Author Topic: Factors in starting a coffee roasting business  (Read 7457 times)

Offline breauxj10

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Factors in starting a coffee roasting business
« on: November 17, 2016, 10:30:56 AM »
Want to start a discussion and get some opinions here on a few key business factors re: starting a coffee roasting operation.

Location

This area seems to be up in the air with a lot of the people I've spoken with.

Large cities tend to have several roasters that do well and have an established biz model for several reasons: city people take pride in local companies, they have a lot of demand from an abundance of cafes and restaurants, a lot of traffic near roasting location(s), etc. The downside here is the competition - how many roasters can be in a city until the market is flooded?

On the other hand, starting a roaster in a small-mid size town with little to no competition seems enticing. There's potential to "corner the market" on a small/mid-size town on the supplier (roasting for cafes/restaurants) and individual consumer end. Not to mention cheaper real estate. However, are small/mid-size town residents and businesses willing to pay a premium for specialty coffee? And will there be enough demand?

Debt vs bootstrap financing

There's benefits/fall backs to both. Debt allows for more capital to grow faster but elongates profitability. Bootstrapping allows for faster profits but will end in potential slower growth and fewer up front resources that can be critical to getting started.

Target customers: businesses vs consumers vs both

Most great businesses define whether they want to sell B2B or B2C. Some are able to do both. Atleast with getting a coffee roasting business started - wouldn't it be a more intelligent biz decision to lock in some initial contracts with restaurants/cafes for cash-flow purposes? And if that is done, will it be more difficult to start a brand bagged, "consumer" coffee?


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Feel free to add any bolded topics that are important to starting a coffee roasting business, I'm curious to hear what I'm missing and not thinking about.

Offline Joe

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Re: Factors in starting a coffee roasting business
« Reply #1 on: November 17, 2016, 02:33:46 PM »
where are you at i the process now? what do you roast on currently?
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Offline breauxj10

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Re: Factors in starting a coffee roasting business
« Reply #2 on: November 18, 2016, 05:14:33 AM »
Right now, I'm at an extremely preliminary stage of starting a coffee roasting biz. My goal is to have something up and running within the next two years.

I have a good friend who happens to be a chef and knows a lot of other chefs in the DC area where we live so there's a good chance we could get into their restaurants. How difficult is it to sell coffee into restaurants/cafes/country clubs?

 DC is notoriously expensive, so we are considering the benefits/pitfalls of moving further out into the "country" but still within an 1-2 hour drive to DC.

My initial thoughts are to look into a north roaster or a used roaster with a 8-15 kg roasting capacity - ballparking 15-20k budget for that. We don't have much experience with large scale roasters so we'd have a bit of a learning curve. Aside from an afterburner, what type of equipment do we need to get started? and any recommended size/brand/style of roaster?

And do we really need that much space to start roasting? I figure 800-1k sq feet would be the minimum space needed.
« Last Edit: November 18, 2016, 07:08:32 AM by Joe »

Abqbomb

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Re: Factors in starting a coffee roasting business
« Reply #3 on: November 18, 2016, 11:02:24 AM »
Is this venture going to be your sole source of income? Make sure your business plan is vetted by an independent third party.  For the sake of discussion though, let's assume your net profit is $5 a pound roasted.  For you to get to $50,000 annually, you'd have to move a minimum of 10,000 pounds of roasted coffee.  You'd need a roaster that's up to the challenge, and IMO, the one you mentioned wouldn't be up to the task.  It also seems to me that The DC area has a very high cost of living.   I could be off base in my assumptions, so am willing to stand corrected.  You seem to have more questions than answers. Maybe some of the seasoned pros here will chime in.
Chris

Offline breauxj10

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Re: Factors in starting a coffee roasting business
« Reply #4 on: November 18, 2016, 12:02:36 PM »
Chris -

My calculations show an 8kg capacity roaster roasting 2 roasts/hour, ~8 hours/day and 2 days/week will yield ~20,000 lbs/year of roasted coffee.

I'm not familiar with large scale roasting machines - am I missing something? and could you elaborate on why you suggest a larger capacity roaster please?

Jesse

Abqbomb

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Re: Factors in starting a coffee roasting business
« Reply #5 on: November 18, 2016, 12:54:14 PM »
I didn't realize the Chinese roaster had that much capacity but trust your numbers. I think my point was more that do you really think you can move that much coffee?  Great if you can!  On the Chinese roaster, are parts readily available as well as service?  Personally, I'd look at Ambex, Probat, or similar, or maybe a nice Coffee Crafters Artisan fluid bed roaster. I think Aaron from this site got one recently and it looks like a great machine. If your livelihood depends upon the roaster, make sure it's something that is easily serviceable and for which parts are readily available.  Just my 2 cents, which means it isn't worth anything, but best of luck and let us know which roaster you decide upon.
Chris

Offline Ascholten

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Re: Factors in starting a coffee roasting business
« Reply #6 on: November 18, 2016, 01:12:19 PM »
Now that you are roasting over 5 Lbs of coffee at a shot, I believe you now are considered a 'polluter'.  You will need a scrubber system to clean up your smoke before you release it to the air, and collect particulate matter, and chaff.  It will of course have to be a certified system, approved by the government, installed by an approved contractor bla bla.  $$$$.  I don't know if fire suppression will apply too, think Gaylord system over a range or grill.   As one starts doing some things in bigger quantities, they find that certain rules and regulations kick in, and that compliance can get VERY costly.

