5 lessons to learn from an $80k/month coffee shop

Hey UpFlipers,

Frank Sinatra once sang, “If I can make it there, I’ll make it anywhere”, painting NYC as a place where only the determined thrive amidst fierce competition and endless opportunities.

Food service is similar — it’s one of the hardest and most competitive industries.

Upfront costs, thin margins, hiring, inventory, regulations…

If someone has the resolve and wits to make it in the food biz, they can make it anywhere.

Therefore, lessons learned in this biz are invaluable in most other types of businesses.

So in today’s newsletter, we’ll explore some lessons we learned interviewing the owner of an $80k/month coffee shop business.

6 lessons from running an $80,000/month coffee business

Today, you’ll learn how Maxwell Mooney started Narrative Coffee, a coffee shop that generates around $80,000/month.

Narrative focuses on quality and experience over branding — it brings in some of the world’s best roasters every few months for anonymous taste testing.

Narrative sells the top two winners’ coffees until the next tasting, ensuring customers get variety and quality.

Today, Maxwell’s also a coach at Threadbare Coffee Consulting, using his knowledge and experience to help other cafes and roasteries build profitable businesses that care for their people.

But speaking of knowledge and experience, we’ll cover how Maxwell got into the coffee business and some key lessons he learned. Keep on reading…

One day, Maxwell was down at Zoka Coffee in Kirkland, WA. He ordered a latte and was blown away at how delicious it was.

This sparked his interest in the science of coffee and how one cup could vary so drastically from another.

Upon researching, he discovered coffee has more than 900 volatile aromatic compounds…

Over twice as many as wine…

Making it one of the most chemically complex drinks in the world.

Yet most people treat it as little more than “wake-up juice.”

Maxwell’s initial interest turned into an obsession…

Pursuing the perfect cup — moving up in the coffee field

Maxwell studied the art of making espresso and latte art by reading forums and watching videos.

He leveraged these skills to land a barista job, sharpening his knowledge and skills as he earned a paycheck.

Maxwell eventually grew into a coffee educator role at another coffee company, then launched Narrative as a coffee cart.

After running that for a while, he was able to open a brick-and-mortar location.

So in short, he started from scratch, learning the business's ins and outs for years before launching Narrative.

Lessons learned from starting, growing, and running Narrative

Maxwell had a long journey with Narrative. So we decided to extract and distill some of the key lessons he revealed to us:

Lesson 1: Starting with a coffee cart

High-volume carts can cost at least $10,000. Low-volume carts could cost as little as $2,000. 

Maxwell told us that carts just don’t do too well financially on their own in terms of raw numbers. They're best used as marketing tools, so that low-volume cart could be the better option. 

What they are good for is building a passionate, loyal customer base, whether you stay with the cart or open a brick-and-mortar.

Lesson 2: Systems, systems, systems

Maxwell has invested a lot into perfecting his systems and processes. This takes the potential for human error out of the equation, reducing waste and increasing efficiency…

Vital for an industry with thin margins and tough competition. 

Even more vital when you have to constantly pump out high-quality coffees quickly.

Each station in the shop has SOPs — employees just follow the SOPs to create consistent, top-tier drinks in less time. 

The machines have features that standardize processes, too. For instance, the espresso machine automatically stops pouring when the espresso shot hits the right weight.

Heck, even the shop’s design maximizes efficiency. A few examples:

1. Hand-made coffee is at the register. Employees can ring up customers while making coffee at the same time.

2. The retail merch shelves aren’t behind the counter. Customers can grab and buy items when ordering coffee, saving employees time and energy while boosting retail sales.

3. The space behind the counter is designed with precisely enough space for one person to work efficiently… with enough space for many to work as well. Plus, everything is organized so employee can move between stations as efficiently as possible.

Lesson 3: Skip the shiny objects

Maxwell put all his effort into his product’s quality. His coffee cups don’t even have branding — it’s all about the flavor and experience.

Ironically, this helped Narrative build its own brand. People know Narrative for providing the best cup of coffee in the area rather than the particular roasters’ products they offer. 

When they’re at Narrative, they know they’re at Narrative, thanks to the insanely good coffee and warm, welcoming experience.

Nowadays, Narrative sells branded merch (like tumblers). But the drinks remain unbranded.

Lesson 4: “Instagram Bait” and free marketing

One of the neatest things we learned from Narrative: 

How their coffee shop’s design drives free marketing.

See, Narrative built around aesthetics and experience. They wanted a space that made for excellent pictures…

That way, people would snap photos of themselves and/or their premium coffee beverages and post them on Instagram and elsewhere.

Clever way to organically drive user-generated content and free online marketing.

He also designed the space so that when people walk in, they immediately see people relaxing at their tables, hanging out, and having a good time.

