Coffee Drive Thru Business Opportunity
Coffee is a massive industry not only in the United States, but across the globe. Currently some 49% of all adults in the US drink a whopping average of 4.3 cups of coffee each day. A number that continues to grow year after year. In addition, through new menu additions such as iced coffees and Lattes, more and more teens and young adults are frequenting the Java counters on a regular basis.
For years I have preached to my clients that in all industries there's a dominant #1 and #2 player and for coffee shops its only a matter of time before we had another household name like Starbucks in the coffee shop arena. Ford and Chevy, Walmart and Target, Coke and Pepsi, Levis and Lee's - you name the industry and most can name the 2 dominant players off the top of their head. The 2 dominant coffee shop brands are.... ? Starbucks and... ? Despite my countless promises that there will soon be one, no one seems to be able mount a challenge for that spot - yet Starbucks continues to serve a larger and larger percentage of the worlds' coffee each day
WHY??? Is Starbucks coffee really that good? I don't think so. Are they such great marketers that they have blocked any coffee franchise from ever being a #2? Maybe, but I don't think that's possible in any industry. So what is it and what's the answer to obtaining that #2 spot? While I cannot answer those questions for sure I am going to tell you what I think are the answers.
Timing can be everything for a business, especially when it's a first to market like a Starbucks. The Starbuck's craze came at about the same time the Internet craze came - and with the Internet came this whole new "wired society". The world's pace picked up, during the .com daze millions of people were working insane hours and the super strong caffeine boost became the norm. (hence all the other energy boost drinks on the market these days). But Starbuck's lucky and ingenious timing goes even further than that. During the .com days Seattle was viewed as one of the trendiest, most riotous places on earth as it was home to lots of big .com's and of course right next to Microsoft's home base - as well as being home to the infamous "grunge" music scene. Bottom line - Seattle had it going on and if they were digging the Starbuck's brew so much - it must be for good reason! That is Starbuck's luck. Here is Starbuck's genius.
If the shoe fits wear it right? Starbucks did just that, making sure their coffee shops were not only serving up great coffee but also great music and even the internet via wireless hot spots packaging 3 of the days hottest trends into a single shop. How cool to sit in a coffee shop, listening to cool music and surfing the internet on your wireless laptop. Starbuck's wisely leveraged not only it's innovative menu of coffee drinks, but also Seattle and technology to build it's brand and market share to the giant it is today. But something happened, and strangely enough, Starbuck's seems to be adapting just fine to the changes... But most of those coffee shops competing for that 2nd spot have not.
The novelty of both the Internet and creative coffee drinks wore off. Novelties do one of two things - they fade away, like the Rubics Cube, or they go mainstream, like Lattes and Double Shots and of course the Internet. We stopped surfing the internet just for the sake of surfing the internet and we stopped ordering fancy sounding coffee drinks just for sake of doing that. All the while we are using the internet more and drinking more coffee now than then.
I see too many coffee shop franchises and independent businesses frustrate themselves and grossly inflate their investment costs trying to come up with some way of being a different coffee shop than Starbucks, and they continue to fall short. Some go upscale with trendy artwork, other's go for funny sounding names or drastic Hawaiian or far East themes - just something to be different - yet they STILL can't seem to hold pace with the likes of Starbucks.
The Starbucks model has evolved as far less people are actually sitting down enjoying the atmosphere while enjoying their coffee. While other coffee shops are packing in the seating tables trying to compete at yesterday's game, Starbucks is reducing the seats and making the counters more convenient in places like grocery stores, book stores, airports and even casinos. At the end of the day, when the novelty is all gone, coffee is a drink - not an activity. Americans no longer want to "do" coffee - they just want to drink it while "doing" something else.
Enter The Opportunity for a True 2nd (or maybe 1st) Place Brand
I don't mean to sound like a coffee shop has no future as a business, as that's quite the contraire. They can be and very often are still fantastic businesses. Is there going to be another major household name brand walk-in, sit-down coffee shop like Starbucks? I no longer think so. Is there going to be another major brand in the coffee service business? I absolutely think so.
Some parts of the country have been seeing drive thru coffee shops and kiosks for years now, but none of us have seen them like we are about to over the next few years. Whether you are a new school or old school coffee drinker most likely the morning is your favorite cup and chances are it goes in the car when you head to work. I'm not sure my father can even drive without a cup of coffee in his hand as I've never seen him do it.
In the morning hustle to work, few of us have time to stop, park the car to run in and get a cup of coffee from our favorite coffee shop but we've gotten spoiled on those sweet tastes, so the thought of a regular coffee with cream and sugar from a fast food drive through isn't so appealing either. If there were a drive thru that was ultra convenient and served up the tasty brew you've grown to love you'd probably swing through every day on your morning commute. Apparently most Americans would, and are.
Drive thru coffee kiosks have another tremendous advantage over other full blown coffee shops when it comes to catching the 900lb coffee gorilla. Their typical investment is generally 1/4 - 1/3 that of a full blown coffee shop meaning more investors can afford the opportunity while bigger investors are able to develop more locations. In addition the time to build for a coffee kiosk is typically several months faster than a full blown shop. Coffee kiosks can be shipped just about ready to plug in and start brewing and require about 2 - 4 parking spaces for a location. (When is the last time you saw a business having to compete for a few parking spaces as its retail space?) With a more manageable overhead, coffee kiosk owners are finding themselves in better positions to promote and grow their businesses more aggressively - all lending itself to a very fast paced evolution.
If you are one of the thousands of investors who knows the great margins of coffee but is not comfortable or able to invest the $350k - $1million required for most coffee shop franchises then maybe a drive thru coffee kiosk is right for you. With investment levels more like the $50k - $100k range, a truly useable differentiating factor and a well addressed void in the market place, drive thru kiosks are presenting coffee opportunities to more investors than ever.
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