Starting a Coffee Shop-Know Your Market

When you go out to eat, you don't always have the same expectations. Sometimes you just don't feel like cooking so you head out for a quick bite. In these cases, Burger King or McDonald's will probably do just fine.

Sometimes, however, you want to go out and have a nice sit down dinner, but you're not looking to spend a fortune. It's not a special occasion or anything like that. But fast food just doesn't hit the spot for you. So on these occasions, you head for a local diner where the food is a step up from fast food but not quite elite. The bill is reasonable and the food is good.

And then there are those times when it's a really special occasion and you want to go to someplace that isn't the same old same old. On those occasions, you go to a really fancy restaurant. It might even be one where you have to have reservations and where a suit and tie.

In each one of these situations, the establishment in question has done its research. It knows what kind of clientele to expect, sometimes even dictated by the establishment itself (reservation and tie) and caters to that clientele accordingly.

Meal at McDonald's for 4 - $25
Meal at Chez Ritzy Palace for 4 - $800 or more.

While a coffee shop isn't exactly going to have that kind of dynamic range of tastes, there are going to be differences between a Dunkin Donuts type establishment and a Starbucks...at least in the minds of the clientele.

Where do you fit?

Who do YOU want to cater to?

Does that market even exist in your area?

If you're planning on setting up a coffee shop in a slum area, I doubt you're going to get people to spend $2 for a cup of coffee. On the other hand, if you're opening up shop in New York in the entertainment district, you can get away with $2 coffee and more. The key is knowing who your market is.

The only way to do this is to do a demographic survey of the area. You need to know who lives there, what their income level is and ultimately, what their preferences are. What about competing shops? What's already around? Has a Starbucks been there and failed? If so, this may give you a good idea of whether or not a higher class of coffee shop will fly in that area.

Without knowing your market BEFORE you actually open your doors, you are risking failure right from the start.

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