Open A Coffee Store
WhatWhereMarketingContact UsAbout the Author

KMO Coffee
Grande Kaffé
Multi Store

(Anyone who is here was there – Atlantic City Coffee Fest), so e-mail me with questions or call me at 800-652-5282.  I have lots of experience at multiple stores and will gladly spend the time with you at no charge.) If you want a word document, e-mail me and I will send it to you.  Bob Johnson

Introduction Understand your First Store,
Know Yourself Are you making enough money
Who are you Strong home base
Fear is Good Difference Between 1 and Multiple Stores
The Audience Elements for Success
Be Flexible Goal Setting
Talk to Sales People? Strategy
Objective of Presentation Planning
Rule #1     Rule # 2 Concepts
Growth Locations
Your First Store: Is it Successful? Money

Page TopGood Morning All, Thank David Heilbraun for a good show again. 

(For those who wrote down the notes on the wall: Tinstaafl means: there is no such thing as a free lunch.  ETDBW means: easy to do business with.)

Hope you all had a great cup of coffee this morning.

See David’s Story in the local paper: 

As David is quoted in the paper, the East Coast is tough…. Not just for shows, but for finding a better cup of coffee. 

As background, I have been in the coffee business:

Since 1990 at the Seattle Show

Really since 1950 with parents at A and P where my job was to get the Eight O'clock Coffee and grind it.  I have a vivid memory of the grinder by the check out count.  The aroma is still in my memory banks.
I have been very serious about the coffee business since 1988: I walked into a Barnies Coffee and Tea franchise in the Galleria Mall in Philadelphia and knew instantly that this was a business for me.  The aroma, and the role coffee plays in American like were instantly apparent. 

Since then the Specialty Coffee business has continued to get better.  More stores, more coffee, more quality, and more conversions from the old commercial grades to the new specialty grades.

Our challenge (Kaffe Magnum Opus and you are retailers) is to make East Coast as good as the West Coast.  (More sites, more conversions and better quality.)

You are all here:

Atlantic City
9:10 AM
Topic is Second Store or Multi Store
You must be serious or you would be in bed sleeping In.

(At this point the audience was polled and there were more people just going into the business than with existing stores, so I changed the tone of my remarks a bit.  Latter, as more people arrived, the mix returned to more people interested in second stores – so I changed the tone back).

For those of you with existing successful stores, you know how to do it.  You have done it, so by all means please do it again.  If you can repeat your success you will learn the management techniques I will speak about latter (that are necessary to be successful in a second and multi store operation).  So, by any and all means, get to it – open the second store.

Expand, have fun – bring good coffee to the east coast.

Lets take on Starbucks, WaWa (explain WaWa – they are a local company that has a broad appeal to the largely blue collar market that dominates the New Jersey, Maryland, Delaware and Pennsylvania area)

It’s not that big a deal.  You have a successful first store.  Repeat it.

Get to it.  Go do it.

Reminder: (No matter where I go or what I speak about I like to remind the audience that brewing strong coffee at or near the SCAA recommended weights will hasten there success and build body memory in customers.  Brew Strong Coffee - 3 or more ounces to a pot.

Page TopBy way on Introduction:

To be successful in Business

You have to know yourself

You have to have your own balance sheet

  • Personal Assets, Personal Liabilities

  • Energy, emotional currency, time, money

Know who you are (the question is: do you have the assets needed to open and operate successfully a second store.  Second stores add measurably to the complexity of business management)

Do a Woody Allen: he was 17 years in psychoanalysis.

Are You:

- Hippies or old hippies
- Entertainers
- Good with people?
- Financially sound?
- Risk takers?
- Work hard?

Go home and write a one-page analysis of yourself.

Page TopWho are you?

Can you, or, do you want to go for Gold Ring- Expand?

What keeps you awake at night?

What are you afraid of?

Can you tame these tigers?  Can you harness the energy to build a better coffee business?

I bet you can.  If you are here this morning, and you have a successful first store, then you have basis to bring good things to the coffee business.  

You are here, so I would think that many of you are concerned – trying to decide to open a second store or not. (Concern or anxiety)

Page TopFear is Good

- I remember 1991 and my first store
- Signed a lease on Nov 4th – opened on November 14.  
- Anxious – Fearful
- Are they going to like me, like the store?
- Will they buy?  Lattees?  (make a joke mispronounce)
- California Visitor – told us how to make drinks.
- Frank Amari – Hey you got brown sugar?

You must have your own stories about worry in retail. 

And now you are going to do it again?  You must be courageous. 

No doubt you are successful and you love the business.