Lesson 5: Strategic expansion — Opening the next location

Narrative opened its second location in Bellingham, WA in 2022. Max said he made sure the following were rock-solid to maximize his chance of success in the new location:

1. A good team: Maxwell had great managers running the original location (in Everett) and a solid team. Maxwell could “step away” from the business and focus on getting the new location ready to go, and he knew how to hire at that point.

2. Financial benchmarks: Maxwell didn’t leap right into a second location out of excitement. He ensured Narrative had sufficient resources to open a new location and in case things didn’t go well. In particular, he stashed plenty of cash in the business while the new location worked out the kinks in operations.

3. Systems and processes: Besides a smaller food menu to fit the new space’s location, Maxwell “copied and pasted” his SOPs and processes from his first location. When something works, no need to reinvent it. However, the space was an old coffee shop, so he had to do some renovations to fit his systems and processes.

Personalization — The key to loyalty

Maxwell puts effort into a personalized customer experience that makes people excited to visit and share Narrative with friends.

Here’s how Narrative personalizes things:

Greetings, goodbyes, and “meeting the customer where they’re at”

Narrative naturally attracts “coffee enthusiast” types. But that’s not their only audience.

Employees are trained to welcome customers in and converse with them… while asking the right questions to see if they’re more of a “coffee geek” or a “grab and go” type of person.

“Some folks want to geek out on coffee — the individual varieties, where it was grown, how it was processed, all that. Others just want to grab their coffee and go.”

From there, they can personalize the service to the customer — whether that’s recommending drinks or talking about the particular roast.

When customers leave, staff bid them goodbye.

Regularly rotating roasts

Narrative brings in new roasts every month via anonymous taste tests, selecting the two winners.

This keeps things fresh and caters to the varied tastes of Narrative’s customers.

Bring Your Own Cup

Narrative encourages customers to bring their own cups or mugs. People can add a bit of personal flair to their caffeinated beverage of choice and even bond over their unique cups/mugs.

Hangout-friendly design

Narrative has couches, tables, and a bar to sit at, catering to individual coffee drinkers and groups alike.

The layout was designed so that when people walk in, they immediately see people relaxing at their tables, hanging out, and having a good time.

Overall, it has a cozy atmosphere.

One financial metric to track like mad

Business owners can track a zillion different metrics. Some matter much more than others.

For physical products, the cost of making the product is one of the most crucial.

This is called Cost of Goods Sold, or COGS. 

For a premium coffee drink, COGS could things like:

• Coffee beans

• Milk

• Creamer

• Sugar/sweeteners

• Cups

• Lids

• Straws

• Labor (only the amount attributable to making that cup of coffee)

And several others.

COGS is key to pricing. You have to sell something for more than it costs to produce, but not too much more (or people won’t buy it).

Maxwell built a master spreadsheet tracking the cost and weight of every ingredient in the store. Plus, spreadsheets for every recipe, allowing him to see the cost of particular drinks. 

These help him see all ingredient costs at a glance and check on individual drink costs — he gets multiple perspectives on his costs.

Besides that, here are some ways he controls his COGS:

• Inventory management: Too little inventory = lost sales. Too much inventory = potential spoilage… and capital tied up that could have been invested elsewhere. Maxwell tracks demand to maximize inventory efficiency, minimizing COGS without losing sales.

• Quarterly audits: Maxwell looks through the spreadsheets every quarter, adjusting numbers as costs change. This helps him alter pricing to maximize profit margins without sacrificing customer demand.

• Ingredient analysis and optimization: Since Maxwell tracks every ingredient, he can isolate ingredients ripe for cost reduction opportunities and seek out lower-cost options.

• Technology: Narrative’s espresso machines have those scales that weigh ingredients exactly, minimizing waste… and thus reducing COGS.

• Staff training: Narrative emphasizes cost control measures in staff training to reinforce the importance of efficiency.

• Encouraging reusable cups: Narrative encourages customers to bring their cups. While not a huge measure, it can help. Oh, and it creates an environment where people can show off their unique mugs.

To wrap it all up…

Experience in the business type you want to launch can help a lot, as you saw with Maxwell. 

So if you’re wondering what kind of business to start, take stock of your current skills, knowledge, and work experience. 

Still, those things won’t get you very far without understanding the business side of things. 

Avoid shiny objects, nail down your systems and processes, focus on mastering and scaling one or two marketing methods, and offer an excellent customer experience.

Don’t forget to track your numbers relentlessly, either. Businesses live and die by their numbers.

So now that you’ve learned lessons from one of the hardest niches in the world…

Don’t miss this 13-step guide to becoming an entrepreneur.

Woah, check these out…

☕ Here are a few interesting coffee industry trends

🍽️ Like the food industry, but coffee’s not your thing? Check out this list of food business ideas

🎙️ Catch our latest podcast episode for more business inspiration and ideas…

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