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If you're thinking about this, then you have to consider how those business you mention make money with a similar model. Starbucks: they don't charge $2 a coff

If you're thinking about this, then you have to consider how those business you mention make money with a similar model. Starbucks: they don't charge $2 a coffee. I would only ever get a drip coffee and I think it's around $3, most people who are going there get drinks in the >$5 range. Plus they have a lot of traffic - more customers = less wages required for each drink McDonalds: They charge less than $2/coffee. They charge less than $8 for a breakfast. They make their money on super high volume. Your vision: you're enjoying lingering, enjoying the sun. You're enjoying the floor (patio) space, which means you can't have high volume unless you have a huge space, which wouldn't work with your "little shack" concept. Unless there's a nearby park or beach with free barely limited space, while also still having enough traffic to stay busy. Very limited spots that can work. (so as with most issues regarding our urban spaces in north america, what we need to make them better is more density. :)

brvsft 4y ago
> (so as with most issues regarding our spaces in north america, what we need to make them better is more density. :) Then we raise the problem that this is not longer some simple, happy little shack where I get my coffee and relax. Higher density, higher volume means I wait in a potentially long line, have my personal space violated both considerately and inconsiderately by total strangers, feel the anxiety of being in a potential fire hazard area, etc. Arguably, none of this is better. I am more willing to pay a premium on the coffee than to deal with all of that.
- ryukafalz 4y ago
  The longest lines I've ever been in for coffee have been at suburban Starbucks drive-thrus, which are far from dense. My experience is small coffee shops in cities don't really get that crowded. There's plenty of room for those small coffee shops where you can get your coffee and relax in a nice little lounge spot. (I've seen more of them by far in cities than outside, honestly.)
- ethbr0 4y ago
  > Higher density, higher volume means I wait in a potentially long line The better bargain is to decrease shop area and worker count, and increase number of shops. Tokyo seems to do just fine with 5-seat places...
giraffe_lady 4y ago
They also ruthlessly overwork employees with just in time scheduling. And the urban starbucks that have cafe-like atmospheres are subsidized by the suburban ones that do all or most of their business through the more-labor-efficient-but-enjoyed-by-no-one drive thru.
- ghaff 4y ago
  The Starbucks near ex-urban me always has a line of cars wrapped around the building for the drive-through--something I've never really understood. If I go to a coffeeshop except maybe when I'm traveling it's to hangout with a coffee and maybe grab some food.
  - djkivi 4y ago
    Think of all the parents taking their kids to soccer, football, whatever. Many of them grab a coffee on the way.
    - ghaff 4y ago
      I guess. If it's in the morning, I'll make some coffee at home and put it in a go cup. Otherwise I mostly don't drink coffee during the day unless it's on a long drive and I certainly won't wait in a 10-15 minute line of cars. But I think it's something that becomes a habit/ritual for a lot of people.
  - monocasa 4y ago
    The simple answer is that caffeine and refined sugar are both minor but addictive drugs, particularly in combination.
  - JohnFen 4y ago
    I think it's about convenience. You can have a cup of reasonable coffee in your hands in just a few minutes.
    - badpun 4y ago
pydry 4y ago
Starbucks can negotiate way better deals on rent than mom and pops. IIRC McDonalds even went as far as to become a landlord many of its franchisees, so it pays rent to itself. For many small businesses - especially mom and pops, the majority of the surplus value is captured by property owners, and the amount has increased over the years. This is partly how Piketty's r > g came about.
- lm28469 4y ago
  > Starbucks can negotiate way better deals on rent than mom and pops. On coffee too, they're big enough to go straight to the farmers and set their prices https://www.thecommonscafe.com/starbucks-criticized-for-low-wages-paid-to-coffee-farmers/ https://www.thecommonscafe.com/starbucks-criticized-for-low-...
- JohnFen 4y ago
  > IIRC McDonalds even went as far as to become a landlord many of its franchisees, so it pays rent to itself. I read somewhere that McDonald's makes more money from their real estate holdings than anything else they do. Can't vouch for how accurate that is, but it seems very plausible.
  - shagie 4y ago
