Franchise coffee shops in the format of "coffee to go". Advantages and pitfalls

To open a coffee shop in the format of "coffee with you" on the franchise, budding entrepreneurs can be enough 150-200 thousand dollars start-up investment. The franchise market is oversaturated with offers of various companies, the level of which can be doubtful. In the rapidly gaining momentum of the business sector is a great opportunity to face dilettantism or unscrupulous franchisors.

The coffee business in USA is undergoing its transformation. Coffee becomes a drink that Russians drink not only at home and in coffee shops, but also on the go. New for our country segment "coffee with you" or "coffee to go" (coffee to take away) is growing rapidly. There are hundreds of mini-coffee shops in the form of Express points of street format, all kinds of kiosks, Islands and racks in shopping and business centers, as well as mobile coffee shops on wheels. According to the company 2GIS, from January to June 2015 in the 15 largest cities of Russia the number of coffee shops increased by 44% compared to the same period last year. According to the forecasts of industry experts, Russia should repeat the Western version of the market development. In place of instant coffee to the leading position will gradually coffee natural. And a large share should take it trade "takeaway" (in the US is about 75% market share).




Why does the new format attract business attention? The fact is that the cost of "coffee with legs" small. They consist of two parts. This is a one – time spending on the establishment of a kiosk or stand (in many cases, your own room is not required at all), the design of the point, the purchase of coffee machines, coffee grinders, cash registers, etc.and fixed costs-rent, salary Barista, electricity, heating and maintenance costs of coffee machines. Consumables and raw materials for mini-coffee shops are inexpensive. They are disposable cups of different volumes and the drink itself, which can make a high margin of up to 400-500%. Coffee "to go" - a great start-up for those who want to quickly recapture the invested funds. Rental rates for coffee shops are minimal, and the points usually do not need to bring Sewerage and water supply. Also requires a minimum of electricity: sometimes it is enough to have a single outlet. In addition, the relative simplicity of the business attracts a large number of enterprising young people who are looking for ways to make good money without having experience.

The domestic market of mini-coffee shops is not yet saturated. Coffee is known to be the second most popular drink in the world after water. The habit of drinking it on the go came to Russia from the West and is slowly beginning to take root in domestic soil. Coffee from disposable cups with a lid drink all categories of the population from students and school students to businessmen. A clear confirmation of this can be seen in Metropolitan areas, when from 7 to 10 am coffee in Express points buy employees of nearby offices and tourists having Breakfast, after lunch about three o'clock in the afternoon-University students, and at lunchtime or late in the evening, all buyers are going mixed.

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Self-opening a coffee shop-it would seem simple, but many beginners are reinsured and try to act on a franchise, acquiring a ready-made business model. The fact is that if you put a simple kiosk and put in his grandmother-saleswoman, the case is unlikely to bring great success. Competition in the market of "coffee with you" is constantly increasing. Coffee shops literally fight for each client with low prices, compete with each other in the speed of services, as well as continuously expand the range. A good coffee shop offers customers not only espresso, cappuccino and latte, but also dessert, such as pastries, confectionery, all kinds of additives and syrups to drinks. The process is increasingly automated, and in order to ensure that the client does not exchange the coffee shop on the coffee shop competitor or the nearest vending machine, coffee shop owners are ready to do anything. To purchase a franchise, is to be experienced ally, which should help to avoid "getting your buds" and to put business on a stream. It is the transfer of experience, not the brand, that comes to the fore in this case.

What should be included in the franchise package
The universal package of the franchise is not, however, on the services offered by the franchisor to provide, you can learn a lot even at the stage of proposal selection. The parent company should be interested in developing its network, so the more franchisee support points it offers, the better. Fully trust the transfer of services on the websites of companies is not necessary. It is best to ask the franchisor to send an e-mail offer or ask for a "transcript" of each item of the franchise in a telephone conversation.

 "Assistance in the selection of accommodation" should consist not only in the fact that the franchisor will nod or wave from side to side with his head, considering the options offered by the franchisee. Ideally, the owner of the franchise should help in negotiations with the landlord, and, most importantly, correctly assess the possibility of the selected location. To do this, parameters such as daily patency on weekdays and weekends should be carefully analyzed (usually there is a minimum threshold, for example, 500 people per hour is required by the Go franchise!Coffee), the approximate age and social status of customers (in the business center, for example, you can set higher prices than in universities), the presence/absence of competitors nearby. If a room is required for a mini-coffee shop, the franchisor must provide a design project with detailed zoning. If we are talking about the island chipboard or outlet in the shopping center, the franchisee will need a scheme of Assembly and installation of equipment. Sometimes franchisors, together with the franchise, sell the modules themselves to build a retail outlet.

