Welcome to Coffee Franchises . Have you thought about setting up a small cafeteria but you don’t know if it’s a good idea? Do you think that franchises monopolize the entire market? This article is for you!
We are going to give you the reasons why the big franchises, even with all their capital, are afraid of small coffee shops.
While franchises are popular for being a profitable long-term investment, there are still many factors that can put capital at risk. One of those is the small coffee shops.
Let us tell you a little more and show you why it might be a better idea to think about setting up your own coffee shop .
WHY ARE BIG FRANCHISES AFRAID OF SMALL COFFEE SHOPS?
Let’s start by debunking a great myth: “franchises are the safest way to invest your money.”
Although many of the big franchises claim to be safe and profitable, we must not forget that they are still like any business, and that the possibilities of going bankrupt are always there.
We could make a long list of franchises that have gone bankrupt (the reasons obviously vary), but the danger of investment being lost is always there .
Currently, coffee franchises fear small coffee shops because they are monopolizing a large market, since starting a coffee shop from scratch is not as complicated as they paint it, and the profitability can be as good as any of them.
In fact, the director of Expo Café, Marcos Gottfried, did a study where he pointed out that in Mexico there are more than 60,000 coffee shops with aannual growth of between 5% and 10% , certainly nothing to envy to a renowned franchise.
To this e must add that it is much cheaper to invest in your own cafeteria than in a franchise one, and that is for the following reason:
It depends on the franchise, but only for the permission to use its name, that is, to have a license to brand use, you must pay from 100 thousand to more than one million pesos . To that add real estate, machinery, premises, etc.
ADVANTAGES AND DISADVANTAGES OF COFFEE FRANCHISES
Before thinking about buying a franchise, it doesn’t matter if it’s for coffee, food, desserts, etc. You must take into account the following common aspects of every franchise:
ADVANTAGES OF ACQUIRING A RECOGNIZED COFFEE FRANCHISE
- Exclusivity zone: All franchises respect a sales distance, therefore, for your region you will be the only one that sells with that brand.
- Advertising and marketing: You will have advertising campaigns that will help increase your sales.
- Before opening, a market study will be carried out to choose the best location.
- You will have technical support, so it doesn’t matter if you don’t know anything about the business.
DISADVANTAGES OF ACQUIRING A RECOGNIZED COFFEE FRANCHISE
- The costs of a franchise are too high.
- Coffee franchises are very demanding with their franchisees, they usually ask that they have even more money than necessary, and that they prove economic stability.
- You have to pay a monthly percentage of your permanent sales (the percentage is provided by the franchise).
- You are the owner, but you cannot make any decisions without first consulting the franchise.
- You do not own the brand, they are only lending it to you.
- You can’t implement any new ideas, basically you won’t have any important control over the business.
- A franchise is a chain of businesses, any damage or disagreement with the brand could represent a problem for the entire chain of businesses.
ADVANTAGES AND DISADVANTAGES OF SMALL CAFES
Starting a coffee shop from scratch can have some drawbacks, but unlike franchises, they aren’t hard to fix.
DISADVANTAGES OF OPENING A SMALL CAFETERIA:
- If you don’t know anything about the business, you are likely to make a lot of mistakes.
- If you do not know how to choose the right place, it is most likely that you will have few sales and do not reach many customers.
- You won’t get as much publicity as you would with a franchise.
ADVANTAGES OF OPENING A SMALL CAFETERIA:
- The initial and final investment are much less than those of a franchise.
- You can even start with a minimum capital, and invest as your cafeteria grows.
- All profits from the first day will be only for you and your business.
- You will be the absolute owner of everything , you will not have to answer to anyone.
- You can implement the sales techniques that you think are appropriate to increase your sales.
- You can implement the cafeteria concept that most attracts your attention.
- You are free to choose your suppliers, your coffee machine, your employees, etc.
- If you have no idea how to start, you can look for one of the many courses that exist to start your business; for example, the 10 secrets to start your coffee shop webinar .
- Small franchises currently have very favorable annual growth, so you are more likely to grow in a short time.
IS OWN COFFEE SHOP PROFITABLE?
If you are an entrepreneur, you have surely asked yourself a question similar to this: « Is it profitable to start a cafeteria from scratch? «.
And if your answer was the following: “the competition is a lot, surely it is ”. Let us tell you that this is not the case, own coffee shops, regardless of whether they are large or small, are covering a large part of the market .
This is because little by little they are innovating the way they sell coffee , something that not all franchises do.
In other words, if you start your cafeteria from scratch, you can do it using a popular concept that many people like, such as “Harry Potter”, or opt for a Vintage, rustic style, to give a few examples. In this way, your cafeteria will be a new place that will attract the attention of many customers.
Renowned franchises, such as Starbucks, Café Punta del Cielo, Italian Coffee, among others, need a lot of investment (the cheapest costs more than half a million), and a long time to recover that money.
However, with your own cafeteria it is quite the opposite. You can even start with up to $110,000 MXN, and grow quickly and safely. The profitability is very good, and if it is managed correctly, it can generate that of a franchise branch, or more.
HOW TO START A COFFEE SHOP FROM SCRATCH?
To start a coffee shop the right way, you need the right advice, because avoiding common mistakes will save you a lot of money.
You should also know how to manage your profits and use the best sales strategies to grow gradually.
The first thing to start your cafeteria is to know how to choose the best location, make a small study of the possible areas and choose the best one.
After that, choose your coffee shop concept and get to work. Something common when starting out is not knowing which coffee machine to buy or where to get it. Many make the mistake of buying them for very high prices or poor quality, something that only means “waste of money”.
If you want to know everything you need to start a cafeteria from scratch, we recommend you continue reading our article called: