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Coffee franchises are springing up in almost every town and city worldwide. It
is a tough business to be in when you consider the long hours, health and safety
regulations and numbers of staff required.When potential franchisees first look
at this business they are blown away by the profit margins. Surely any business
that has such high margins built in must be profitable?In reality it is not as
simple as that. For a coffee shop to be truly successful it needs to generate a
huge number of sales to cover the fixed costs. The fixed costs are very high
primarily due to the fact that business premises are required in shopping malls
and busy high streets. This means that over half the turnover goes towards
covering the rates and rents. A coffee franchise needs a higher number of
employees then most franchises due to the number of hours the business has to be
open. The majority of turnover is done either before work starts, at lunchtimes,
after working hours and during the weekends. Unlike some other franchises this
is definitely not a nine to five business!Staff costs are very high and then
there is the problem with keeping them. Most employees in a coffee shop
franchise are only doing this work until they manage to get a better job! This
means that there is a constant turnover with staff and this can be a nightmare
to manage. Most new members of staff will require some training.A coffee
franchise usually sells a lot more then just coffee. Most also supply
sandwiches, cakes, pastries and other snacks. On a busy day it is far too easy
to run out of supplies too early whilst on a quiet day some of the food might
have to be discarded. The regulations involved with selling food to the public
means that detailed records have to be kept.Competitive forces are also at play
with a number of new fast food franchises entering the scene as well as
speciality sandwich makers. These are all conspiring to take away some of the
regular trade from the coffee franchises.It is still possible to make money with
a coffee shop franchise and to achieve this needs careful planning and the right
strategy. Premises must be found that are on busy thoroughfares for the right
terms. Only the best coffee should be served. Not all coffee shop franchises
adhere to this simple rule! Some even restrict you into buying coffee beans only
through their own supply chain. This can be troublesome especially if the tastes
in your area are varied and different.The ideal solution is if there is a right
balance between the coffee you have to buy from the franchisor and the
flexibility to source it elsewhere. This also helps to make the business more
profitable as most franchisors charge a premium compared to sourcing and buying
quality coffee beans elsewhere.If you are prepared to work unsociable hours and
have people skills especially with regards to dealing with employees, then a
coffee shop franchise might still be the right business opportunity for you.