I hate to sound negative, but after starting my own business, got a very rude awakening on  how expensive shit can get.  Now if you are into customer service, and dealing with food, umm yah.   Wait until danny the dirt bag decides he wants to make your business, his business, and conveniently slips and falls on the coffee he just spilled.  Insurance can get costly too.  If you are doing just roasted coffee it shouldn't be too bad, but any other food items and now we are talking bonded warehouses and all kinds of insanity.

Aaron
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Offline Yardbirdaa

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Re: Factors in starting a coffee roasting business
« Reply #7 on: November 18, 2016, 05:48:52 PM »
To me, starting a business is like having your first child - if you wait until you are ready, you will never be ready.  Write a plan that looks great.  Do some research,but don't obsess about it.  As far as getting in to restaurants, alot of owners don't look at coffee like we do.  They find the cheapest stuff their customers will tolerate.  You have to be willing to flex on wholesale, because the restaurant supply companies have a fairly strong grip on cheap coffee.    Jump in, and see where it goes.

Offline breauxj10

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Re: Factors in starting a coffee roasting business
« Reply #8 on: November 19, 2016, 12:35:28 PM »
Chris - I'm not looking at any Chinese roasters. My eyes are on US Roaster Corp or Mill City. Any knowledge on either of those?

I want the core of the business to be coffee roasting - maybe with a coffee tasting area and small storefront concept. I have friends who went into the restaurant business and they always talk about how they're on edge b/c of all the hidden costs. He almost lost 10k overnight inventory because a walk in fridge system malfunctioned, luckily they had more than one fridge. I want to completely avoid/minimize food if we do some sort of storefront.

Good advice on not obsessing over the biz plan. A business is nothing until it's something.




Abqbomb

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Re: Factors in starting a coffee roasting business
« Reply #9 on: November 19, 2016, 02:29:22 PM »
If you go down a few threads in this Commercial Hardware section, there's a long thread about Mill City Roasters. I don't personally have any experience with that company, but my understanding is the roasters they are selling are made in China. 
Chris

Offline peter

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Re: Factors in starting a coffee roasting business
« Reply #10 on: November 19, 2016, 02:33:08 PM »
US Roaster is in the midwest and makes their own roaster.  Mill City is in MN, and sells North roasters, made in China.  I wouldn't hesitate to buy either, but wanted you to know where they're made.

You still haven't said (unless I missed it) what you roast on now.  How long have you been roasting?  How are your cupping skills, in regard to sourcing coffee?  Is there anything in your background that would lend itself to help succeed in a roasting business other than the idea that it'd be a good way to make some money?  Not trying to be a db, just asking.
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Offline Joe

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Re: Factors in starting a coffee roasting business
« Reply #11 on: November 19, 2016, 05:48:13 PM »
I would hesitate, let me correct that.... I would not hesitate to recommend against Mill City. The people involved with that company aren't cool in my book. They spammed us, slandered us, and created a bunch of discord here and have not apologized or acknowledged what they did. Until that happens I can assure you that I wont recommend them and in fact if I sense this thread promotes their agenda in any way shape or form it will be shut down.


That may seem harsh if you just walked into this thread but I don't mince words and I mean what i say and I do what i say. I have never been good at being passive aggressive, I prefer to know where I stand with people and I will afford you the same respect.

So lets cool it on the MCR talk if you want to have a legitimate conversation about running a roasting business you aren't going to seriously consider a Chinese sourced roaster as your solution.
« Last Edit: November 19, 2016, 07:06:34 PM by Joe »
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Offline Joe

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Re: Factors in starting a coffee roasting business
« Reply #12 on: November 22, 2016, 11:00:31 AM »
roasting business tutorial

Back on topic, Here is a nice write up i am sure this person had to have passed through GCBC at one point.
[url=http://www.greencoffeebuyingclub.com/index.php?board=37

Abqbomb

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Re: Factors in starting a coffee roasting business
« Reply #13 on: November 22, 2016, 12:19:27 PM »
Good link and informative Joe.  Our church has a modest-sized coffee shop and the 5kg Ambex they use is sufficient, but know a larger capacity roaster would suit them well.  Hopefully the OP is doing some in depth research......

Offline Joe

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Re: Factors in starting a coffee roasting business
« Reply #14 on: November 22, 2016, 12:28:03 PM »
Good link and informative Joe.  Our church has a modest-sized coffee shop and the 5kg Ambex they use is sufficient, but know a larger capacity roaster would suit them well.  Hopefully the OP is doing some in depth research......

Dang you must have a huge church ;D I roast for my church with my lowly Sonofresco.
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