Summary
The Story of Narrative Coffee
Maxwell, the founder of Narrative Coffee, started the business in 2015 with no prior experience in coffee or business. They launched a coffee cart in 2016 and a brick-and-mortar store in 2017. Initially, they faced a major struggle with being underpriced, resulting in either no profit or losses on every sale.
Overcoming Early Challenges
Maxwell shares a crucial system that helped him overcome early challenges: a detailed spreadsheet to monitor costs. This spreadsheet tracks raw ingredient costs, breaks down each recipe by ingredient, and updates costs quarterly, ensuring they stay on top of costs.
Expanding the Business
The speaker shares their experience with opening a second location, which was similar to the first one, with a few adjustments due to the new space. They had a strong management in place, a good cash position, and had reached certain benchmarks before expanding.
The Coffee Cart Business
The entrepreneur started a coffee cart business with a $1,500 loan, which can be a viable option for those planning to operate on a low volume. However, high-volume carts can cost $15,000 to $20,000. The key to success lies in viewing the business as a marketing opportunity, focusing on building a loyal clientele.
Providing an Exceptional Customer Experience
To achieve this, it’s essential to provide an exceptional customer experience, which involves welcoming customers, asking the right questions, and tailoring the experience to each individual’s needs and preferences.
Designing the Space
The guest experience is prioritized by designing the space to engage customers from the moment they walk in, with a retail shelf to browse while waiting in line and a visible pastry and point-of-sale area where baristas can multitask. The layout is intentionally compact to allow one or multiple baristas to efficiently make drinks without getting in each other’s way.
Building Brand Equity
The founder of Nar Coffee wanted to create a unique system that would help maintain high-quality coffee, build brand equity, and provide a consistently great experience for customers, regardless of the roaster being served. This approach also helped avoid being branded by the roasters they served, allowing Nar Coffee to build its own brand.
Taylor Brands and Monthly Revenue
Taylor Brands is an AI-driven one-stop shop that helps small business owners establish their brand identity, including logo creation, domain and website creation, business cards, and more, all for a low monthly cost starting at $8.99. Meanwhile, the conversation shifts to a coffee shop owner who shares their monthly revenue, which is around $70,000 to $80,000, with a slight dip in early fall and winter.
Marketing Strategy
The primary driver for bringing in customers is Instagram, which is used to stay connected with guests regularly. The design of the space is intentional, with great lighting, to encourage customers to take pictures and post them online, creating a natural way to promote the business.
Advice for Starting a Coffee Business
For those looking to get into the coffee industry, it’s advised to work for someone else first, to learn the ins and outs of the business, and then do your research before starting small.
Starting Small and Breaking Even
When starting a business with a limited budget, it’s crucial to do due diligence and start small, finding ways to minimize costs. The initial investment for this business was around $290,000, with $181,000 for the build-out and $65,000 for equipment and operating capital. They broke even in about 6 months, thanks to their high-value investments in efficient equipment and systems, such as automated espresso machines and high-efficiency grinders, which enabled them to process a high volume of quality products while keeping costs low.
The Importance of Systems
Systems are crucial for a coffee shop’s success as they provide a structure, framework, and help track progress through metrics. This leads to increased efficiency, reduced costs, and more value for the business, which can be shared with them, creating a win-win situation.
Prioritizing the Guest Experience
The coffee shop prioritizes creating a welcoming atmosphere, focusing on experience-oriented design rather than heavily branded elements. Their marketing strategy emphasizes social media influence and organic growth, encouraging customers to share their experiences.
Open Communication and Efficiency
The importance of open communication, efficiency, and strategic setup in a coffee shop is highlighted. Monthly one-on-one meetings and open communication lines enable addressing challenges and ensuring a smooth experience. Efficiency is key, and the setup is designed to minimize crossing paths, which can lead to lost time.
High-Quality Milk and Relationships with Suppliers
The coffee shop’s high standards are reflected in its high-quality milk and relationships with suppliers. The food program was developed by the chef, Megan, who was passionate about the business and wanted to contribute.
Standard Operating Procedures
The business owner emphasizes the importance of standard operating procedures, checklists, and a point-of-sale system to stay on top of activities and track data. They prioritize supporting their staff by providing tools and training to serve guests well, and building communication systems to ensure menu changes are conveyed effectively, especially as the business scales.
Time Management and Delegation
The speaker focuses on high-value tasks that only they can do, delegating other tasks to staff with clear roles and job descriptions. This allows staff to take initiative and fix problems as they arise.
