Check out Wake Oasis Coffee most recent podcast episode here:
Jeff Vojta from Dilworth Coffee – www.dilworthcoffee.com
Paul Peterson Owner of Wake Oasis Coffee – www.wakeoasiscoffee.com
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Paul Peterson:
Welcome. Welcome. Welcome. This is the roast brew sell podcast. This is the coffee business podcast for those interested in the coffee industry. From the business side, from the consumer side, the roasting side, we’re going to answer all those questions that you have, that you might not be able to find answers to elsewhere today. We’re going to ask the question, I love coffee, should I open a coffee shop? Shop coffee is a passion business. And today we have Jeff Vojta with Dilworth coffee.
Jeff Vojta:
Jeff Vojta with Dilworth Coffee, pleased to be here.
Paul Peterson:
And Paul Peterson with Wake Oasis Coffee in Apex, North Carolina. We’re going to be answering the question “I love coffee, should I open a coffee shop?” Jeff, should we open a coffee shop? If you love coffee and you have a passion for that product?
Jeff Vojta:
Well, it’s one of the first things, you probably want to like your product that you’re selling to get started, but there’s, there’s a lot of other things. And in order to make a coffee shop a success that you need to be good at doing so loving coffee’s key first ingredient may not be enough.
Paul Peterson:
Okay. What else do you think you need to have? What’s important. And, and for those who are looking at getting into it, because they have a passion for it, what separates those shops were being successful versus the ones that ended up being unsuccessful or not lasting?
Jeff Vojta:
What I’ve seen over the years is, a lot of people love coffee. They love talking to people. They love the coolness of hanging out, talking to people over current events and coffee. Running a coffee shop is like any business, whether it’s for profit nonprofit, there’s just, there’s a lot of details and headaches in order to ensure that you open up on time every day that you closed the shop, things ready, staffs their inventory. And, a lot of that stuff, not all of us are born accountants or CPAs who know all of this stuff or come with an MBA. Sure. It takes some research. In other words,
Paul Peterson:
I feel like that’s when I when I bought our first shop and then we opened up the second one, , we put a lot of effort into developing our business plan and for me, I always enjoyed coffee, but I didn’t have some lifelong passion into it, but I always enjoyed how coffee was a vehicle for community. How was a vehicle for people, how people could gather enjoy themselves. It seemed like one of those things that so many other positive aspects kind of culminated into coffee. And so to me, that’s what I enjoyed. And so when we were working on our business plan, it was looking at, okay, well, does this place facilitate those values? what are we going to be serving there? Who’s our community. I think it goes back to the five that we talked about in episode one which we’ll provide a link to in the show notes, but the idea is, okay, you love it. How are you going to make it successful? Because the reality is, is a slow coffee shops don’t stay open. So when the passion aside from the passion, what else do we do?
Jeff Vojta:
Right now? I mean, very good questions, policy. I look at this and one of the first and we come back to our five PS product place, people, promotion, profit, and all of those are vital to ensuring that you’ve got a great business and knowing that it’s running. So you love coffee, you may love a particular origin of coffee, but is that enough or the, where do you want to locate your shop? are there going to be enough customers back to your people competitive, who’s going to want to come in and drink or buy that product? Correct. Are they willing to pay there, if you get great, wonderful coffees and they’re all a hundred dollars a pound because you want to really help out farmers and stuff, you may not find customers willing to pay, 10 plus dollars for a cup of coffee. It’s. So again, it’s all important, but it’s, it’s good to know where it’s up front and that may be a portion of your business, but can it be all off?
Paul Peterson:
Makes sense. And I think one of the things that I realized very quickly when I got into the coffee business was about 25 to 30% was coffee related. And I would probably say a manager’s job as well is directly coffee related. You have, you obviously have your roasting, you’re going to be pulling shots. You’re going to be doing product selection in the very beginning. But once the product is selected, a lot of that is, is more day-to-day operations. You’re not really doing, the coffee bean R and D and things like that on a regular basis, but you’re really going to be spending a lot of time on people. So how are you interacting with your customers? How are you promoting? How are you marketing? How are you bringing them in? You’re going to be spending a lot of time on your staff, happy staff equals happy customers.
