Many people love coffee right now. As a result, many people take advantage of this love for coffee by opening their cafés.
Coffee shops are profitable businesses. The top names in the business usually earn 70 percent of the industry’s profits. Larger businesses earn higher profits, but this shouldn’t discourage small business owners from trying their hand at the coffee shop business. You don’t have to start big ASAP. In fact, why not start with a small coffee stand? A drive-thru coffee stand to be exact.
Drive-thru coffee stands are common retail concepts that consist of a small structure with a service window or two — a big difference from common cafés with all the tables and chairs. Customers need not stay in the shop; they can just drive to the window to order coffee and food.
Each drive-thru coffee stand is unique. These coffee corners vary in design and size, but they serve the same purpose: they conveniently offer coffee to drivers. Customers can either drive up or walk to the stand and get their daily cup of Joe. The latest “Atlas of American Coffee” published by the National Coffee Association (NCA) showed that past-day coffee consumption has returned to the levels before the pandemic.
The report shows that around 65% of Americans drank coffee more than any other beverage in the past day. The NCDT report, commissioned by the NCA since 1950 and updated twice yearly, is the longest-running study of American consumers’ coffee drinking habits.
Given the ongoing popularity of coffee among all Americans, a drive-thru coffee stand could be an innovative and successful business venture. If you plan to open one, consider some tips for setting up a coffee shop.
Drive-Thru Coffee Stands: A Profitable Venture for Small Business Entrepreneurs
According to the National Coffee Association (NCA) US survey, the average American coffee drinker can drink up to three cups of coffee per day. Also, seven in 10 Americans drink coffee weekly; 62 percent consume coffee every day. The country’s coffee consumption has also increased by five percent since 2015.
With these numbers, there’s no denying that people will always look for coffee. But with the current situation, we are in (due to the pandemic), people are also looking for convenience. So, if you can offer coffee in the most convenient way possible, people will flock to your business (especially in the cold winter season).
One of the best things about opening a drive-thru stand is that it saves you more money compared to when opening a full-blown coffee shop. The traditional coffee shop setup includes additional expenses like chairs, tables, restroom needs, etc. With a coffee stand, you’ll need a small coffee corner (positioned in a convenient location), the right equipment, and ingredients.
Plus, if you pick the right location, you can make as much revenue as the regular coffee shop for less money.
Why Do Some Drive-Thru Coffee Shops Fail?
Not all drive-thru coffee stands are successful, though. Many business owners think that their coffee could be the cause of their downfall. But that’s never the case.
One of the reasons behind their failure is the lack of planning. A lack of preparation leaves business owners susceptible to common traps that reduce sales, drive up costs and increase headaches.
Unlike traditional coffee shops, the lower-cost investment model of a drive-thru coffee stand can feed a business owner’s overconfidence. Many aspiring coffee stand owners can think that they don’t need plans, but they do. There’s no such thing as winging it, even if you plan a “small drive-thru coffee corner.”
Other reasons behind coffee shop failures are poor accounting, lack of operational knowledge, insufficient funding, and mismanagement. So, instead of dealing with these problems, it’s best to plan.
Why Start A Drive-Thru Coffee Stand?
Starting a drive-thru coffee stand is a cost-effective and lucrative option for entering the coffee business. It can generate revenue comparable to a full sit-down café, requiring fewer start-up costs. Choosing the right location is crucial to the success of this type of business, and it may be the most suitable choice for those who lack the resources for a physical coffee shop.
Here are some of the reasons why a drive-thru coffee stand is a good option if you plan to enter the coffee shop industry:
Low Maintenance Cost
The minimal equipment and space needed for a drive-thru coffee stand can result in low maintenance costs, making it an attractive option for those considering entering the coffee shop industry.
Basic Equipment
Firstly, the equipment needed for a drive-thru coffee stand is significantly less than what would be required for a traditional coffee shop. A simple espresso machine, grinder, coffee brewer, and cash register are typically all needed to produce a quality cup of coffee.
You can even consider getting a basic coffee maker machine if you are just starting the stand. The equipment you’ll need does not require much maintenance, thus resulting in lower overhead costs than a sit-down café. Furthermore, since the stand doesn’t require seating, there’s no need for additional furniture or decor, which can add up to a significant expense.
