Economic Crunch: How Will It Affect Our Business?

[javaqueen]

I would love to hear what you think the repercussions of the economy will mean to the coffee industry.

I have my inclinations and will share when the discussion begins to roll.

[Marshall Fuss]

Regina Alleman said:

I am starting a new coffee roasting business. I have been reluctant because of the current economic conditions, but have decided to forge ahead. Any advice from you seasoned veterans would be appreciated.

More than the usual amount of cheap, used roasting equipment will be coming on the market this year. You can save a lot by keeping your eyes open.

[Jason Haeger]

Marshall Fuss said:

Regina Alleman said:

I am starting a new coffee roasting business. I have been reluctant because of the current economic conditions, but have decided to forge ahead. Any advice from you seasoned veterans would be appreciated.

More than the usual amount of cheap, used roasting equipment will be coming on the market this year. You can save a lot by keeping your eyes open.

I concur.

[miKe mcKoffee aka Mike McGinness]

Not just used roasting equipment gonna be available. Picked up a $600 (if new) tripple sink today for $200, yesterday a $1500+ (if new) older 7'x3' True SS single door fridge for $125. Ok, the external skin of the fridge is beat up so I'll likely be in another $100 or so to skin it to match oak cabinets. But it runs! And 18 brand new way cool 27x27 floor ceramic tile table tops for $200 total all 18.

Ah oh, just got the dinners ready call....

Marshall Fuss said:

Regina Alleman said:

I am starting a new coffee roasting business. I have been reluctant because of the current economic conditions, but have decided to forge ahead. Any advice from you seasoned veterans would be appreciated.

More than the usual amount of cheap, used roasting equipment will be coming on the market this year. You can save a lot by keeping your eyes open.

[Joachim Oster]

In tough economic times companies catering to the vices (e.g. liquor, tobacco) are doing good. Coffee is kindalike borderline vice. Add sugar and hot milk and you have creature comfort for the worried and unemployed. Think we will do fine.

[Sam Granger]

I believe that the good espresso cafés will do alright. The ones that have to worry are the mom-n-pop shops that aren't trying to cultivate a café culture or develop their customer's palettes. The quality centered cafés are not just trying to run a business but change the way people view coffee, and if they're successful in doing this they will maintain a steady customer base.

I believe that roasters will do even better. People will start to brew at home more often. Café-roasteries can help people set up to brew at home by selling vac pots, french presses, etc. as well as the beans. Once again the trick is to properly educate these consumers so they can understand the world beyond Folgers.

Just a thought or two,
~Sam

[Kurt Stauffer]

The ability for small roasters to source high quality beans may be in jeapordy. Importers act as banks for roasters. What happens when importers feel the crunch? Big players may be the only ones with the cash to buy premium, stamping out the little guys quest for quality. There also may be a lot of farmers who pull of their coffee trees and replace them with food if they can't find a specialty market.

SamwiseGrangee said:

I believe that the good espresso cafés will do alright. The ones that have to worry are the mom-n-pop shops that aren't trying to cultivate a café culture or develop their customer's palettes. The quality centered cafés are not just trying to run a business but change the way people view coffee, and if they're successful in doing this they will maintain a steady customer base.

I believe that roasters will do even better. People will start to brew at home more often. Café-roasteries can help people set up to brew at home by selling vac pots, french presses, etc. as well as the beans. Once again the trick is to properly educate these consumers so they can understand the world beyond Folgers.

Just a thought or two,
~Sam

[Mike Spence]

This is one of the things I am hearing more of. Basically, when times are good and money is flowing, everyone can open a store and keep it sustainable in the market (take that with a grain of salt :) ) . When the belt tightens, the stores that are not on top of customer service, quality etc are the first to close. Those customers don't vanish - they just head to another store. I think we might see some consolidation in areas and a little of the "strong survive" syndrome.

SamwiseGrangee said:

I believe that the good espresso cafés will do alright. The ones that have to worry are the mom-n-pop shops that aren't trying to cultivate a café culture or develop their customer's palettes. The quality centered cafés are not just trying to run a business but change the way people view coffee, and if they're successful in doing this they will maintain a steady customer base.

I believe that roasters will do even better. People will start to brew at home more often. Café-roasteries can help people set up to brew at home by selling vac pots, french presses, etc. as well as the beans. Once again the trick is to properly educate these consumers so they can understand the world beyond Folgers.

Just a thought or two,
~Sam

[Kurt Stauffer]

If you roast coffee or buy coffee or milk or any other commodity product and you can afford to stock up now is the time. Just when everyone is talking "deflation" (also know as "capitulatating") you will ALWAYS see a dramatic and often violent reversal of whatever trend becomes widespread. Therefore, it is my opinion and that of many other investment gurus not found on CNBC or other popular media, that all commodity classes will generally see a nearly vertical ascent sometime in the second half of 2009. If you don't believe me, put it on your calendar. Say around September or October. "C Market" Coffee prices will probably go to at least $2/lb with premiums reaching an average of $4/lb. Inflation begins now.

[Mellisa]

I replied on here when the stock market first started declining. What we have seen in Iowa this month tops all the past months for a decline. I have had days where receipts were $30 or less! My breakfasts and lunches are almost nil despite beginning a new ad campaign touting breakfasts for $4 and lunches for $5 (tax included). Coffee sales are down too, despite consistantly good coffee....

[Jason Haeger]

Things that work for a coffee retailer may not translate well to a food cafe that serves coffee. As often as I've seen people try to assume they are the same thing, they are not. Restaurant sales will see a decline on the whole in times like these. I know I don't go out as often. Why go out when I can make better at home for less? Dining out doesn't fall under the category of "affordable luxury" the way coffee does.

In any case, I still wish you luck.

Mellisa said:

I replied on here when the stock market first started declining. What we have seen in Iowa this month tops all the past months for a decline. I have had days where receipts were $30 or less! My breakfasts and lunches are almost nil despite beginning a new ad campaign touting breakfasts for $4 and lunches for $5 (tax included). Coffee sales are down too, despite consistantly good coffee....

[miKe mcKoffee aka Mike McGinness]

While my cafe's focus is coffee, our own roasted coffees, we also have limited breakfast menu and more expanded lunch menu. I too have seen major declines in back of house (ie food sales) with swings as much a 1000% day to day recently. Couple weeks ago back of house was ~$350 on Monday, the next day $37.50! Makes staffing challenging to say the least. Average daily back of house around $175 the last couple months compared to averaging close to $400 a year ago. Consequently while I used to staff 4 during lunch hours now it's 3 M-W-F and 2 Tues and Thurs. The good thing is front of house (espresso, pour-over bar and press pot to order, teas and support pastries etc.) have remained decent and whole bean sales are slowly increasing.

[TIMBURR]

I agree Brady. I can't speak for the rest of Australia, but in Queensland people are slowly becoming more conservative, not enough to notice a huge change, but when and if the change does happen, I'm hopeful people will return as they adapt. The media seem to be blowing things up worse than the current circumstances. I have no doubt it will get bad, but its nowhere near as bad as they are making out. I was speaking to a cafe owner yesterday, who reluctantly sold her cafe because her husband has become paranoid about the economic state. Shame they were doing realy well. I've opted to open my espresso bar in the business heart of my town. Hoping the Cops, lawyers, real estate agents and government workers will get me through.
Probably the biggest threat affecting coffee in Australia right now is the price of green beans. Our aussie dollar is in the low 60's and in december aloan my roasters green-bean broker's prices went up 3 times and no doubt will have a gradual continue up. Coffee consumption is still doing well, just feeling the squeeze on the profit margin. One day at a time though right?....