Opening a new coffee shop is not extremely difficult in and of itself, but opening one with a competitive advantage that allows it to thrive rather than flounder in the local market is a challenge that requires planning ahead. Nonetheless, there are several proven routes to competitive advantage used by coffee shops, and one may be successful for yours.
The quality of your products can convert those who currently drink at other establishments to yours and hook those who might be one-time visitors to return. To ensure high quality, you have to check quality at every step of the service process, from the sources of your coffees and other products, to the systems, staff, and equipment you use to store, grind, brew, and serve. You may need to have unique or unusual sources for your products so that you are not competing closely with other shops who share the same suppliers. Researching suppliers may be the best method for this type of advantage, unless you have specific talent to develop your own products that will make your shop stand out.
Some retail locations acknowledge that the experience of the visit is compelling differentiation for customers regardless of the products sold. By offering a specific atmosphere, theme, or entertainment, your shop can stand out even with relatively standard products. There will be costs associated with whatever unique environment you are trying to create, so make sure to research these and show how it will enable you to either charge a higher price or bring in more customers than you would have otherwise.
As you reach lower and lower prices for a basic cup of coffee, your shop can tap in to a much larger market by converting users who would making their own coffee. However, once you shoot to be one of the lowest price coffee shops in your neighborhood, it can be difficult to find other ways to distance yourself from the pack. Even though you will make up in volume some of what you lose in dollars per customer, you will probably have little money to play with to attempt unique marketing or decor to build a brand, and you will always be in fear of direct price competition from both independent and chain shops that try serve at low prices as well. A price differentiation strategy will work best for you if you have a unique way to cut your costs substantially, making more room for profits or branding.
Are you looking for more advice on how to start a coffee shop or develop your coffee shop business plan? Call 877-BIZ-PLAN to learn how Growthink can help you build your coffee shop business.