Space Requirement
In terms of space, a drive-thru coffee stand can be set up on a small lot, a parking space, or out in the open, which further reduces costs compared to leasing or buying traditional retail space. Since the stand is meant for a quick transaction, it can be designed to maximize efficiency and minimize the need for extra staff, thereby reducing payroll costs.
Excess Demand
The past few years have seen an increasing demand for convenient and fast coffee options, particularly among busy commuters. This trend has only been exacerbated by the pandemic, which has made contactless, on-the-go options more appealing than ever before.
Smart Business Venture
These statistics suggest a drive-thru coffee stand could be a smart business venture. It requires relatively low investment and meets the needs of time-strapped coffee drinkers who want their caffeine fixes without leaving their car. Compared to traditional coffee shops, a drive-thru stand requires minimal equipment and space, resulting in lower maintenance costs and overhead expenses.
High-Traffic Areas
Moreover, a drive-thru stand can be just as profitable as a sit-down café without the added expense of furniture or decor. By setting up shop in a high-traffic area such as a parking lot or busy street, owners can capitalize on the demand for fast, convenient coffee options among busy commuters.
Over the past five years, there has been a slight increase in the use of drive-throughs for buying coffee. According to a survey in 2020, 48% of the respondents reported purchasing coffee from retail outlets using drive-through services the previous day in the United States.
In short, the demand for fast and convenient coffee options is rising, and a drive-thru coffee stand could be an innovative and profitable way to meet that demand. With its low maintenance costs and reduced space requirements, this type of business may be an excellent option.
High-Profit Margin
The drive-thru coffee stand business model offers a potentially high-profit margin due to the relatively low cost of coffee ingredients and the simplicity of the business. The drive-thru coffee stand requires minimal equipment and space compared to a traditional coffee shop with overhead expenses, including rent, utilities, and furniture. This translates to lower maintenance costs, overhead expenses, and a higher profit margin.
Inexpensive Ingredients
Coffee ingredients such as beans, water, and milk are inexpensive, especially if purchased in bulk. This means the cost per cup of coffee is comparatively low, allowing for a higher markup when sold to customers. Additionally, drive-thru coffee stands typically offer a limited menu with fewer options than a traditional coffee shop. This simplified approach reduces the need for additional staff and training, reducing overhead costs.
Pricing and Volume Influences
The profitability of a drive-thru coffee stand can be heavily influenced by pricing and volume. To illustrate this, you can consider two scenarios with different pricing and volume levels.
Scenario 1: High Pricing, Low Volume – In this scenario, the drive-thru coffee stand charges a premium price for each cup of coffee but attracts only a small number of customers. This may be due to the stand’s location, limited menu, or other factors that deter customers. Although the profit margin per cup of coffee is high, the overall revenue is low due to the low sales volume. As a result, the stand may need help covering its fixed costs, such as rent, utilities, and salaries, and may eventually leave the business.
Scenario 2: Low Pricing, High Volume – In this scenario, the drive-thru coffee stand charges a lower price for each cup of coffee but attracts more customers. This can be achieved by offering affordable prices, promotions, or loyalty programs to encourage repeat business. With a high sales volume, the stand can generate significant revenue despite the lower profit margin per cup of coffee. Additionally, the stand may benefit from economies of scale, such as lower purchasing costs for ingredients and supplies and lower overhead costs per cup of coffee sold. As a result, the stand may achieve higher profitability and sustainability.
These scenarios suggest that a drive-thru coffee stand can be profitable with the right pricing and volume strategy. The stand can generate significant revenue while maintaining a reasonable profit margin by setting competitive prices that attract a high volume of customers. This can be achieved by offering value propositions such as quality, convenience, speed, or personalization that differentiate the stand from competitors. Additionally, the stand can use data analytics, customer feedback, and market trends to optimize its pricing and volume levels over time.
How To Start a Coffee Stand?
Determine the Concept of Your Coffee Stand
How do you want your coffee stand to look? What is the café aesthetic? Also, what type of experience do you want your customers to have? Answer these questions by developing your concept and vision of your coffee stand.
Write your thoughts as you start brainstorming concepts for your coffee shop. Initially, your thoughts might be all over the place. That’s OK! Track them by writing all of them down. Come back to them later so you can sort your ideas.
Many thoughts you take down can build your business plan, so always keep your notes available. If you don’t know where to start, visit nearby coffee stands and pay attention to their food, location, and branding.