    https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chain-its-a-brilliant-30-billion-real-estate-company https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chai... > About 85% of the company in 2016 was represented by franchisee-run locations—people who agree to operate individual McDonald’s restaurants with a licensed privilege to the branding. But rather than collect a lot in royalties or sell its franchisees cooking equipment, McDonald’s makes much of its revenue by buying the physical properties and then leasing them to franchisees, often at large mark-ups. https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burger/ https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burg... > Today McDonald’s makes its money on real estate through two methods. Its real estate subsidiary will buy and sell hot properties while also collecting rents on each of its franchised locations. McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 36,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee-operated.
derefr 4y ago
Or, to put that another way: the true cost is real estate. Don’t try to run a cafe. Find a pretty outdoor area where some property developer kindly built commons seating on their own dime, and drive a coffee food truck up to it.
- cafard 4y ago
  I don't know about other cities, but in Washington, DC, the pandemic lockdown essentially destroyed the food truck business. A few operate along the edges of the National Mall, where the customers must be tourists. But McPherson Square, Farragut Square, and L St. NW used to have a lot of food trucks and have none now. So maybe find a pretty outdoor area where there are lots of tourists.
- SECProto 4y ago
  > Find a pretty outdoor area where some property developer kindly built commons seating on their own dime, and drive a coffee food truck up to it. Most places with high demand like this also have prohibitions (or limited parking/operating permits) on things like coffee trucks, in my experience. Another issue with our prohibitive land use practices in north america.
hinkley 4y ago
Don’t try to understand how a company works by looking at the loss leaders. A cafe despite the name is not making its money off of coffee. Drip is probably selling at cost, especially once you include the cream and sugar. It’s probably not the pancakes either, with whipped butter and syrup. It’ll be the orange juice, the bacon, or omelettes.
- slindsey 4y ago
  Just an anecdote; I spoke to a manager at a small coffee shop and he said that they make all their money on coffee alone by 9am (and surprisingly, they licensed Starbucks coffee). Everything else was a pain and barely covered costs because of time, equipment, and effort. But coffee was cheap and easy.
  - hinkley 4y ago
    How much are they charging for coffee?
    - slindsey 4y ago
      Around 2 dollars US for a medium coffee that cost them pennies. According to him, the other things they sold were there just to bring people in. Money was in the coffee because it was cheap and easy.
      - hinkley 4y ago
        Medium is what, 12 ounces? Yeah I could see that. You're mostly paying for cup. But I think you/he should look around. If you're not a fast food restaurant coffee costs a bit more than that these days, and charging 'a bit less' craters your profit margins.
  - urbanhole 4y ago
    Yep. For all cafe-like spaces I’ve been involved with, drip coffee == free money.
logifail 4y ago
> what we need to make them better is more density I'd love to hear more about this, and how one defines "better", because it doesn't sound like this is going to work for everyone. Full disclosure: I've spent the pandemic being amazingly grateful that - by chance - I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes.
- DHPersonal 4y ago
  (Increased) density doesn’t have to mean an absolute lack of any open fields, does it? Doesn’t density offer a probability that countryside can be closer to one’s home?
  - logifail 4y ago
    > Doesn’t density offer a probability that countryside can be closer to one’s home? I was responding to someone suggesting that increased density would help with retail profitability. If we were to make housing more dense but use the extra space as countryside that's not going to provide any more customers within the catchment area of the OP's coffee shop, is it?
    - SECProto 4y ago
      > If we were to make housing more dense but use the extra space as countryside that's not going to provide any more customers within the catchment area of the OP's coffee shop, is it? If your current area has 400 residents but you can still easily walk to open fields, increasing that to 1200 residents in the same area would triple potential coffee customers while maintaining the same access to countryside.
- SECProto 4y ago
  > I'd love to hear more about this, and how one defines "better" Sure! The discussion was about enjoying small independent coffee shops, and how to run one profitably, so my description of "better" is w.r.t. that issue - for persons who want to run such a coffee shop, or who want to visit one. The identified issue is that per-purchase margins are fairly small, and to sustain a business it requires a lot of these small purchases. As property (mortgage/rental) costs are also high, having a small space is also important. So to get a lot of customers despite being a small space, you want to be either near a natural attraction (park, beach, etc), or near a lot of people (office building, metro station). Density helps with the latter. > I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes. And how many independent coffee shops can you walk to in a couple minutes?

