Why Do Coffee Shops Fail? – Unveil The Truth (Explained)

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You may have seen a coffee shop next to your favorite grocery store. You thought, “I’ll stop by there one day.” It’s been months since you saw it and now the coffee shop is closed. The question remains: why do coffee shops fail? Read on for detailed explanations!

Why Do Coffee Shops Fail?

Here are some typical reasons behind the falling of small coffee shops after a short period:

Overall Lack Of Knowledge

A lot of people avoid doing research and development because they think it’s just going to take too long. They’re wrong! Researching the market, understanding what your customers want – are all important steps in running any successful business venture, even a small coffee business! 

According to Forbes, although 80% of small businesses get through the first year of operation, only half of these numbers survive in the following year. 

Here are some fields that you need to do deep research before running a coffee shop:

  • Funding Analysis – To run a successful business, you must understand your profit projections and know when they will be broken. 

This way, there won’t be any surprises on the financial side of things for yourself or other people involved with running this new venture into entrepreneurship!

  • Market Analysis – What does your competition look like? What are the demographics of an area in which you plan on developing a new business?
  • Location – Zoning restrictions also play a part in what kind of businesses can operate successfully within certain areas, so make sure any potential locations meet those requirements before moving forward with purchasing land or construction!
  • Structure – Ensure the business structure meets your demands.
  • Product – You know that you’re selling coffee but don’t want to get lost in the process. Hire an industry professional for help with sourcing and execution so your baristas can focus on making great drinks!

The perfect coffee shop is a balance of great taste and customer service. Coffee can be tricky, but if you have the right knowledge, it will sell itself! If you’re looking for a good cup of joe, it’s important to know where your coffee beans come from. 

Making contact with wholesalers and roasters in the area can be step one when sourcing off-the-shelf products or home brewing equipment like grinders and boilers. 

When you’re ready to start up your own business, it’s time for one last set of refined skills, namely: making the perfect cup and studying familiar drinks that people will love!

Read more: How to attract customers to your coffee shop

Bad Location

Your location is the number one reason people come back to you; try to choose a location as convenient as possible! Allegra’s statistics show that convenience plays an important role in customers’ decisions on whether to come back to a certain shop!

You’ve got a coffee shop business, and you’re thinking, “I’m going to need some good sites.” But there are no more! All the big names have taken them already. 

Let’s be more flexible and creative! You have a high-rent spot on top and lower-priced options at the bottom. On this scale, the in-between is the clever choice! Remember that you do not need to opt for the most expensive site to succeed! 

Needless to say, location competition is another vital factor you must consider! Think about how competitive the market is for a second! Coffee shop owners need to think outside the box and be eager to try new things. 

Still, your customers should come in person or through their doors if you want them there! You never open a vegan restaurant at an auto parts store either, so choose carefully on what avatar will best suit the business as well as YOUR clientele’s needs!

Competing With Others

It’s tough to make a name for yourself in this coffee industry. With 70% of sales belonging to just 50 shops, it’s no wonder that competition is fierce! This is also the reason why many coffee businesses give up on the race within a short period. 

The key to success in this competitive market is able to stand out from the crowd and make your own name. If you do so, there won’t be much that can keep you down! 

Besides, the best way to get ahead of your competition is by studying them. You need a plan in place to identify what opportunities they are not filling and how their business may be different from yours. This will give you an advantage over other companies vying for the same clientele demographic as well!

For example, you can take advantage of your competitors’ lack of customer loyalty programs by offering something that will stand out. If they don’t have a program, it’s time for your business to shine!

Lack Of Unique Experience

The best way to stand out in a crowded market is by offering something that customers can’t get elsewhere!

The more you know about your competition, the easier it will be to stand out. With a better understanding of what others are doing in this community and what they’re missing from their businesses or offerings – don’t worry: there’s always room for improvement! 

You might attract potential customers by filling that gap with something extra-special just made especially for them!

Nevertheless, you could make your business unique by style and shape it with a new theme! 