I love this business, I work at it all the time, and I love not just the coffee aspect, but also the business aspect.  I love business.  It is what I do, and if you have this ingredient, go to it.  Open.

Just so you know:  in my opinion the second store is harder than the first.  But the third to the 20th are easy.  The 50th you may not know actually opened if that is where you want to go. 

Page TopSo who are we as a Group?

I am proud to be here with you entrepreneurs.

- Distinguished
- Accomplished Group
- Successful stores opened
- Now adding more
- Movers
- Shakers
- Builders
- Creators

CEO’s – owners- you make today an easier task for me because in a sense you only have to repeat what you have done.

All have different styles:

- Some are type A’s - Some are type B’s
- Some are delegator’s – some are do it yourselfers
- Some are take charge people – some are passive

These different styles make my job a bit harder: 

Why?  You will hear what I say in the context of your style.   

I ask that you listen today.  Become a student.  Contribute.  Break some of your habits.  Listen.

Page TopBe Flexible

Talk with:

- Vendors
- Suppliers
- Sales People
- Teachers

Page TopHere’s Why


- Bubble Milk Tea?  What the heck is that?  Stay current.
- Fair Trade Coffee?  Stay current, expand your line or not.
- Bird Friendly Coffee?  Stay current.
- Organic Coffee?  Stay current.
- All Social Spending – yes it goes on:

DINKS (double income no kids – demographic)

\Web sites?  Have one yet?  The world has changed enormously.

Business strategy – ever change it?

In my case:

Banker for 23 years – decided to change.

Then my plan was: 

- In one mall: both an ice cream store and a coffee store so I could move people around seasonally.

- Then I moved to coffee franchisers

  • Beanery for 8 stores

  • Barnies for 8 stores

Then retail on my own

Then wholesale  Stay current and be flexible.  Change will happen naturally.

Must be flexible

Old customers we met at the Beanery just Friday Evening.

Swivel Hips – dancing – moving – changing with the demands and the business environment.  Must be flexible.  

Page TopObjective Today

1. Help you think about opening multiple stores.  Just Think about it

2. Raise some questions that you may want to consider before you open or move on your plan.

3. Create a short list of things or items you need to be successful.  We already have a couple on the list.

a. Know yourself
b. Embrace fear
c. Be flexible and open to change

4. If we have time I will also just through out some ideas on the different roles we have to play as leaders and organizers of work and people.

Page TopAnd no matter where I am or what I am talking about:

Rule #1: The unwritten and unstated purpose of business is to stay in business.

Rule #2: Cash is king.  The way to stay in business is to keep cash growing.  Is your cash account growing or falling.  Is it level?  Are you making money?  Are you paying your bills on time?  Are you paying yourself enough?

Are you spending more than you make? Or, do you make more than you spend?

Which brings us to growth.

Page TopGrowth

Why Grow?

- Uncle Bob in the Woodstock Flea Market at age 65.  He was done growing and satisfied with his life.
- Some people like small – manageable
- Other people like large – driven, build, create

I think growth in a natural event.  It leads to good health. 
Growth is healthy in people and in business. 

Life Cycles

 Pass A Long

Growth extends life.  Complacency – inactivity shortens it and hastens the end of the cycle.

Page TopUnderstand Your Current Operation 

Before you open the second store:  or continue opening more stores – lets examine briefly your existing operation.

1. Are you happy?

2. Are you smiling?

3. Are you coping

a. With tasks?  Do time cards bother you?
b. With the people?

4. Paying your bills on time?

5. Building cash account?

6. Do you cringe when the telephone rings?

7. Do you panic when you get a registered certified letter?

8. Did you pick a good location?

a. If not, you can improve this:  are the other aspects of your business still ok?  If so, keep going.

9. Are your customers returning?

10. Are your sales increasing?

11. Are you building a base of customer information?  Central information file? (Mailing or direct marketing list)

12. Do you get returns?

13. Do you get complaints?  A lot?

14. Are your vendors happy?

15. Is your staff happy?

16. How’s the turnover?

17. Are you happy with your hours?

Do you have excess Energy? 

Do you want a bigger car?  A bigger house?
Which brings us to the biggest question of all?????

Page TopAre you making enough money? 

- For you
- For your store
- Will your income support a second store

  • If you need $50,000 personally, and you need $50,000 per year for the second store, it is generally better to rely only on the existing operation to financially support the second.  Banks look at you like that for good reason: is it is a measure of strength and far less risky if the existing operation can pay the bills even if the second hiccups.

The net of this is make sure you are making enough money because:

Expansion requires a strong home base.

