Food Franchise

Posts Tagged ‘Competitive Advantage’

The coffee franchise business opportunity has grown in popularity, especially in the last five years. The reason? Demand is on the rise. Coffee consumption has increased dramatically over the years and specialty coffee is all the rage.

When investors see statistics like the fact that half of adults in the United States consume over 4 cups of coffee each day — it gets them excited. In this article, we will discuss what you need to know before buying a coffee franchise business.

Demand is a good indicator that investing in a coffee business is a smart financial proposition. However, there is more to it than just having demand. When somebody wants coffee, they have to choose between several different options. What will your business you invest in offer them that they can’t get anywhere else and that they want?

You have to make sure to invest in a franchise that offers a valuable competitive advantage in the marketplace. Otherwise all the demand in the world won’t help — it will be met somewhere else.

When looking for competitive advantages evaluate what other coffee businesses in your area are going after. The marketplace. For example, let’s look at the leader, Starbucks. You will probably have considerable trouble trying to compete with them for their market share.

However, who says we can’t go after another share of the market? For example, you could put up a drive through coffee franchise right across the street from Starbucks and probably be successful.

Why? Because your target market are the people who are more concerned about quickly purchasing a cup of coffee than they are about enjoying the atmosphere and personalization offered by Starbucks. That is an example of a competitive advantage.

This is one of the most important factors to evaluate before purchasing a business. In addition to demand and competition you need to educate yourself on the options available to you. This means knowing what kind of budget you have to work with and the various franchise opportunities that are available within that budget.

There are different answers for different budgets. For the small budget, you can consider a coffee kiosk. A medium-size budget may be perfect for a coffee drive through business, while a bigger budget can be used to invest in a franchise with an established brand name.

Keep these facts in mind when evaluating different possible investments in the coffee franchise business.

Demand is the name of the game! Coffee consumption as a whole has increased dramatically within the last 10 years. Specialty coffee is now common almost everywhere, whereas a few decades ago it was only found in the most chic of places.

About five years ago, many savvy investors stood up and started taking notice of the opportunities presented by coffee franchise businesses. A lot of them got into an opportunity and made a lot of money. Think about it – half of the adults in the United States currently consume, on average, 4 cups of coffee each day.

The fact is, those who consume that coffee have a variety of different requirements that need to be met before they will purchase coffee from you. Some only prefer to brew the coffee themselves at home, but they will purchase coffee beans from you. Others want a quick fix that they can grab on their way to work. For them, convenience is preferred over quality.

Others still want the experience that comes with getting coffee. Think of Starbucks in this instance. That is why Starbucks can charge three or four times as much for what basically is the same coffee as another competitor and get away with it.

The point is that there are a lot of different reasons why people will consume coffee. And of course there are a lot of different coffee franchise businesses that go after these different market segments. So it’s important when looking at these franchise businesses to find one that will give you a competitive advantage in your marketplace.

What’s a competitive advantage? Basically, it’s what can you offer to the coffee drinker that they want and can’t get anywhere else?

The answer to this will depend upon the area in which you plan on putting the coffee franchise business in. For example, if you’re in an area that is already saturated with specialty coffee stores then another one probably won’t work. See how it fails the question asked above?

However, in a place where there are only specialty coffee shops, a drive-through coffee shop that stresses speed first may just have what it takes to make it – even directly across from four other slow environment rich coffee shops.

It’s important when evaluating different businesses to keep an eye on the target audience that they go after. When you have determined what markets are hot and exploitable in your area then look for a coffee franchise business that target those people. That is your best bet when investing in any franchise.