High Rate Of Employee Turnover/Burnout

The best employees are the ones that love what they do. When you have a good workplace, happy people accomplish more and stay longer. In contrast, you can’t expect the best work from unhappy employees. They might even leave in droves!

When an employee walks out the door, it can be a costly endeavor to replace them. On average, hiring new staff costs around $4k – 8k,  which is more than many businesses spend on their benefits packages! Imagine the cost of spending that much several times a year. It adds up fast! 

Employees should have a workplace that they are excited to come in and be part of, not just another job. 

Make sure you listen thoroughly so their voice can truly resonate with yours through the shop culture! Give your newest team member a chance to be successful. Make sure they know what is expected of them, provide support when possible, and don’t hesitate to provide feedback on their performance or ability as an employee.

Besides, offering them a free drink or meal during the shift can also help boost their mood and energy to work more effectively!

Providing A Bad Customer Service Experience

When interacting with businesses, it’s not just the quality of products that matters – customer service is also crucial. Imagine what it would be like if you never had to put up with bad customer service again, the times when a rep was so kind and caring. They made your day just by listening!

We all want great experiences from our favorite businesses, but too often, that isn’t real because of subpar-or worse yet–terrible reps who don’t care at all about making sure their customers are happy enough!

You might be surprised to learn that your baristas are more important than you think. They provide a vital service at every location, and it’s their job not only to make sure everything goes smoothly but also to get acquainted with every guest who walks through those doors!

Word of mouth advertising is a powerful tool that can do wonders for your business with the power to connect you directly and help spread positive reviews from satisfied customers. 

Similarly, negative feedback about your business’s bad customer service can possibly destroy the brand’s reputation immediately! This is why you must train the employees to be professional in their services to the customers.

Falling Behind the Times

As a business, it’s important to stay up-to-date with modern practices. That means going for an older style in your branding can work well if done correctly – however, make sure you don’t fall behind by sticking too rigidly to these traditional ways of doing things.

Moreover, the days of the old-fashioned store without credit card machines or social media accounts are quickly fading. Every business has to offer convenience in order for customers to come back. If you make it as easy on them and painless, the likelihood of buying is much higher!

Social media – an ultimate weapon for businesses nowadays to stay in touch with your customers and make sure they don’t forget about you.

Low-Quality Equipment & Ingredients

You know that it takes more than good coffee to make a great business, but if you’re serious about your customers’ experience, then investing in high-quality equipment is essential. You’ll want an espresso machine and grinder for when people come into a visit or order their drinks right away so they can taste the difference right from the start!

Choosing the least expensive option could be a terrible mistake. While it’s easy to replace or repair cheaply made equipment when something breaks, buying higher quality products in the first place is cheaper as you do not need to replace them in the long run!

Failure To Market

Marketing is the key to success. Without it, you may end up with a half-built business and no one at your doorsteps! 

The best thing you can do for your business is spend time on marketing, whether it’s social media, online ads, or even just knocking out some side projects and promotions to make an impression with potential buyers!

You are losing out on sales because you’re not marketing! Each day is a step closer to running out of capital, and that will hurt your bottom line. It doesn’t have to be this way; with the right knowledge about social media platforms like Instagram or Facebook Ads Manager for Business Account, you can find your business’ perfect match in less time than ever before.

How To Have a Successful Coffee Shop?

After learning about the remarkable mistakes and failures that the majority of coffee businesses normally make, let’s move on to see what makes a successful coffee shop!

Find A Good Location With Reasonable Rent

Some people find themselves in a coffee shop for any number of reasons. Maybe they’re looking to socialize and catch up with friends, or maybe you need some work done on that report while sipping your favorite beverage! 

Whatever the case may be, before running your own business venture, consider why this type of business has become so prevalent all over town. 

When selecting a location, think about where potential customers will go in order to enjoy their coffee and what types of people visit your favorite spots? You might want something with plenty going on nearby or within walking distance so that everyone can easily access the place!

