Origin Coffee in Shoreditch has a customised black La Marzocco Strada. The shop is partly a showcase for their wholesale clients.<\/figcaption><\/figure><\/div>\n\n\n\nBeing an entrepreneur<\/h3>\n\n\n\n Now businesses need to offer a proposition that is some combination of perceived greater quality, faster or cheaper than their competitors. And businesses often thrive when they work out how to offer two of these factors.<\/p>\n\n\n\n
Many coffee shop make the mistake of offering all three.<\/p>\n\n\n\n
Some of you believe that one should offer all three, and at a theoretical level I would have some sympathy with you as its a noble aspiration and a great starting point for working out where to take your business. But when it comes to the nuts and bolts of running an operation and, importantly, when you wish to trade at a profit, you can\u2019t just offer speed, low pricing and quality to your customers without financial consequences.*<\/p>\n\n\n\n
If you do, the resources required to deliver this proposition will eat up your profit. And this is pretty much where a good portion of the industry is right now.<\/p>\n\n\n\n
Stop benchmarking and return to core viable propositions<\/h3>\n\n\n\n It is, of course, competition that has got us to this point, but we\u2019re not sure that it is market competition. Opening a coffee shop has relatively low barriers to entry, so many people have been able to do it. Unfortunately a large number of new proprietors seem to have taken an approach of, \u201cThey look busy, I\u2019ll do the same, but sell it a little cheaper\u201d. The same applies to roasters. This is not a good business strategy, and we hope that we\u2019ve now got past this point.<\/p>\n\n\n\n
There is currently some discussion about whether the market is large enough to support the number of coffee shops and roasters currently operating in the UK. Nobody has the data necessary to be sure, so I wouldn\u2019t trust the chitter-chatter on this matter. But it does seem highly likely that for all these businesses to survive, and even thrive, they are going to have to focus on distinct market niches.<\/p>\n\n\n\n
In practise, this means a variety of propositions derived from the permutations of fast, cheap, and of quality:<\/p>\n\n\n\n
Fast and cheap (lower quality)<\/li> Fast and quality (more expensive)<\/li> Cheap and quality (slower)<\/li><\/ul>\n\n\n\nThe three ways The Iron Triangle concept proposes speciality coffee propositions can develop.<\/figcaption><\/figure><\/div>\n\n\n\nGive yourself \u2013 and your competitors \u2013 a break<\/h3>\n\n\n\n We\u2019ve written this post because it is our current estimation that key constraint to price increases exists inside the competitive culture that exists within the coffee community\u200a\u2014\u200anot consumers\u2019 willingness or ability to pay.<\/p>\n\n\n\n
That cultural pressure makes it difficult for businesses to evolve their propositions into these niches. For example:<\/p>\n\n\n\n
When a business starts buying cheaper coffee the industry rumour-mill starts and an opinion emerges that the establishment is going downhill. The fundamental measure is, of course, whether the quality and pricing is right for their customers, not the industry\u2019s baristas.<\/li> Or, when establishments raise prices, other proprietors start making comments like, \u201cI can\u2019t believe that get away with charging that much for x<\/em>\u2019. The appropriate response ought to be a re-evaluation of what the market will yield.<\/li>And, when a shop pushes upmarket there is often implied criticism that they think too highly of themselves or an assertion that carries a moral dimension that they lack \u2018 accessibility\u2019. Obviously, we should all be working out how to charge our respective customers more almost all the time.<\/li><\/ul>\n\n\n\n