Jeff Vojta:
So how are you helping them be successful and have the tools to do what they need to be able to do, to help customers have the best coffee experience possible. And I think the other side of it is you’re going to be angelic, working with the people side, working with your vendors, making sure that you have good relationship with them. There are going to be issues that pop up, no relationship is going to be perfect, but how do you resolve those issues? And I think being able to have those relationships are important. I think one of the other aspects of coffee, business ownership that people sometimes ignore when they’re so focused on the passion side of it is they forget about the business side of it. I personally, being financial side of is not something that I enjoy doing.
Paul Peterson:
I don’t enjoy looking at P and L’s, I don’t enjoy the bookkeeping side of it. So I hire a bookkeeper because I understand that’s not one of my strengths. I love the people side of it. I enjoy the coffee side of it, but you have to figure out how to be successful. How do you kind of watch your back and take care of those other aspects? Because I think if you start ignoring the people, when you start ignoring the finances and just focus on just the coffee, you might have delicious coffee, but your finances might be a mess and you have no customers. And you’re just not going to be open very long.
Jeff Vojta:
How many of us go in there knowing how to schedule, how to hire staff, how to schedule this stuff, how to deal with HR issues. I mean, most of us probably didn’t go to school to be an HR professional, but that’s going to be one of your many hats you’re going to wear. Correct. And then you’ve got to pay these people, which means you gotta have a payroll, you gotta have dealt with taxes and a bunch of forms. I mean, we use payroll service because I did not want to mess that up very early on to keep all that straight, the bookkeeper. I didn’t want her to worry about doing payroll tax returns.
Paul Peterson:
Yeah. And you’re even CPA in a prior life.
Jeff Vojta:
Yeah. Yeah. And I knew right away, that is not what I want to be doing all day. But then there is supply chain management. I mean, my sister-in-law went to school for that. They have degrees and I’m like, well, how does that work there? But very quickly learning how to deal with minimum orders from the bay greys and the dairy and the deliveries and adjusting holiday schedules and things is like, I didn’t really know you had to be an expert at that, but quickly learned that one. Yeah. If we’re going to be open, we need to make sure we got product in the store and, and how to handle stuff when people are out. So, these things, this is just part of everyday part of running a business and whether it’s coffee or any business, these are all bottling.
Paul Peterson:
I think that, that makes sense. I think that it’s, so I have a lot of hobbies from riding bikes to working out and going to the gym. And, I, I had always enjoyed doing coffee stuff and that was a hobby of mine. And I’ve always found it interesting. The people who could successfully take the leap from having a, a hobby that they could enjoy to monetizing that in a way that added value. I think, unfortunately what you see are some people who, and we can talk about some of the reasons why somebody would get into a passionate business or, or try to turn their passion into a coffee shop. But I think unfortunately what you see are some of those people who go in with very rose colored glasses and they lack a certain realistic perspective of what the life is going to be like for people. And so I think you have some people who maybe they get into owning a coffee shop because they just love coffee. They love the process of finding the best beans and figuring out the best way to, to brew whether it’s a poor or whether it’s drip and different types of pour over machines. And really like the aspects of like all of that.
Jeff Vojta:
Yeah. And that, and I liked doing that too. That’s fun. That’s, that’s one of the more interesting parts of the jobs. And I’ve seen a lot of people of our industry. If they really have a deep passion for that, there’s other ways they can explore and work with that passion, maybe not opening a coffee shop, it’s, it’s keep it some degree is a hobby and an extension of the hobby. And whether or not you want to write blogs, you want to research stuff. I mean, I know people have small roasters and their garage and, they’ll buy a couple of beans and they run small internet stores and some stuff, and they get to experiment. And, and, it’s basically just em, in the business, maybe a little bit of other help, but it’s not like, well, let me go sign a lease that I’m going to personally guarantee. So if it, if the business can pay for the rent, I’m going to have to, pull out my personal checkbook and write the check for the rent.