1. Operationally
2. People wise
3. And you – can you handle more responsibility and work?

If your current store or operation is successful or is doing ok – then I would urge you to move on and add to it.  Grow.  Expand.

If you have issues with the first store, then I recommend that you fix the things that need work, and then move to the next store.

The exception to this is that the existing store is not living up to your expectations for uncontrollable reasons.  A big employer closes for example.  This is not you or your operation.  It may be your location picking, though, so don’t ignore it, but on to the next site. (For example, did you miss something in the press that may have given you a heads up on the closing of the plant.  I.E. in 1982 IBM introduced the PC – it was the beginning of the end of the main frame, and the 5,000 jobs in Kingston New York where main frames were manufactured.)
Make sure you are making enough money in store one to support store 2. 

Page TopThe Difference Between 1 Store and 2 or Multiple

Each store may be the same. 

But the big difference is the size, the intensity of your new operation. 

So you will have to learn how to cope with a longer span of control – and to manage your business through other people. 

Everything is bigger: 

- Payroll- taxes- over 10 people more regulation

- Things take longer to communicate, to change, to implement, so you have to plan over longer horizons.

  • Lets say you want to change the espresso by a few seconds, or make the compaction tighter.

  • Now you go out and do it. 

  • With more stores you need to communicate with more people and it may not get done.

- Turnover is more by shear numbers and therefore you need to hire more

- Accounting is different and you may have a few sets of books.

- You need more money – so your relations with the banks are different.

- Quality is threatened because your supervision is different. 

Sales: if a court stenographer comes in today to order 100 baskets for all the attorneys in your market – you come out and take the order.  With two stores that person may be told you are in the other store!  Or – oh she’s not here. 
You have to find a way to deal with these things. 

For Sales: cell phones for easy contact.  Fast cars. 

Supplies: some people deliver the supplies to each store every day as a method of keeping in contact with each store daily.  So be the delivery person.  
This way you have contact, and you manage by walking around.  Stay in touch.  Observe.  This gives you a better feel for the quality of the operation and the staff and it gives the staff an opportunity to speak with you. 
Size can bring economy of scale:  this means lower costs because they are spread over larger volume.  But you may incur more overheads (for example – you need a vehicle to carry supplies – so make it your SUV).

Page TopElements for Success

Key elements so far:

1. Know yourself
2. Back up
3. Embrace fear
4. Be Flexible: become a student
5. Cash: make sure it is growing
6. Management by staying in contact.

More items to add to the list:

1. Set goals: repeat them daily.  (more on this in a minute) 

a. For example: In three years I will have 5 stores each doing $400,000 in sales.

2. Focus your attention on a few things at a time.  Stay organized. 

3. Get good bankers.  There aren’t many.  Most are pretty bad today.  Do your best.

4. Develop your real estate skills and take your time.  Pick you spots well.

5. Let people solve their own problems.  Don’t be a fireperson.  If you let them work they will eventually get it.

6. Pay yourself enough.  Take time off.  Rest.  Your business needs you rested and making good
    sound decisions.

7. Develop good coffee skills.

8. Look for allies.

9. Habits: Break the bad ones develop the good ones.  If you have a knack for picking good sites,
    keep going.  If you don’t – get a good realtor.

a. If you hire well – keep hiring.  If not, get a good person who can hire.

The following sections are the ones we did not get to cover in the session. 

Set Goals – next section on this.

Write out your strategy - more 

Write out your plan to implement the strategy  

Have enough money

Page TopGoal Setting

Keep it simple 

Fun – Fame – or Fortune  

Goals work to focus your attention on what you want to achieve.  No more than one page triple spaced.  Keep it short.  Cover only 1 year.  

Goals help you organize the work and organize the staff to achieve the goal.

If you set goals you will also help yourself develop the strategy to reach the goals and plans to implement the strategy will follow naturally. 


I will have a man on the moon by 1970.  John F. Kennedy.  Simple straightforward, but incredibly bold.

I will have five stores each doing $400,000 by 2005.

My profits will be 10% to 15% of sales, after taxes.

I want to have $100,000 in personal income in three years and enough income to support my stores.  Probably need four stores.

For Kaffe Magnum Opus our goals stated in 2001.

1. To be doing 1,000,000 pounds of specialty coffee in four years.

2. To be the specialty coffee roaster of choice to the specialty coffee trade.  This is tough to measure.

Page TopStrategy:

What we are trying to do is come up with items to consider when you are considering opening more stores.
We now have a set of goals and we need to develop a strategy or a method that will enable you to reach the goals.

Lets pick the first goal: 
I will have five stores doing $400,000 by 2005  

Decisions to make:  

Independent or Franchise?