brvsft 4y ago

> (so as with most issues regarding our spaces in north america, what we need to make them better is more density. :) Then we raise the problem that this is not longer some simple, happy little shack where I get my coffee and relax. Higher density, higher volume means I wait in a potentially long line, have my personal space violated both considerately and inconsiderately by total strangers, feel the anxiety of being in a potential fire hazard area, etc. Arguably, none of this is better. I am more willing to pay a premium on the coffee than to deal with all of that.

ryukafalz 4y ago
The longest lines I've ever been in for coffee have been at suburban Starbucks drive-thrus, which are far from dense. My experience is small coffee shops in cities don't really get that crowded. There's plenty of room for those small coffee shops where you can get your coffee and relax in a nice little lounge spot. (I've seen more of them by far in cities than outside, honestly.)
ethbr0 4y ago
> Higher density, higher volume means I wait in a potentially long line The better bargain is to decrease shop area and worker count, and increase number of shops. Tokyo seems to do just fine with 5-seat places...

giraffe_lady 4y ago

They also ruthlessly overwork employees with just in time scheduling. And the urban starbucks that have cafe-like atmospheres are subsidized by the suburban ones that do all or most of their business through the more-labor-efficient-but-enjoyed-by-no-one drive thru.

ghaff 4y ago
The Starbucks near ex-urban me always has a line of cars wrapped around the building for the drive-through--something I've never really understood. If I go to a coffeeshop except maybe when I'm traveling it's to hangout with a coffee and maybe grab some food.
- djkivi 4y ago
  Think of all the parents taking their kids to soccer, football, whatever. Many of them grab a coffee on the way.
  - ghaff 4y ago
    I guess. If it's in the morning, I'll make some coffee at home and put it in a go cup. Otherwise I mostly don't drink coffee during the day unless it's on a long drive and I certainly won't wait in a 10-15 minute line of cars. But I think it's something that becomes a habit/ritual for a lot of people.
- monocasa 4y ago
  The simple answer is that caffeine and refined sugar are both minor but addictive drugs, particularly in combination.
- JohnFen 4y ago
  I think it's about convenience. You can have a cup of reasonable coffee in your hands in just a few minutes.
  - badpun 4y ago

pydry 4y ago

Starbucks can negotiate way better deals on rent than mom and pops. IIRC McDonalds even went as far as to become a landlord many of its franchisees, so it pays rent to itself. For many small businesses - especially mom and pops, the majority of the surplus value is captured by property owners, and the amount has increased over the years. This is partly how Piketty's r > g came about.

lm28469 4y ago
> Starbucks can negotiate way better deals on rent than mom and pops. On coffee too, they're big enough to go straight to the farmers and set their prices https://www.thecommonscafe.com/starbucks-criticized-for-low-wages-paid-to-coffee-farmers/ https://www.thecommonscafe.com/starbucks-criticized-for-low-...
JohnFen 4y ago
> IIRC McDonalds even went as far as to become a landlord many of its franchisees, so it pays rent to itself. I read somewhere that McDonald's makes more money from their real estate holdings than anything else they do. Can't vouch for how accurate that is, but it seems very plausible.
- shagie 4y ago
  https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chain-its-a-brilliant-30-billion-real-estate-company https://qz.com/965779/mcdonalds-isnt-really-a-fast-food-chai... > About 85% of the company in 2016 was represented by franchisee-run locations—people who agree to operate individual McDonald’s restaurants with a licensed privilege to the branding. But rather than collect a lot in royalties or sell its franchisees cooking equipment, McDonald’s makes much of its revenue by buying the physical properties and then leasing them to franchisees, often at large mark-ups. https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burger/ https://www.wallstreetsurvivor.com/mcdonalds-beyond-the-burg... > Today McDonald’s makes its money on real estate through two methods. Its real estate subsidiary will buy and sell hot properties while also collecting rents on each of its franchised locations. McDonald’s restaurants are in over 100 countries and have probably served over 100 billion hamburgers. There are over 36,000 locations worldwide, of which only 15% are owned and operated by the McDonald’s corporation directly. The rest are franchisee-operated.