The material part of the franchise must include equipment. Usually franchisors as a trump card of the offer declare coffee machines of "the best European brands", even without specifying their names. The market of "coffee with you" is quite young, so a potential franchisee should not be conducted is not such cheap techniques, which are greedy for new businessmen. Sometimes franchisors offer to purchase the equipment and lease it to lower start-up costs partners. This scheme of work, in particular seen in a network of coffee shops "Gourmet". If we are talking about a mobile coffee shop, the franchisee gets a car equipped with an espresso machine and everything necessary. In addition to the equipment, software can also be provided to maintain a sales accounting system.

A special point of interaction between the partners is consumables and raw materials. As a rule, the network implies a uniform menu. This means that franchisees should be provided with contacts of suppliers who provide the company with certain discounts due to large purchase parties. Sometimes the head office includes the cost of deductibles starting batch of consumables – branded disposable cups, lids, sugar sticks, syrups, etc. Further terms and conditions of purchase of this material are discussed separately. Actually all financial dependence on the franchisor, can consist only in purchase of consumables.

 Place for your business proposal
Also, the franchise should provide an impressive wealth of knowledge from their experience. It is best if the company is not limited to sending hundreds of documents, and will be able to provide advice on any issue live. Much attention is paid to the learning process of the franchisee and Barista. Some developed networks of coffee shops, for example," Cheerful day " and Coffee Like, conduct courses and trainings of partners on the basis of the parent network. A few days later, the partner receives knowledge about the coffee business and the necessary guidance, and the novice Barista – technology work and workshops from more experienced colleagues from the company. In addition to all this, the franchisor should share his experience with his branch, in cooperation with Rospotrebnadzor, the Tax service, SanPiN and other structures. The process of learning and exchange of experience can and should take place regularly-in the form of communication in General corporate chats, through webinars, at meetings of franchisees, etc.




The franchisor should provide assistance in marketing support. Brand recognition alone does not work in this type of business. Moreover, do not work and the usual elements of outdoor advertising, such as banners, pillars, posters, as well as handouts and audio advertising. Franchise owners pay attention that only a small group of regular customers purposefully go to certain points for coffee. The most part of purchases works under the scheme "I saw-I bought". Coffee is considered to be a reflex product, so the coffee shop, located two steps from the client, but around the corner, can bring significantly less profit than the one that is further away, but it can be seen from afar. Therefore, the best advertising will be the location in front of the main flow of people, as well as the quality of the products. In pursuit of the client coffee houses are actively using a variety of bonus programs and cumulative discounts. According to the network of coffee shops "Cheerful day", thanks to cumulative discounts and loyalty cards, coffee shops of the network receive a 20% increase in revenue. Perhaps one of the most frequently used promotions is the sixth coffee for free, as well as various sets (two/three purchased coffee donut for free or 2 coffee+2 rolls = discount, etc.). As an additional way to attract customers, franchisors can provide the partner with a ready-made group or account in social networks. Maintaining your own website or advertising on TV for mini-coffee shops are not profitable.

Offers and prices: how much
The number of franchises of mini-coffee shops that can be found on the market is quite impressive and its diversity can drive the entrepreneur into a dead end. Many of the networks are considered Federal and even international, as they have their offices in many parts of Russia and CIS countries and literally every month open new points. One of the industry leaders is the Izhevsk project Coffee Like, which has more than 200 branches. Among the major players can be identified as a network of coffee shops " Cheerful day "(130 points), Rolls Club (91 points), "Go!coffee" (more than 80 points). Almost every region of the country has its own coffee chains, and each network can sell a franchise of one or more formats. As examples, we can cite a network of coffee shops "Rolling field", which operates in the Urals and sells three formats of coffee shops (mini-coffee shop, mobile coffee shop, street coffee shop), a network of Coffee and the City, popular mainly in Moscow and Moscow region, "Mobile coffee shop", developed in the Rostov region and in the South of Russia, a network of Express cafes in the Krasnodar region Bon Cappuccino, which positions itself as one of the first in the region, etc.

On average, investments in a mini-format coffee shop will be about 220 thousand dollars, but can reach up to 1.5 million dollars or more. Investments will depend on many parameters, the main of which are the required area and equipment. Here everything is determined by the format of the future coffee shop. The smallest investments (100-400 thousand dollars) will require trade stands, Islands in the shopping center with an area of 2-3 square meters and pavilions, the largest - street coffee shops from 15-30 square meters with the possibility of arrangement of seats (450 thousand-1.5 million dollars and more).

