Long Story Short Coffee espresso truck that he drives from festivals to farmers’ markets in and around Coeur D’Alene, Idaho; and Alterra Coffee Roasters setting up shop in the mezzanine of the US Bank building in Milwaukee, Wis., just to name a few. These guys and many others are blazing the trail for specialty coffee retailers who either have limited space or limited funds, but want to do it right. “For any barista considering opening their own store, be it kiosk or full store concept, I would advise them to consider their personal goals,’’ says David Stackhouse of Millrock Display Cases and Modular Cafes. “Are they looking to build opportunities for unique customer experiences? Do they get off on delivering the perfect drink to wow customers?’’
Big Dreams with Less Cash
So what do you do if you’re a barista who wants to open his or her own retail operation but it turns out your dreams are bigger than your pocketbook? First of all, don’t waste time getting discouraged. You’ve got lots of options with lots of different price tags, and there’s nothing wrong with starting with a more modest plan: cart or kiosk.
It’s great to have big dreams for your business, but not only should you be careful with your cash, you need to figure out whether you even like running your own business in the first place. In addition, by starting out with a cart or kiosk you can also build the experience needed to show a bank or investor that you have what it takes to be successful in retail coffee and will be better off if looking for a loan if you want to open a sit-down coffee bar.
“Banks don’t give loans based on passion for coffee, but my parents did,” recalls Michaela Marquette, a café owner in Minneapolis who began her business as a cart after working for a barista for an acclaimed roaster for seven years prior. “I was really lucky. My parents got me and my business on my feet with a loan. We did it all seriously, with contracts and loan repayment papers, so that after I had paid it off, I could show the bank that I was responsible and credit worthy. It made all the difference when I went for a bank loan to open my café.”
Dainagon Wen of Chicago was able to finance his start-up cart with a bank loan based solely on a good credit rating he had maintained as a college student. “I worked as a barista for three years, but one year into it, I knew I wanted to open my own place,” he says. “I saved $9000 which was enough to prove to the bank that I was worth a loan—a cart loan, that is. Those are smaller than café loans!”
Indeed, there are fewer upfront costs to begin with. Some of the elements that make a café start-up more likely to flow out of control don’t factor into cart and kiosk businesses in the first place.
“By offering a fixed cost, espresso carts create a simpler, more reliable business plan,” says Douglas Pratt of Michaelo Espresso in Seattle. “Managing the costs involved in a café build out is difficult, especially for first time entrepreneurs. The espresso cart concept eliminates that obstacle. Also, since the cart is classified as equipment it is possible to lease finance the cart and therefore the bulk of the business cost, whereas a bank loan for a build out can be much more difficult to organize for a start up.” Stackhouse of Millrock agrees: “Starting with a kiosk represents a much smaller initial investment that can afford a quicker return on the initial investment. The typical coffee kiosk can be fabricated and installed with many fewer considerations and expenses than a full store.”
Before we move forward let’s roughly define the difference between a cart, kiosk and mobile operation, and what it will take to open a small retail coffee business.
Espresso carts are generally self-contained, stand alone, coffee and espresso operations. The typical equipment will include an espresso machine, two burr espresso grinders, refrigeration, self-contained fresh water and wastewater reservoirs, a hand wash sink, and all the necessary water pumps, filters, heaters, electrical converters, circuitry, and outlets to facilitate the equipment. A 220-volt power source, an approved source of fresh water, and a means for disposing of wastewater will be required. The addition of a drip coffee brewer or a hot water source for French press and pour over coffee can easily be added.
It is becoming more difficult these days to build your own cart as local health, fire, electrical, and plumbing codes are increasingly critical of the components and specifications required for cart approval, so you may want to look for a pre-fabricated cart or hire an expert to help with your build out.
A single-cart operation could quickly be expandable to offer more space for more extensive menu offerings by adding several cart units. Also, carts are often available in a variety of sizes and materials. Always keep in mind that even when starting a business on a budget, you get what you pay for and it is important to invest in high quality materials and equipment.
“An espresso cart will get wet every day, be leaned on, stood on (yep), pushed over door jambs, pushed into door jambs, scratched and torqued,” says Pratt. “Take a close look at any cart you are evaluating to be sure it will stand up to years of this abuse.”
Start up costs for a nice and simple cart operation can approach $20,000 to $30,000 quickly, and it is important to understand that it will take more than equipment to get into the business. Just like any coffee retail operation you will need to stock your shelves with inventory, secure permits and establish workman’s compensation and liability insurance. Some locations will also require the services of an electrician if a landlord is not willing to facilitate the required electrical outlets.
If you are interested in a cart that will need to be moved daily for security purposes, make sure the cart is strong enough to endure the punishment. Many carts are designed to be stationary and not for daily transport. You do not want your cart operation to look like it has been entered into the downhill soapbox derby after a few weeks of operation.
The other concept to consider is a mobile operation or an operation on wheels. This business model allows you to take the product to your customers, rather than having your customers come to you. Mobile operations are usually self-contained and built into or towed behind a vehicle. There are a few companies that build this type of operation or you can be creative and figure out how to best build your own. Price range on this type of operation can obviously vary greatly, but a ball park start up figure could be between $40,000 and $80,000, depending on your equipment, materials and if you go with the 22-inch rims or not.
Some coffee trucks have been outfitted similarly to a catering truck where the side or back rolls up and the espresso machine is serviced by the barista standing outside. The other option would be to outfit your truck or trailer so the operator remains inside the vehicle (better for those rainy days).