Paul Peterson:
Scary. It’s scary. And I think there’s also the very, the very there’s a very firm reality to knowing that the payroll that you have, you are responsible for other people’s livelihood. And that is something that particularly on the heels of, of, we just are coming out of 2020 that was a very firm reality, how do you make payroll when a revenue isn’t quite what it was. I think a lot of shops were able to, and some weren’t able to, but even if you were able to do that, you constantly had that thought like, okay, well, how do I make sure I maintain this? How do I take care of the provide security for the employees that I have? Because that’s a pretty big responsibility.
Jeff Vojta:
We took it upon us to take care of our team and, and that gets into budgeting and cashflow management and, working with a really good financial advisor to help you plan and make sure that you don’t run into that problem. And you take care of these people.
Paul Peterson:
Yeah. And so I think that’s just one of the key aspects that people need to be aware of, as you’re getting into a passionate business, just recognizing that there are going to be some greater responsibilities that that are just going to be givens, that you’re going to have to accept. And I think the rent is going to be one of those things. I think providing for payroll is one of those things I think going on to one of the other reasons that I think people might look at opening a passion business, which they might want to rethink this is, I just think it’d be a cool place to hang out, talk to friends and have my friends kind of hang out up there. And it just be kind of a, a gathering spot, almost like a club for me and my people. And I’ve seen people do this with coffee shops. I’ve seen people do this with bars where they just, oh, it’s just going to be a cool place to be. That’s really expensive clubhouse, you should go build a tree house or do something else.
Jeff Vojta:
Yeah. clear out a space and just invite them over for coffee, build
Paul Peterson:
Out a garage and you’ll have to put a garage bar in or something.
Jeff Vojta:
But yeah, it’s, it’s, I can recall many a times at the coffee shop over there talking with friends or family, it would pop in there and, just want to chew the fat there for a while, but then, a bunch of customers and things come in and I have a lot of questions. So suddenly those customers are as important as the earlier ones. So you gotta jump yourself out of that conversation, figure out how to excuse yourself, very tactfully and get over there and help these customers. No,
Paul Peterson:
I think that’s it. That’s a key point. And I even noticed that with myself and my shops when I almost, I have a hard time going into my own shops just to relax and have a cup of coffee because I’m constantly aware of, okay, well, what are the service times? How long is it taking at the drive-through form, order time to getting a product out the window has that person that’s standing up. So too long, what’s the sound that the blenders making? Is that something I need to go check on? Like all of those little things it’s because you’re, so you, you, you are, hyper-focused on making sure you’re delivering the best product that you might not be able to sit there and just enjoy it which you shouldn’t be because it’s your business. You should be dialed into all of those little details, but if you’re not expecting that, and that is something that’s going to constantly be a source of frustration for you, you might want to rethink this and maybe decide, Hey, a coffee is an amazing hobby at my shop might not be a business for me.
Paul Peterson:
Okay. I think one of the other things that should give people pause is it is if they expect to keep coffee as a hobby and then just hire everybody else just to do the work for them. And they’re not really going to participate at all in the coffee shop or be part of the culture, be part of the menu creation, be part of the work, the day-to-day stuff, everything like that. Can you talk to that a little bit
Jeff Vojta:
As the owner of the coffee shop and coming in there you’ve and whether or not you’re in there operating it, or you hire a manager to run it, you, as the owner are ultimately responsible for everything, you set, the culture, you set the tone, what are we serving? What hours are we open? how are, how do we want to treat our staff? How do we treat our customers? And again, if any problems or issues come up, it’s the Buck’s going to stop with you. They’re all going to end up rolling back up hill. So you’ve, you’ve got to really, you’ve got to be the leader and that’s, and there’s good. And there’s bad that come with that, but you need to understand that it’s not all glory. you may find yourself snaking out of toilet in the bathroom sometime because
Paul Peterson:
No, that happens. My wife and I were out celebrating our 20th anniversary yesterday. And, you get a call in the middle of dinner time that, the drive-thru speaker box went out, the headsets aren’t working. So here I am, celebrating 20 years and you’re trying to triage from 30 miles away. Okay, well, what’s going on? And luckily we were able to solve the problem, but that is just, you can just take it in stride. And, and, fortunately my, wife she understands that this is, this is kind of the life that we signed up for. And this is, this is what we have to do. Because you understand, okay, well, our, our needs are important, but sort of the needs of your employees, because they’re going through undue stress, trying to solve this problem.
