Have you ever wondered why some businesses run so smoothly while others are like a train wreck?
I started Narrative Coffee in 2015, then we’ve been building better systems ever since. (dramatic music)They have to be able to multitask so they can make coffee and ring in orders at the same time. And we invested in things that I knew would give us our best chance at return. A lot of people put their retail after the point of sale, which never works.
How much are you spending on an average month for advertising?
None, nothing. So we built a spreadsheet that tracks the raw ingredient costs. I call it Instagram bait ’cause it just makes for better pictures. So anytime people cross pathsis a time where you lose efficiency.
We’re gonna show you guys how to start a coffee shop, improve its sufficiency, and expand to multiple locations. So let’s go say hi to Maxwell. (dramatic upbeat music)Maxwell, tell us when you first opened Narrative. Yeah and the reason you got into coffee, tell us the story behind that. Totally, yeah, I’ll start with the reason why I got into coffee. I had a really amazing latte one day at ZoKa Coffee, down in Kirkland.- [Paul] Okay.
And, it blew my mind, and I just got super into it and started researching it and learning about itand just invested a ton of time into it. No prior coffee experience? No barista experience? No business experience, nothing, just super into it. Need to try that coffee. Yeah, it was great. And then we opened Narrative. We launched a coffee cart on July 4th, 2016. Okay And then we opened our brick and mortar, which we’re sitting in right now, on June 9th, 2017. 2017, so you’ve been here for a number of years.
Yep Maxwell, tell us when you first opened, what was the biggest struggle or a business problem that you faced? Definitely that we were under priced. So our COGS were just really high So we were basically either not making money or losing money every time we were selling something. Okay, why don’t we share how you solve that problem later on in the video? So you guys keep watching cause Maxwell obviously has solved that. Yeah And now you’re flourishing. Let’s talk about systems or SOPs that have helped you overcome your early challenges.
As a coffee shop operator Yeah. One of our bigger things that we spend a lot of effort on is developing a full spread sheet where we keep track of all of our costs. One thing that’s really easy to happen is you just go to the store you cost something out once and then you feel like it’s set for a while. And then you don’t look at your costs again for a bit And all of a sudden everything’s gone up, and now you’re throwing money away. So we built a spreadsheet that tracks the raw ingredient cost and takes every recipe in the entire store, breaks it down by each ingredient So that whenever, we do a quarterly audit of our COGS, that way, every time one of our ingredient costs goes up it’s reflected in every recipe costs so that we can stay on top of our costs at all times.
Is that automatic connected, Yup. so you’re just provider, or is that a spreadsheet you created within Google docs? – Yeah, we use an Excel spreadsheet Yeah, so it’s got multiple pages, we have like a master page that has every raw ingredient So like flour, and milk, and butter, and all those sorts of things, broken down at a gram level and then we weigh everything So everything is done by mass. So that way we’re really consistent. It reduces our waste. And then we also know exactly how much of each product goes into everything. And we account for everything from takeaway with cups and sleeves and lids all those small costs, they all add up.
I wanna add value to our viewers who maybe don’t have that system in place.- What can they do today to get that in place and start saving, start making more? – Yeah, definitely I think that one, they can email me. I’d be happy to help with that We could share that sheet with them. – Wow, you guys, he’s willing to share that sheet with you. MAXWELL@NARRATIVE.COFFEE- There you go. – But then also, if you just wanna build it yourself, it’s not too difficult. You just go in and find all your ingredients break down by the weight, how much you paid for it and then make a unit out of it. And then every time you use that ingredient in a recipe,you just include that unit.
When you opened your second location did you do anything differently as compared to opening up this one? Yeah, it was a sort of a different situation that we we’re coming into, kind of pre, it was a coffee shop prior. So we had to do some construction things that were around making it work for our systems and how we operate. But as far as the systems themselves and how we do things almost everything is identical. Our food menu is slightly smaller, just given the constraints of the space Gotcha. But everything’s pretty much, pretty much similar. How did you know you were ready for a second location? We have a really strong team. So I knew that we had good managers in place that could facilitate continuing to run this place well Have always tried to take the work myself out of a job type of an approach So I knew that we had really strong managers here. We got a great manager up in Bellingham.- Obviously having cash position was an important thing. So, we had kind of financial bench marks that we were looking to see before we were ready to expand.