If Franchising to others

  • Cheap Money

  • Cheap Labor

If Buying a franchise think about it.  Are you

  • Cheap money for someone else?

  • Cheap labor for someone else?

What kind of locations

Hub and spoke

My Home Town - saturate it, force others out

  • Mall

  • Downtown

  • Carts in Hospitals

  • Carts in Colleges

Distance from home - do you want to run a company with far flung sites?

  • Ten richest towns in America

Will we manufacture?  Roast?  Grow eggs?

David Bell, Harvard Professor

  • If you retail, retail

  • If you manufacture, manufacture

  • The job of the retailer is to figure out how to get the product into the hands of the lady in the red house on the corner of Main Street.

  • Mixing retail and manufacturing invites trouble

Decide if you are going to be retail or wholesale.

1. If you don’t like sales people
2. If you don’t like to sell
3. Stay retail

Elements to consider: Delivery, timing, service

In wholesale: you go to them.  You seek them out for sales; deliver to them, so distribution is important, as is quality and production expertise.  

In retail: they come to you, your sales growth following the timing of opening new stores.  In wholesale, sales growth is very time sensitive.  It can take a long time.  If you don’t take calls from sales people, you probably won’t like wholesale.

Nothing happens unless you sell something.  

A last word on growth strategies:  

We have assumed that more locations are the path to follow.  There are many more options:

1. More sales to existing customers  
2. More products in existing operations  
3. New methods of selling – web
4. Different Price strategy to expand customer base
5. Higher volumes from existing stores.  
6. Web, web, web, web, web

Example of Strategy: 2001/2002 Kaffe Magnum Opus Strategy to reach 1,000,000 pounds.

1. Move to new plant (done 9/15/2001)  
2. Install new larger batch roaster enabling roast to order (done 9-15-2001)  
3. Trademark Europe (underway)  
4. Expand the sales force and customer service staff (done 2-2002)  
5. Expand web presence to support the sales force (registered 1000 domain names 2-2002)

6. Expand product line to include Chai, Fair Trade Coffee, Organics and Natural Flavors
    (done Feb through May – 2002

Page TopPlanning 

The two key elements of planning are arranging the tasks:

- Sequentially – which is easier since you do one at a time.  Could also be less expensive since you
   have more time to accomplish.
- Or, concurrently – which can be maddening since it puts more demands on you – but things happen
   faster.  And they are definitely more expensive.  

Business plans are for you.  Not for the bank.

So keep it short and sweet.  No more than a page or two.  You have to do the implementation, not the bank.  A couple of key items will suffice.  

I have to admit that I do most of my planning in my head, and I constantly change it.  Times change.  Events change.  So I try to keep it simple. 

A single line: I will open a new store on September 1, 2002 is a simple plan (also a goal), but you know what it means.  It involves a ton of work.

So keep it simple.

Practice Planning: (all of the following activities require good planning.  Set the goal, visual the future, and put the things in place or acquire the goods needed to reach the goal).  

- Chess

- Golf

- Sailing

  • Smooth

  • Heavy weather

  • Perfect Storm was bad planning

  • No weather fax

  • Ran for home

  • Docking

  • Leaving the dock

  • Food for the trip

Page TopConcepts

Commerce Bank: in our area this bank has grown to very large size very fast.  Buildings are identical.  Great concept.  They have coin-counting machines in the lobby!!!!  

WaWa – I mentioned before.  Great concept.  The stores are identical and colorful, bright, with lots of parking.  They are good locations.  Lousy coffee.  

Starbucks vs Manhattan Bagel (two stores with $700,000 my friend has two Manhattan Bagel stores each doing about $700,000, but he still worries about the headquarter problems)   

Wal Mart vs. K-mart

You can see plenty of examples of good look, fit and feel.  Visualize your own. 

Develop your concept either in advance or as you go.  Remember flexibility.  If you like what you do, keep it.  If not – get rid of it.

Page TopLocations

In a single community

          Hub and spoke
          Distance is easier

  In State – will you drive?

          Find DINKS = double income no kids buy specialty coffee

  In targeted communities

          Demographics dictate
          10 richest communities in America  

Type of stores you want

          Coffee Houses
          Mall gift stores and drink bars

  Target sales volume

          If $250,000

Take your time.  Take care.  This is the most important thing you will ever do in business.  Pick you spot well.  Make sure it fits your personal goals.

Page TopMoney

I can’t believe I have gotten this far and not talked about money.

Have enough.  Don’t skimp.  If you are disciplined, then stick to the budget.  If you are not disciplined, make sure you double what you think you need. 

Cash is king.  If you run out of cash, you are in deep water.

More on money. 


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