Chapter 2: The Best Location

Many consultants will advise prospective startup coffee shops to focus their attention on picking the “perfect
location”. They suggest you locate your venture in a high traffic location in a densely populated urban area. There are several downsides to this proposition. Rents are high. The congestion forces many people to hurry by rather than stop. Competition is also highest in these areas. Instead of seeking the “perfect” location, I want you to focus on attaining a “goldilocks scenario”. Rather than perfect, it needs to be just right. There are no perfect locations. But there are many “just right” locations. A just right location will have consistent traffic, reasonable population density,
complementary rather than competitive neighbors and the best possible cost of occupancy. What constitutes the just right amount of consistent traffic? Coffee shops need two types of traffic, destination customers and spontaneous customers. Typically, destination customers will cover operating costs and spontaneous customers are what make the café profitable. Weekday traffic patterns are fairly consistent and allow the steady stream of regular clientele. Weekend traffic can be wildly inconsistent. The goldilocks location is a location that has close access to offices and commercial spaces as well as tourist attractions. The traffic doesn’t need to be Times Square, just consistent and somewhat predictable. When seeking just right amount of population density, look not just for the most people per square mile. Consider the demographics of the area. An upscale café offering artisanal coffee roasts will do just fine in an affluent community populated with young singles. This same coffee shop will have less success in a lower-middle class area, even if the population density is the exact same. The secret to population density is not how many people, but how many of the people I want to attract to my business are in this area. Neighboring businesses can help funnel the traffic they draw into your store, or they can compete for the existing traffic. The best location will have a mix of non-competitive businesses that cater to the same clientele you seek to have in your store. Using the upscale, artisanal coffee roaster example again, complementary businesses will include boutiques and clothiers that appeal to upmarket consumers. Try to avoid areas saturated with other food options, even if they are not specifically coffee shops. I once worked in a building in a fairly densely packed part of town filled with offices and businesses that catered to offices. While it was a great, central location, it was a horrible spot for a new coffee shop. The space was inundated with competitors. Not direct competition, like other cafes, but instead quick service restaurants that vie for the same daytime dollars as you will. Sometimes coffee is a complementary acquisition, but for office workers hurrying back to their desks, making a second stop takes up too much time. That made this location a non-starter. Factoring in this advice should have already created a better result for your rent. By avoiding the location that is perceived as perfect, you also avoid the high cost a landlord wants to charge for the perfect spot. The goal is to spot and capitalize on market inefficiencies. If all retailers are looking for one formula, that will drive up the cost of rent in places that fit their formula. Checking your business’ needs against the “perfect” location will open up better
opportunities. Finally, when choosing a location, take to heart the old carpenter’s maxim Measure twice, cut once. No decision is more permanent to your business than the location you select. To the best of your ability, you have to examine, investigate and vet a potential locale before settling on it. Let me offer up one practical piece of advice. When you think you have found your location, bring a few friends who have no experience running a coffee shop and little familiarity with your plans to that location and talk with them about your vision. How quickly they grasp your vision can tell you how well you have picked the spot to help you realize your dream.

 

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