Write Down Your Business Plan
The most successful businesses started with a plan. Creating a business plan before you open your drive-thru coffee stand can help you develop, execute and launch a business model that works. Also, having a business plan can save you money from the start, ensure you cover everything, and help you avoid mistakes. It can also streamline your spending and efforts.
Find a Convenient Location that is Easily Accessible
Your location impacts customer traffic. The selling point of drive-thru coffee shops is their convenience. As mentioned above, you can save more on operation and start-up costs. On the other hand, the customers will immediately get their affordable coffee fix quickly.
When opening a drive-thru coffee stand, your location can be as simple as an empty parking lot. However, if you’re nearby a large shopping center that receives a lot of customers, get in touch with them.
Another thing to consider when looking for a good location is your county/city/state regulations. Contact your local government officials and make sure your business’s location complies with the local regulations.
Decide If You’re Going to Buy or Build your Drive-Thru Coffee Stand
When starting your drive-thru coffee stand business, you have two options: build it or buy one. Building your coffee stand from the ground up is possible, especially if you have access to the right equipment and tools. You can save more money by building your coffee corner. If a DIY build isn’t viable for you, contact a contractor. They can help you do this at a low cost.
You can always buy pre-existing coffee stands if you don’t want to build the stand. Many businesses sell their drive-thru coffee stands, which they can deliver. Some business owners even buy old food trucks or RVs and convert them into a drive-thru coffee corner.
Develop Your Menu
While serving coffee is a priority, many drive-thru coffee stands have fancy menus. The menu depends on your target market’s needs and location. If you want to start simple, that’s OK. Just let it grow from there. For example, you might want to provide the following:
- Cold-brew coffee
- Drip coffee
- Espresso-based drinks (Americans, lattes, and espresso shots)
- Teas
- Cream-based drinks
- Soda and water
- Pre-packaged goods (e.g., bagels, cookies, and muffins)
Once you get to know your customers, expand your drive-thru menu options. Cookies, scones, and muffins are popular menu items for drive-thru options. All of them go well with coffee drinks. Other popular options are energy drinks and smoothies. If you plan to offer these, you’ll need commercial blenders and ovens.
Buy Equipment That Fits Your Space
Equipment creates good coffee. In a traditional café, size isn’t a question, but with a small drive-thru stand, you must consider the size.
In this case, you’ll need a grinder and an espresso machine. With espresso machines, two or three group heads should do. Having three spots to pull shots in small spaces can be chaotic. You need two people to work with the machine at a time.
Hire Amazing Baristas
Apart from the equipment, the baristas are another secret weapon behind successful cafés. The quality of your staff can make or break your business.
Hire baristas for their reliability, trainability, and personality — not just their experience. While experience is important, personality training isn’t as easy. You can train for skills, though. So, hiring personable, energetic, and bright employees is essential to your coffee stand’s success.
Things To Consider While Setting Up A Coffee Stand
You should consider a few things to ensure success when setting up a drive-thru coffee stand. Here are some tips to help you get started:
Inventory Management
Managing inventory is an essential part of running a successful coffee stand. You should keep accurate records of your stock levels, ordering timelines, and pricing structures to ensure you always have enough supplies while avoiding overstocking. Investing in the right POS system can help track inventory and stay organized.
Marketize Your Business
When setting up a coffee stand, you should focus on marketing your business to attract customers. This includes ensuring that your stand is visible from the street, using social media and other digital platforms to promote your products, and offering loyalty programs or discounts to generate repeat business.
Create Coffee Menu Pricing Details
Creating a coffee menu with competitive pricing is another important aspect of running a successful drive-thru coffee stand. You should consider the cost of ingredients, labor, and overhead expenses when setting your prices while also considering customer demand and local market trends. Additionally, you may offer discounts or loyalty programs to encourage repeat sales.
Provide Standard Customer Service
Providing quality customer service is essential when running a drive-thru coffee stand. This includes being friendly, answering questions, and providing recommendations. Additionally, you should ensure that your staff is properly trained in making coffee drinks and operating the POS system to ensure efficiency and accuracy.
A drive-thru coffee stand can be an innovative and profitable way to enter the coffee shop industry. Considering the tips and advice above, you can set up a successful drive-thru coffee stand that meets customer needs and generates significant revenue. With its low investment costs and high-profit margins, this type of business is an attractive option for those looking to enter the coffee industry.
