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Factors in starting a coffee roasting business

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breauxj10:
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.

Joe:
where are you at i the process now? what do you roast on currently?

breauxj10:
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.

Abqbomb:
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

breauxj10:
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

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