Consistently Serve A High-Quality Product

A study by the National Coffee Association of America found that specialty coffee and tea drinkers want more than just a mug o’ joe. They are constantly looking for new flavors, which is why you can find gourmet drinks in nearly any type or flavor!

It seems that specialty coffee has gone from being just something you drink during your morning routine to a whole new world of possibilities. Not only have the different types expanded, but there’s also an option for everyone with CBD infusions or RTD beverages!

Sustainability is a hot topic in the coffee industry. In order to be sustainable, businesses have their practices and policies to minimize not only environmental impacts but also provide economic benefits for communities that they are doing business with or affecting through fair trade agreements. 

The pitfalls of a coffee house owner are many. With the demands for quality products and attention from discriminating customers, it is difficult to attract regulars without consistency in service or keeping up with trends.

Provide Great Customer Service

To become a successful coffee shop, it’s important to have friendly and welcoming customer service. Counter service accomplishes this by generating revenue upfront with the quick turnaround time on orders, as well as minimizing labor costs for you when busy periods come around.

Table service is the best way to go if you’re looking for a more personal, customized experience. Your guests will feel like they are right at home and enjoy interacting with their server as well! With table service, you have the opportunity to offer more upsell and may benefit from it.

Create A Trendy, Relaxing Café Atmosphere

It is important to make customers feel at home in your coffee shop. Researchers have found that most consumers indicate familiarity, the overall atmosphere, and comfort as the main attraction of a coffee shop.

A place to enjoy coffee and Conversation, Starbucks has been around for over 30 years. A major contributor to its success is that they provide an atmosphere where customers feel at ease while waiting in line or sitting down with friends inside of one of their stores – which now boasts more than 8000 locations worldwide!

Offer A Loyalty Program

People love to feel appreciated and rewarded. That’s why customer loyalty programs work so well! Rewards keep them coming back for more, enticing friends or family members in the process as well. A loyalty card can improve the business bottom line:

  • Encouraging loyal customers to visit more often
  • When you have a small business, it’s important that the odds of your customer choosing you over competitors are improved.
  • You can help people spend more money at any given time by providing them with great experiences from start to finish.

You can get your loyalty program off the ground in multiple ways. If you go with traditional cards, make sure they’re durable and have prominently displayed business logos, so people know where their purchases are going! This is all possible with the help of newer digital technologies. 

Customers can save their information automatically at the point of sale, eliminating one less thing in the wallet!

Use Trends And Social Media For Marketing

It’s important to stay on top of the latest trends in order to make sure your brand is ahead of its game. After conducting research, we recognize that coffee and food are the most popular things on Instagram!

Customers love viewing beautiful photos of food and coffee on Instagram! Believe it or not, they can help promote your business for free via their posts! Just make sure that your location can be tagged, so they know where to find what you offer – just put some coffee-related hashtags at the end of any post with this type of photo.

Understand What You Are Really Selling

Some businesses don’t know what their customers want, and so they offer an unenjoyable experience. 

Coffee shops are often the most popular place in town because they offer more than just a place to get caffeinated. Not only does your customer need food (a necessity), but also any other comforts! 

By understanding your customers’ needs, you can better construct an offer and make decisions that keep them coming back for more of what they like. This way, the coffee shop can maintain its success!

Final Thoughts

Overall, there are plenty of answers to the question, “Why do coffee shops fail?”

If you want to have a successful coffee shop, make sure that people are coming back for more. If they come in and the food tastes good, or it’s a different experience than what they can get at home. You need to give them something special every time they show up. 

Coffee shops fail because customers don’t return knowing there’s nothing else on offer besides their favorite drink. It doesn’t matter how delicious your coffee tastes if no one ever buys them from you!

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Almost 20 years already spent committed to coffee and more than 3 years of experience as a barista at Starbucks. Madelyn Doyle graduated with a Bachelor’s Degree in Nutritional Science from the University of California and finished the Coffee Skills Program at the Specialty Coffee Association (SCA).