derefr 4y ago

Or, to put that another way: the true cost is real estate. Don’t try to run a cafe. Find a pretty outdoor area where some property developer kindly built commons seating on their own dime, and drive a coffee food truck up to it.

cafard 4y ago
I don't know about other cities, but in Washington, DC, the pandemic lockdown essentially destroyed the food truck business. A few operate along the edges of the National Mall, where the customers must be tourists. But McPherson Square, Farragut Square, and L St. NW used to have a lot of food trucks and have none now. So maybe find a pretty outdoor area where there are lots of tourists.
SECProto 4y ago
> Find a pretty outdoor area where some property developer kindly built commons seating on their own dime, and drive a coffee food truck up to it. Most places with high demand like this also have prohibitions (or limited parking/operating permits) on things like coffee trucks, in my experience. Another issue with our prohibitive land use practices in north america.

hinkley 4y ago

Don’t try to understand how a company works by looking at the loss leaders. A cafe despite the name is not making its money off of coffee. Drip is probably selling at cost, especially once you include the cream and sugar. It’s probably not the pancakes either, with whipped butter and syrup. It’ll be the orange juice, the bacon, or omelettes.

slindsey 4y ago
Just an anecdote; I spoke to a manager at a small coffee shop and he said that they make all their money on coffee alone by 9am (and surprisingly, they licensed Starbucks coffee). Everything else was a pain and barely covered costs because of time, equipment, and effort. But coffee was cheap and easy.
- hinkley 4y ago
  How much are they charging for coffee?
  - slindsey 4y ago
    Around 2 dollars US for a medium coffee that cost them pennies. According to him, the other things they sold were there just to bring people in. Money was in the coffee because it was cheap and easy.
    - hinkley 4y ago
      Medium is what, 12 ounces? Yeah I could see that. You're mostly paying for cup. But I think you/he should look around. If you're not a fast food restaurant coffee costs a bit more than that these days, and charging 'a bit less' craters your profit margins.
- urbanhole 4y ago
  Yep. For all cafe-like spaces I’ve been involved with, drip coffee == free money.

logifail 4y ago

> what we need to make them better is more density I'd love to hear more about this, and how one defines "better", because it doesn't sound like this is going to work for everyone. Full disclosure: I've spent the pandemic being amazingly grateful that - by chance - I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes.

DHPersonal 4y ago
(Increased) density doesn’t have to mean an absolute lack of any open fields, does it? Doesn’t density offer a probability that countryside can be closer to one’s home?
- logifail 4y ago
  > Doesn’t density offer a probability that countryside can be closer to one’s home? I was responding to someone suggesting that increased density would help with retail profitability. If we were to make housing more dense but use the extra space as countryside that's not going to provide any more customers within the catchment area of the OP's coffee shop, is it?
  - SECProto 4y ago
    > If we were to make housing more dense but use the extra space as countryside that's not going to provide any more customers within the catchment area of the OP's coffee shop, is it? If your current area has 400 residents but you can still easily walk to open fields, increasing that to 1200 residents in the same area would triple potential coffee customers while maintaining the same access to countryside.
SECProto 4y ago
> I'd love to hear more about this, and how one defines "better" Sure! The discussion was about enjoying small independent coffee shops, and how to run one profitably, so my description of "better" is w.r.t. that issue - for persons who want to run such a coffee shop, or who want to visit one. The identified issue is that per-purchase margins are fairly small, and to sustain a business it requires a lot of these small purchases. As property (mortgage/rental) costs are also high, having a small space is also important. So to get a lot of customers despite being a small space, you want to be either near a natural attraction (park, beach, etc), or near a lot of people (office building, metro station). Density helps with the latter. > I happen to live in a low-density part of the world. It has its downsides, but on the plus side, from my home I can walk to open countryside in pretty much any direction in a few minutes. And how many independent coffee shops can you walk to in a couple minutes?