On September 30th minimum wage in Florida rises to $15 per hour. To maintain profitability I am evaluating options to ensure that the shop remains financially viable.
For the last 11 years and 11 months, my model was to offer food, drink, free Wi-Fi with purchase and a cozy atmosphere. Nearly every seat has an outlet nearby - making the shop very work-friendly. My shop does not have a drive through window. Delivery is available via DoorDash, Grubhub and Uber Eats.
My shop is busy. Our morning customers arrive like clockwork. New customers, tourists and snowbirds visit in on a regular basis. I am not facing diminished foot traffic or slower sales - I am being pressed by rising rent, labor costs, food and coffee costs and a perceived price cap on what the perceived value of latte and egg and cheese croissant at a neighborhood coffee shop. Plus, everyone is being hit by inflation. Money that would go for coffee may have to go for gas.
I pride myself on having built a community around Sip Java Co. where most of my patrons know one another. My pricing and loyalty program is designed to make it possible to come 5 or 6 days a week without feeling the pinch in the wallet. But this last mandatory increase in the minimum wage has me concerned that my model may no longer work. I am not arguing that my employees do not deserve higher wages; I am merely pointing out that the numbers may no longer work.
I visit other coffee shops frequently. I track prices, offerings, service levels and traffic flow. Some shops resemble my model. I think Sip Java Co. is unique in the breadth of our offering from 12 hot loose leaf teas, 3 iced teas, fraps, matcha, smoothies, sandwiches, lattes, cappuccinos, cortados and the variety baked goods made in house. For instance, one competitor offers iced coffee drinks in one size, for instance.
Obviously, one route to contain cost is to shrink our offering and cut staff. Our menu is evaluated quarterly to determine what items should be cut. I see reels on social media about shops that offer just a few products, don't offer seating, Wi-Fi or electrical outlets. And I spend a lot of time wondering how much of the success is based on location and population density.
Independent coffee shops have become a de facto shared workspace. Starbucks popularized the model and unfortunately set the norms for behavior. Starbucks reduced seating after Covid and now has pivoted to adding back 25,000 seats. When I started Sip Java Co. in 2014, I observed customer behaviors that surprised me. I have, for right or wrong, blamed the behavior on Starbucks, whose nonchalant attitude toward customers camping for hours over a $2 cup of coffee, set an irreversible standard of hospitality. This standard has created a sense of universal entitlement in all coffee shops. I can't count the number of times I have heard from a customer, "Well, that's not how Starbuck's does it." As in all business, you are compelled to mimic the market leader or invest heavily in educating customers about how your business operates. In my shop, seating is precious so turning a table is important. So there is balance between making people comfortable but not too comfortable.
Currently, my shop has community tables. Some people complain about having to share the space with someone else. Briefly, I experimented with tables for two but I learned that a single person would pull two tables together in order to create a space to spread out their work.
Other behaviors that surprised me include people bringing in food or drink from other restaurants. Some people have boldly used delivery services to have food delivered to my shop. People have convened meetings of 8 or more attendees but failed to purchase anything, People buy a coffee one day to get the Wi-Fi password and come back the next just to use the Wi-Fi, no purchase. Tutors feel completely comfortable running their business inside my business but fail to contribute to my business through a purchase. The little scholars, hungry after a day of learning, generally buy something even if it is just a bag of chips.
Listing out these issues may make me out to be a crybaby. I am actually quite grateful for the business that I have and I don't want to change my model.
I have plenty of options to modify my business model. At least 6 regular customers have encouraged me to raise my prices. As analyze my options, I would like to hear from anyone that might have a suggestion to the various challenges I listed above - while the campers et al are not the reason why my model should change, I would be interested in hearing how to resolve the issues without generating the ire of social media or earning negative Google reviews. Email me at info@sipjavaco.com