Essential Equipment and Systems
The most essential equipment for a coffee shop includes a high-quality espresso machine, grinders, and reliable refrigerators. A good point-of-sale system, stable internet, and strong Wi-Fi are also crucial for smooth operations and customer satisfaction.
Reflections and Advice
The speaker reflects on what they would tell their younger self, emphasizing the importance of investing in oneself and learning to say no to opportunities that aren’t a perfect fit. This is particularly crucial when a business is small, as one failed venture can have a significant impact.
Profit Margins and Overhead
The speaker’s coffee shop has a 30% profit margin on retail items and 3-400% gross profit margin on other items, with an overall profit margin of around 10%, which is industry standard. The business was able to thrive in Everett due to a need for specialty coffee, a strong community, and low commercial rents.
Identifying Areas for Improvement
The key to identifying areas for improvement is to pay attention to cash flow and communication breakdowns, which often indicate a lack of systems in place. Effective communication and feedback from staff experiences can help understand what’s being missed and address potential problems.
Staying on Top of Reviews
For brick and mortar coffee shops, staying on top of reviews is crucial, as it’s a form of word-of-mouth advertising. Responding to reviews and taking them seriously is important, as it not only interacts with the reviewer but also with potential customers.
Investing in People and Relationships
Maxwell, the owner of Narrative Coffee, emphasizes the importance of investing in people and relationships, as they are crucial to success in any industry. He also stresses the need to protect one’s time for family and self-care, warning against burnout.
Key Vocabulary
| Term | Definition | Example Usage |
|---|---|---|
| Brick-and-Mortar Store | A physical store where customers can visit and purchase products. | Narrative Coffee opened a brick-and-mortar store in 2017. |
| Cost Spreadsheet | A detailed spreadsheet to track costs, including raw ingredient costs and recipe breakdowns. | Maxwell used a cost spreadsheet to monitor costs and stay on top of expenses. |
| Coffee Cart Business | A mobile coffee business that operates from a cart or truck. | Narrative Coffee started as a coffee cart business with a $1,500 loan. |
| Customer Experience | The overall experience a customer has when interacting with a business. | Narrative Coffee prioritizes creating a welcoming atmosphere and exceptional customer experience. |
| Brand Equity | The value of a brand’s reputation and customer loyalty. | Narrative Coffee aimed to build brand equity by providing a consistently great experience for customers. |
| Systems | A structured process or framework that helps a business operate efficiently. | Narrative Coffee emphasizes the importance of systems in providing a structure and framework for the business. |
| Open Communication | The practice of sharing information and ideas freely within a business. | Narrative Coffee prioritizes open communication and monthly one-on-one meetings to address challenges. |
| Standard Operating Procedures | Detailed guidelines for performing specific tasks or processes within a business. | Narrative Coffee emphasizes the importance of standard operating procedures and checklists to stay on top of activities. |
Watch The Video
Vocabulary Quiz
1. Which word means ‘to make something or someone successful or profitable’?
A) Overcome
B) Expand
C) Thrive
D) Monitor
2. Which word means ‘to give someone or something a particular image or character’?
A) Brand
B) Market
C) Design
D) Build
3. Which word means ‘to make something or someone more efficient or effective’?
A) Optimize
B) Streamline
C) Prioritize
D) Minimize
4. Which word means ‘to give someone or something a particular image or character’?
A) Brand
B) Market
C) Design
D) Build
5. Which word means ‘to make something or someone more efficient or effective’?
A) Optimize
B) Streamline
C) Prioritize
D) Minimize
Answer Key:
1. C
2. A
3. B
4. A
5. B
Grammar Focus
Grammar Focus: Using the Present Perfect Tense to Describe Past Experiences and Their Relevance to the Present
Grammar Quiz:
1. By 2017, Narrative Coffee ____________________ a brick-and-mortar store.
A) launched
B) had launched
D) was launching
2. Maxwell ____________________ a crucial system to monitor costs before expanding his business.
A) developed
B) had developed
C) was developing
has developed
3. By the time Maxwell opened his second location, he ____________________ a strong management in place.
A) had
B) has
C) had had
D) was having
4. Maxwell’s coffee cart business ____________________ with a $1,500 loan.
A) started
B) had started
C) was starting
D) starts
5. By the time Maxwell expanded his business, he ____________________ certain benchmarks.
B) had reached
A) reached
C) was reaching
D) has reached
Answer Key:
1. B) had launched
2. B) had developed
3. A) had
4. B) had started
5. B) had reached