Tuesday, April 17, 2007

time to squeeze water from stone

This process is not for the faint of heart. Really.

Our more complete construction bids are finally in, and 'whoah'. I mean really, take a deep breath, "whoah". Let's just say that some of our key construction categories are double (or more than) our initial estimates. And they weren't small numbers to begin with.

There are a lot of reasons why the numbers are so high, some of which I can grasp how they've incrementally ballooned (i.e. incremental changes to the structure of our lease contract affecting what we're responsible for, versus the landlord), some things which are completely out of our control (additional code requirements, cost of materials like copper and steel, etc.), and some stuff, that if we're honest, had just never made it onto our radar for whatever reason.

But the end result is that we have to get the numbers down; there's only so much money. There's no point in spending every single dollar that we have just to get open, if it leaves us with not enough money to pay for rent, staff, ingredients and the other plethora of operational expenses that will be due before we have enough sales to cover them, so that we end up closed within a couple of months of opening. They do say that's the number one (or two) reason businesses fail.

So now, we get into the unpleasant line-item process of figuring out what is absolutely required, and what isn't, e.g. where we will have to make the compromises. No one likes to compromise.

Facing these decisions does have an effect of forcing us to re-focus. It forces us to figure out where we won't compromise - we know that for us, the absolute highest potential for the quality of our coffees has to be the priority. But that's still tough on the constitution when you're trying to squeeze out every dollar you can from the budget and, for example, the difference between a sufficient main espresso grinder and a grinder that gives us the potential to really bring out the subtlest and sweetest flavors in our espressos might be $1700. That's just the difference, the premium for a grinder that enables us to make our coffee just a little bit better than it would be with the other grinder.

And we're making the same sort of choices for our 'brewed coffee' grinder, our "second" (+ "third") espresso grinder, our (Ferrari of an) espresso machine. These premiums all add up. But we're making these decisions because we're not trying to open a Starbucks-quality convenience store, or just a cute, community gathering spot where the coffee's "okay"... that's not our plan, or our desire.

And once we're open, we're going to continue making these types of choices, paying a premium for the best-sourced, freshly-roasted coffees, organic milks and better, more expensive ingredients. Why? I guess because ultimately we trust and believe that if we offer the most delicious product possible, that people will respond... no matter how much we end up having to compromise on the "awesome" bar design, the "ideal" floor construction, or how many midnight hours we end up having to spend painting the 11 ft. ceiling ourselves.

It actually really blows my mind that with all the fixed construction start-up costs for this type of build-out that aren't optional, that anyone manages to open a new business at all. My respect for folks that do manage it grows every single day. So go on, go on in to your favorite shops, bars and restaurants, say 'hi' and give them some business!

PS- Donations now being accepted.


mikep said...

I'm rooting for you guys. I don't envy the hard decisions you are faced with. I am excited to watch an excellent shop born as we watch!

Steve said...

Hi Dee,

The build-up costs keep me on the edge…I can never get a good handle on how much it is going to be. The forums don’t help much at all, they are just bunch of post entries with filler words. This is one of the uncertainties delaying my progress. I hope I’ll have good news to share soon. But for now, I wish you two with all the best!



lee said...

Thanks, MikeP! You too, Steve!

Yeah, build out costs are tough. I saw your Specialty Coffee thread about costs, Steve. At the time, I didn't have any input, but I think once we're done, I'd probably post there about it. Let me know how things are going though. And nice job on the latte art submissions on your blog/YouTube... very nice! Inspiring actually!

See you on the interweb,

Steve said...

D'oh! I am soooo sorry, Lee....
I can't think straight lately, but soooper happy to know that you like my latte art. : )

Rhett said...

Hello there! Wow sorry to hear about the struggles... But pour a good cup o'joe and have great service and you'll get me every day on my way to work! Watching through our windows across the street...