Choose the Best Location

As you search for a coffee shop location, take into consideration the value of a location rather than the price.

Pop Quiz:

Which of the following coffee shop locations is a better value?

A) 1,500 Ft2 @ $10 Ft2 location that attracts 150 customers daily.
B) $20 Ft2 location of same size that attracts 300 customers daily.
C) Both make the same amount.

If you said “B,” you’re right. In this scenario, that extra $1,500 you commit to pay each month will generate approximately $5,000 extra gross income each month. This calculation is made at reasonable coffee shop product prices and conservative profit margins.

Even considering extra staff hours and demands such as electricity and water, most of that money will end up in your pocket at the end of the month.  That’s a good value for your investment dollar.

So how exactly does one estimate the number of customers that may visit your coffee shop location?

Texts recommend that an average retail coffee shop visited by .2% to 1% of proximate vehicle traffic.  This figure is higher for pedestrian traffic and areas with better visibility or access. As the law of averages goes, this is reliable.

For the better accuracy, you must make adjustments for:

  • local area demographics
  • visibility of the location
  • traffic patterns
  • accessibility, and
  • competition.

If a location has nearby competitors, take a seat and count the volume of customers they serve at high and low times of the day.  Check out different days of the week too.

Create projections for low, moderate and high volume scenarios. Develop a response to each of these situations and be prepared to act. The stress and uncertainty often associated with financial planning of a new business will be reduced when you have a response readied.