Jeff Vojta:
You have customers, their needs are met. You have people who get in the car, they might pack up the kids, they drive 15 minutes up to your shop. And they’re going to be disappointed if they’re not going to be able to get what they want. And that is a responsibility that I think is very important because you want to deliver value every single time. And if you don’t deliver that value for whatever reason, then, then or you don’t care about delivering value every single time, then you really need to think about, okay, well, is this something I should be doing?
Paul Peterson:
Right, exactly. I mean, there’s, there’s a lot of people depending upon you when you own any business and when you own a coffee shop, so correct from those coffee farmers down to your customers coming there. So it, it, I learned early on, cause I grew up in family businesses that it went beyond just us and our families.
Jeff Vojta:
Sure, that makes sense. I think one of the last things, and I think I’ve heard this a lot and I think a lot of coffee shop owners have probably run into this from very well-meaning baristas who want to own their own coffee shop someday. They just love to create new menus and food items, and they really don’t care what the ingredients cost to go into that there’s, there’s, they’re more concerned with the highest quality drink and not really factoring in the cost of goods sold and what the price points going to be to that drink. And I think this gets back to one of the both, when you talk about the five-piece, when you’re going to be looking at the product portion of that, how are you going to be creating products that you can sell that have good margins that allow you to pay your staff, pay your rent get to the one of the other piece, which is going to be profit and make some money off of it. And do so in a way that tastes delicious for your, for your customers
Jeff Vojta:
Right now. I mean, it’s critical and it, anybody thinking about starting a business, there’s a book that I read years ago called the E-Myth revisited. Oh, that’s a great book. And I, and what really rang true was the pie maker. And we had one of our first wholesale customer. Actually, I bought baked goods from them and they were a wholesale coffee customer, but the manager of the store really loved to bake great cake decorator and all of that side and thought, well, I could just run this business a lot better. we could decorate the cakes, I could source different ingredients and do all of these neat things and shape really following the book struggled. And it took her, they were trying to do great cakes, but the people, the customers forgot, all these other things we were just talking about in the business suffered. Ultimately she got burned down and sold it and just, she was the best cake maker. There was, it just didn’t turn out to be, she needed to be the, she needed to be the cake decorator, not the store manager.
Jeff Vojta:
Sure. No, I, and I think that is, I really enjoyed that book and that’s probably one of those books I should go back and reread every four or five years.
Jeff Vojta:
No, I think we all should cause it gives us great pause to think, God, I need to be doing that.
Paul Peterson:
That’s great. And we’ll include a link to that in the show notes as well, so that people could find that and you can download it on lots of he read books, you can get physical copies. It’s a book that’s pretty much out there anywhere. But I think that’s key. I’ve, I’ve run into that a lot. And one of the things that I’ve tried to do to w with my employees particularly the ones who are longer-term, who take an interest in coffee as a business, is to really talk to them about cost of goods sold. So I’ll have them come to me with a particular drink. And the first thing we’ll do is we’ll say, okay, well, let’s price out that drink. And so we’ll start taking it down to the gram, how many grams of espresso, how many ounces of milk and we’ll go through, how many pumps of syrup, what are we looking at for grams of powder?