Such a value as a lump-sum contribution (sometimes referred to as the value of the franchise), which may be less than or equal to the amount of investments, can also cause confusion. This indicator franchisors can understand how they want themselves. A significant difference between the column "investments" is that the lump-sum payment is entirely paid to the franchisor. It should be borne in mind that denoting the approximate amount of investments, the franchisor may not invest in it the amount of the contribution, and do not use it in the calculations of payback. The cost of the franchise may depend on the content of the package. For example, the chain of coffee shops "Cheerful day" basic franchise package will cost 80-120 thousand dollars, and the full – 470 thousand dollars. The difference between them is that the full package includes equipment, coffee accessories, bar fridge for storing milk, coffee weekly roasting, consumables and training services for franchisees and employees, which does not involve the basic package.

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As for royalties, companies rarely require monthly payments from partners. Even a small mzda can become a serious burden for a small coffee shop. Under favorable conditions, the invested funds should be repaid within six months from the date of opening. The promised monthly profit is most often about 100 thousand dollars per month. Detailed indicators of some Russian franchises of different scales can be found in the table. It should be noted that the prices of companies are constantly changing, and more accurate updated information is available on request.

Some of the franchise coffee chains in the format of "coffee to go»

The pitfalls of mini-coffee
One of the main problems of coffee format "to go" - is, not surprisingly, their rapid growth. Companies that are expanding by leaps and bounds on the franchise, with the pace of its development simply can not cope and as they say in the people, begin to "lag". Some companies openly say that the quality of coffee under their brand can vary significantly in different parts of the country. For the sake of expanding the network, many businessmen have to sacrifice standards. Purchases of raw materials and equipment for the branch occur from different suppliers, and for finishing outlets are allowed to use the cheapest materials.



Moreover, the parent company just physically does not have time to listen to all its partners. To achieve operational communication with the head office, and even more so with the creators of the network (usually the partners are represented by managers), novice entrepreneurs are extremely difficult. It turns out that buying a franchise from such networks is akin to buying a sign, and cooperation on the franchise loses all its main advantages and turns into a headache for both sides. And everything would be good if this sign really attracted customers, but the market of" coffee with you " is still very young and not rich in quality brands. The franchisor, feeling that he can not effectively control the activities of partners, begins to actively dictate and impose their working conditions. The franchisee, in turn, accustomed to the coffee business, soon realizes that the" guardian", from which there is still no sense, he no longer needed, and seeks to get out of the network. 

In addition, the problem of all new types of business is a huge number of non – professionals. Many franchisors, seeking to sell an idea that once worked, offer raw models. Not thoroughly versed in the business processes, they only want to make money on the sale, but the success of their franchisees are not interested. An entrepreneur who wants to open a mini-coffee shop should pay attention to the company's development strategy. The way of professionals-the choice in favor of quality, not the number of coffee points. The risk of getting burned on the acquisition of franchises Express coffee today is very high.

The acquisition of the franchise will not save the buyer from the same problems experienced by all other owners of mini-coffee shops. The main difficulty lies in the choice of location. Not only does it need to have good pedestrian traffic, we must not forget about the intervention of the weather. Most mini-format coffee shops are located on the street, so you need to take care of heating in the cold season. In addition, during bad weather revenue falls at times. No one will drink coffee in the rain or rain without a roof over his head. Another pitfall may arise from the position of the city hall. In many large cities of Russia local authorities began to fight actively against booths as with "uncivilized" forms of trade which heap streets and spoil appearance of the city. For those kiosks that remain, significantly increases the rent, and their appearance should match the surrounding architecture. The prospect of doing the repair of the kiosk and spend on it already limited funds most entrepreneurs scares. Open a point in the underpass or subway – also not 100% out of the situation. This option has its own barriers - high rent and minimum rental offers. A favorable place for accommodation with high conversion is considered to be shopping and especially business centers with lower rental rates than in the shopping center. These places have a high conversion rate, that is, the percentage of people who consume coffee, but it is quite difficult to break into such tasty places. Also, the human factor can affect the business. In contrast to the classic coffee houses count on the tip employees do not have to. Moreover, the Barista has to work in the cold, so the hired employee will be tempted to put part of the proceeds in his own pocket.



Spoil the life, of course, can and competitors. In many megacities between businessmen already there is a war hidden from prying eyes for a favorable location (known, for example, cases of arson of car cafes). How long will the process of increasing the market is unknown, but the peak of saturation, of course, sooner or later will come. Vending machines selling coffee and other hot drinks also compete with mini-coffee shops. People want to wait at the kiosk or bar counter and wait until they are poured, less and less. In addition, the device, which is called "more clean" than the Barista, and never slip the client a dirty Cup.

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