Business parks, factories, construction sites, schools, farmers markets, and special events are all prime locations for a mobile espresso unit. If you choose to go this route, be aware that many times mobile catering businesses may sign an exclusive contract to provide services to certain locations, so check with the appropriate authorities to see if your services are welcome, and if so, ask for an exclusive contract yourself .A mobile coffee operation can have some fixed sites where customers know when and where they will be, along with the ability to move from place to place, or to be hired for a special occasion. A great example of this type of business is Coffee Angel,“ Ireland’s Finest Mobile Coffee Caterer,” a project started by Irish barista champion Karl Purdy, who provides and promotes coffee excellence while serving off the back of a customized Vespa Ape scooter.
So how do you find a great location for a cart or kiosk operation? Some major points to look for are high visibility, high traffic counts, availability to have your commissary nearby and easily accessible, and also a location that is relatively safe. But beware your first instincts. Pratt says one of the biggest mistakes potential cart owners make is to assume “I’m the only person smart enough to see the potential of this location.” If it seems like a great spot for a cart or kiosk, why isn’t there one there already? Do some research, and that might include standing on the corner asking passers-by if they would frequent a cart in this spot. The answers and reasoning of people who know the spot better than you do will no doubt surprise you.
One huge advantage a cart or kiosk operator has is that you can literally put your operation right in the flow of traffic. Carts and kiosks can in most cases be set up anywhere. For that reason, you can search out high traffic areas and set up camp. The walk-by traffic also has a better capture rate, as people are already out of their cars and more inclined to spend a few minutes to get a convenient latte.
Especially in a cart operation, security is always a factor. You will want a location where your cart can be locked up and stabilized in place, or can be pushed to a safe close-by location when not in operation. Even though it is not a 1962 BMW R60/2 motorcycle, you will still want to protect and lock down your cart to avoid it being stolen or pushed over. You can often lock a cart to anchor bolts embedded in the ground, making it difficult for a thief to steal or move the entire cart.
In addition, if you are planning an outside operation, make sure you survey each location on a typical working day through the eight- to 10-hour period when you will be open. Check things like how the sun will hit you at various times of the day, what kind of protection from the elements and bad weather you’ll have and how much it would cost to run electricity and utilities to the given location.
With regard to a kiosk location, remember that a kiosk can come in a variety of sizes, shapes and configurations. Kiosks are more permanent and are usually situated in a secure spot, but are typically assembled from modular components and can be taken apart and easily reassembled in a different location. Once electricity is in place, a kiosk can be brought in and assembled in a day or two, similar to the modular kiosks Coffee Fest attendees have grown accustomed to seeing at the Millrock Latte Art Championship events.
The functional advantage of a kiosk over a cart is the extra room it provides, allowing the operator the ability to offer a wider array of products. We have a past American Barista & Coffee School student who is opening a kiosk operation and focusing on Clover coffee and direct trade, whole bean sales as well as excellent espresso beverages. If the location allows, you can offer just about everything you can in a coffee shop, on a smaller scale, especially if you are creative.
Another thing to consider in a kiosk location, once again, is the type of security provided. A public space where there is someone watching over your kiosk or cart when you are not there is ideal.
The other thing you want to consider in a location is whether there will be space for table seating that is either your own or shared in a public space. Seating will really make a difference to your business. In addition to table seating you can sometimes incorporate bar stools and walk up service similar to small cafés found throughout Europe. Seating also gives the perception to passer-bys that you are a beverage or food type of business and can draw the attention of more customers.
Opening and Operating Capital
While we discussed the lower start-up costs for opening a small coffee retail operation, it will still be important to fully understand and allow for operating capital. It may easily take 60, 90 or 180 days to turn the corner to where you are actually making a profit. Probably the single biggest mistake that people going into the service industry make is spending all their money getting their operation open, after which they find themselves with nothing left to pay for operating expenses during the first few months of business. A good rule is to take about one-third of the money you are planning to spend on your investment and set that aside for operating capital. You will also want to have sufficient marketing and advertising reserves of 10 percent of your total sales the first six months or so, dropping to five percent after you are established. Estimate carefully while planning your operation and understand what your resources are and what total investment you can afford.
Opening more than one cart operation is worth considering. If you are in a market that has many great locations, you can often open eight to 10 cart or kiosk operations for the same price as an in-line coffee bar. The other advantage is that if one particular location fails, you can move it somewhere else.
No matter what kind of small space operation you choose, there are going to be some obvious advantages over the daunting idea of opening an in-line coffee bar. First of all, your rent will be much lower. Depending on where you are located you should be able to negotiate a fair and often inexpensive lease, given the small footprint you are looking to obtain.
Another advantage is that your labor will be limited, along with your hours of operation. Given the fact that you may not need to deal with other employees, a small operation can be very lucrative. As a sole proprietor you will have much greater control over all variables of your operation. It is an advantage that the money one may make as a sole proprietor goes into their pocket for them to manage, which means target daily sales can be more realistic and lower than at a full blown sit-down coffee bar. One can make a pretty good living for a fairly low stress job if all variables are managed right.
In my opinion this may be what is attracting many coffee professionals to this type of operation, like my friend Dismas Smith, 2002 North American Barista Champion, who is opening his small operation in a unique space on Fremont Street in Seattle. Dismas will be able to control the quality of every drink served, and will easily manage the variables involved with his particular space. With the total control a single operator has, Dismas, Jon Lewis and others have also become the entertainers, the coffee educators and the smiling face of their businesses. They have the ability to speak with each and every one of their customers and can feel satisfied that every one leaves with a great beverage and feeling about the experience. In this industry, it’s not only about the coffee, but the personality of the barista/owner that can affect the customers, and keep them coming back.
Article by Matt Milletto, reprinted from Barista Magazine