Paul Peterson:
And we’re going to build a cost structure for that drink. So we understand that, and then it’s going to be okay, well, we know this, this drink, as we put this together, cost 3 25, what’s the market value of this drink? What do we think people are going to pay for it? And if the market value of that drink is $5. Well, can you have a drink that is 65% cost of goods sold or whatever that number comes up to me. And the answer is, no, you can’t do that. That’s not sustainable. You’re going to lose money once you factor in your operating costs. And our rough kind of scale that we use in the coffee shop before we really dig into it even further, and this is not kind of digging into P and L or anything else is really, cost of goods sold should be less than 30%. You’re going to factor in your operating costs are going to be, another 30%. And then you’re going to have R and D profit reinvestment.
Jeff Vojta:
And also just kind of go on there. It’s like all those pumps, all those ingredients is two things that I always ask our customers is can you one reliably source all those ingredients, or is it going to be a seasonal offering? Number two, can you repeat the dream for the same quality? So no matter who makes that drink, is it made the same way the guest has the same experience.
Paul Peterson:
I agree, and that’s, we’ve taken two drinks off of our menu recently. And this is going to get into one of the other aspects is how long does it take to make the drink, putting a stopwatch on it? Because if you have a latte that takes, a minute and five seconds to make, and, and once you add some ordering time on there, so you have, 20 to 30 seconds for ordering time, 20 to 30 seconds for your transaction time at the window. So you’re looking at about two minutes from a drink from ordering to getting it out. Now you stack next to that, a drink that maybe takes three minutes to,
Paul Peterson:
So now you stack next to that, a drink that maybe takes three minutes to make, and now you’re going to be impacting all the customers who are behind that person. So I think it’s really just one of those things where you have to factor in not just the deliciousness of the drink and how perfect that one particular drink is, but what is the real cost of it? The real costs are the actual explicit costs of the ingredients that go into the drink, but you also have the implicit costs of the, of that individual customer, but then all the other customers who are impacted by making that one drink and then recognize that your business model might not include longer lead time drinks. If you have a dine-in cafe where you have table-side service, you have a lot of people who are sitting down and maybe not as much of a transit or throughput coffee shop, then you might be able to get away with a drink that has a little bit longer lead time. If you have a drink, we have a lot of people who are commuters on the go drive through locations, walk-up windows, where they’re grabbing their drink and going. You’re going to have to think about more of the quick service model and the duration of the drink and what you’re making with them.
Jeff Vojta:
No, I think that that’s true, Paul. And a lot of it goes back when you are planning, your business is back to the pod piece, is who’s your customer who are your employees? What is, where are you located at? And all these factors will come into play, whether or not you’ve got to have a two minute latte, or you can do a three.
Paul Peterson:
Sure, no, I think that, that makes perfect sense. So, well, I think we give people a lot to think about, I think there is, there’s nothing wrong with having a passion for coffee and having a passion for wanting to share your love of coffee. I think if you do that and you ignore the realities of the total business ownership and the total business experience, then I think people are going to ultimately end up ruining one of their passions. And I think what they’re going to end up doing is essentially creating an environment in which they’re going to be functioning in an unhappy way. And if you take, if you go into it as a passion project, recognizing that you also want to learn and enjoy the business, recognizing that you also enjoy being around people and recognizing that you’re willing to make some compromises for the sake of the business as a whole, then I think that you can find a way to dovetail both passion and business together to be successful, and then figure out how to share your passion and enthusiasm with other people in a way that can be monetized and in a way that could be a sustainable longterm.
Jeff Vojta:
I mean, that’s, that’s great advice in a nutshell and can save people a lot of money, but it comes down to knowing really what you want to do and the proper plan you can funnel those passions into something that could be personal.
Paul Peterson:
No, I think that makes sense. So Jeff, as always, I appreciate it. Thank you very much. It’s a lot of fun. Where can we find you?
Jeff Vojta:
You can us at dilworthcoffee.Com or vojta@dilworthcoffee.com.
Paul Peterson:
Awesome. And my name is Paul Peterson with Wake Oasis Coffe. You can find us at WakeOasisCoffee.com Or Paul@wakeoasiscoffee.com. Jeff we’ll talk soon. Awesome pop. Thank you.