Coffee Schools & Consulting: Buyer Beware?

The 10 Essentials in Starting & Successfully Operating a Specialty Coffee Business

Operational Challenges For the Independent Coffee Retailer in 2007
by Bruce Milletto

What's Brewin'
— Coffee News Flash

Coffee Schools & Consulting:
Buyer Beware?

So, you want to start a specialty coffee business…You’re going to spend an enormous amount of money and you’ll need to protect that investment by being as well-educated as possible about every aspect of the business. You will want to learn how to be the best barista in order to serve a high-quality product and you will want to get a business education specific to specialty coffee. You’ve decided that going to coffee school or hiring a consultant will help you to achieve these goals.

Below Bruce Milletto, President of Bellissimo Coffee InfoGroup tells you what to look for when shopping for a coffee school or consultant.

I was recently surfing the web checking out the competition in coffee education and consulting. I wasn't surprised to see there were a number of individuals and companies now offering consulting services and opening coffee schools. Certainly, America is all about competition, and this industry is large enough to support multiple sources of information and assistance. After all, successful coffee businesses fuel the growth of our industry. Truthfully, what concerns me is not the fact that these other sources might be taking some business away from my company, but rather that consumers may make uneducated decisions about where to get good information... information that will be essential to their success and the continued success of this industry.

A Serious Business
Going into business can be very risky. The average failure rate for any type of new business is about 80 percent. Failure rates for restaurants are typically around 95 percent. And, while no specific statistics exist for the failure rate of coffee businesses, we must assume that they fall somewhere between 80 and 95 percent. Clearly, many of these failures are the direct result of owners who have made poor decisions in setting up the business or do not possess the skills to build and run their business. Those who have prior business ownership experience and/or "bottom line" foodservice management experience will certainly have a better chance of being successful than those who do not. But, with this industry changing and becoming more competitive each day, the types of mistakes that were made by budding entrepreneurs five years ago (and were survivable), often result in business failure in today's marketplace. Good information is essential to survival and success in this business.

The decision to embark on the journey to open your own coffee business is a serious one. If you are considering attending a coffee school or establishing a consulting relationship, and the principals or their associates are not forthright about the risks, or do not ask questions about your business experience, or financial resources to start the business, you should be concerned. If they just happen to be able to sell you an espresso machine or coffee, you should be doubly concerned!

The truth is, that for those who are already in the business, most would probably tell you that foodservice is a "love/hate relationship." Owning a coffee operation can be fun and rewarding, but it can also be overwhelming. While having great product, good customer service, and a clean store are the fundamentals essential to attract and maintain customers, it is only a small fraction of what it takes to set up and operate a successful coffee business. Creating a realistic financial plan, sourcing the capital, finding a great location, negotiating an advantageous lease, developing an efficient space design, selecting the right equipment and consumable products, hiring good employees and training them thoroughly, ordering product, controlling cost of goods, controlling labor, producing monthly income statements, setting goals and budgets, marketing your business, etc., etc., etc. — all need to be mastered to be successful in this business. (I might mention that all of these subjects are talked about in detail at our school – ABC’s.)

It is for this reason that I warn the buyer to beware when they are making selections for professional help and education. Many within this industry can show you how to pull a good shot of espresso, steam velvety milk, and pour a heart on your latte. And, if your only goal is to make a superior latte for your friends at home, or to sharpen your barista skills at your present place of employment, then most will probably meet your needs. But don't be under any illusion that beautiful drinks are all it takes to be successful in this business.

A Case in Point
Several months ago we signed a client who needed assistance with an espresso bar design. When we asked about his budget for equipment and the build out, he provided us with a figure, which was woefully short of what we knew it would probably cost. When we informed him of this fact, he told us that the business investment figure had been provided to him as a result of financial plan that was prepared for him by a consulting company. Upon examination of this financial plan, we realized that it was merely a shopping list of equipment and consumable products that the consultant’s company sold. It made no provisions for such things as prepaid rents and deposits, architectural, accounting and legal services, essential equipment and mill work (sinks, refrigerators, ice makers, cabinets, etc.), contractors services (general, plumbers, electricians, framers, sheet rockers, painters, etc.), inventory and small wares (except the things they stocked), and probably most important of all — operating capital! The amount quoted as the necessary funds to open and run the business only represented about 15 percent of what would actually be needed!

In my opinion, people who represent themselves as knowledgeable consultants in this industry, and then provide poor information because they are unqualified, are not only negligent, but border on being unethical as well. After all, we are talking about people's life savings in many cases perhaps their home, which has been mortgaged to start the business, or their 401(k) retirement fund, or their kid's college education money.

Our Experience
When Bellissimo began business 15 years ago with the creation of award-winning educational videos, books and consulting services, it was not only because there was a need for education and assistance within the industry, and a business opportunity, but also because we knew that collectively, we possessed the skills and experience to do those things well. I had experience in film making, successful retail business ownership, and importing Italian products, specifically coffee. Ed Arvidson, senior coffee consultant for Bellissimo, came with 20 years of foodservice management and ownership experience, including training managers and troubleshooting operations for major corporations. We knew we possessed the skills necessary to fill the needs of many. But more importantly, we also knew our limitations. If an individual would call our office and ask us to help with a function that fell outside our realm of expertise, we would try to refer them to someone who was qualified and experienced.

Since its inception, Bellissimo has expanded its staff slowly and carefully. Kris Larson, Matt Milletto and Jared Mockli have all brought their talents, and experience to help create what I believe is the strongest, and most qualified consulting and educational team within our industry. Perhaps more important than their talents and experience is their passion and integrity.

We've gained our experience about coffee and espresso over many years, by learning from some of the "industry's best" (like Dr. Ernesto Illy — Illy Caffe and Mauro Cipolla — Caffe D'Arte Coffee, to name a couple). We've also learned about the business and this industry by helping literally hundreds of companies and individuals open their businesses, and by helping many others address their business challenges. It is from this base of knowledge and experiences that we have created the industry endorsed standards in DVD and textbook training and education. Some consultants in this industry buy our tools to help educate their clients, and to them, I say thank you. Your dedication to education, as well as your patronage is greatly appreciated. There are others who will try to discourage you from buying any educational materials, unless they come from them — Beware! No one has a monopoly on knowledge. Our office bookshelves are stocked with books from the industries best and brightest.

It is from this wealth of knowledge and experience that we have built our coffee school: The American Barista & Coffee School in Portland, Oregon. If you are going into this business, get educated. If you have no experience, and it's within your budget, consider some consulting help. However, do your homework before you make a decision on what school to attend, or which consulting firm to hire.

Ask the following questions:
How long have they been in the industry? Are they willing to give you references? What is their experience? What is their reputation (within the industry, and with their past attendees/clients)? Do they have actual experience in creating and running successful coffee operations? Who are they affiliated with in the industry? What kind of facilities does their school possess? Do they have equipment and products from more than one supplier (the American Barista & Coffee School has over 60 sponsors!)? For most people the stakes are too high to make the wrong decision.

Bruce Milletto is the President of Bellissimo Coffee InfoGroup and Founder of the American Barista & Coffee School.


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