Let’s talk about the cart. What was the cost to get that going? How did the cost break down if somebody wanted to do the same and start there? Yeah, totally. It kind of depends on the situation. Mine was kind of a unique situation in that I was gifted the carts and it had an old espresso machine on it. It was like ’80s era cart, a local church had itand they were just, it was just taking space in their basement and they knew that I was into coffee. So I offered to take it off their hands and they let meand so I renovated that cart with the espresso machine on it. I put about $300 into replacing all the parts Yeah, I had like a $1,500 startup loan that I took. And so I started the cart with $1,500with all of our inventory and everything. – So free cart, 1500 bucks for inventory. What would it cost someone to buy a cart?- Depends on the volume that they’re planning for and expecting, a high volume cart will cost 15, 20 grands.- Yeah, with a trailer and all that to do it right. If you can be a little more low volume you can make it work for two and a half, three grands. – Say, any tips tricks with regards to starting with a cart?- Yeah, I always recommend people if you are looking to start a cart or some sort of mobile operation view it as a marketing opportunity, not as a finance driver they tend not to do incredibly well as far as like raw numbers go but they can really build a loyal clientele and just a group of people that are really passionate about what you’re doing and those people become your core and they get excited about your brands.(upbeat music) – So let’s talk about the key ingredients to an exceptional customer experience for a coffee shop. What stands out? – I think there are two, there’s a very simple one welcoming people in when they come in, so saying hello and saying goodbye when they leave. And then also figuring out and deter mining how to ask questions and create an experience based on where the person is at Some people. – Give me an example. – So for example, some folks, when they come in here, they’re wanting like a full coffee geek experience And they wanna like geek out about the coffee, the individual like varieties, where it was grown, how it was processed, all that Some folks just want their coffee and they wanna get off to their day, right? So like learning how to read that, training our staff to give that experience based on how people want to be served really creates a great experience. All right, well, let’s give you guys a quick tour, a walk around of how you set the place up.- Yeah. – Why and why that’s important. – Yeah, so I mean, for me, the first thing is the guest experience always So walking in the door, what are they seeing? And seeing people hanging out, couches here, then over here, we’ve got our kind of retail shelf that way, when people are waiting in line, there’s something to something to look at, something to grab. A lot of people put their retail after the point of sale which never works in a coffee shop. – Retail before point of sale. – Absolutely. – [Paul] That’s important.- And then this is kind of where we order, with our pastries over here and our point of sale there. And then our filter coffees, the ones that we make by hand are right there. That’s really important because it takes a pre-setted hands time like you have to actually hold it and make the coffee. – Why here then? – They have to be able to multitask so that they can make coffee and ring in orders at the same time. So that’s really huge. Then that wraps around here to where the barista’s station when they’re making espresso drinks, that sort of a thing, this is all built just tight enough to where one person can work it by them selves or you can have multiple people working in it together without getting in each other’s way. All right, Paul let’s go get some supplies real quick and we can chat a little on our way. – Awesome, let’s do a supply round with Maxwell. We’ll show you guys where he gets, what he gets and what it costs. – Yeah. (upbeat music) – So you have a pretty unique process of choosing your roasters. – Yeah. – You change it every two months? – Yeah. – Tell our audience why you do that and where the idea came from really?- Yeah. And what does that do for your business? – Totally yeah, so we’re really focused on taste and experience and it’s really easy for people to get caught up in branding and all sorts of other things that make people feela certain way about a given roaster and that sort of a thing. I think that cup quality so that just the flavors them selves are the most important thing. It creates an experience for people. It also means that sometimes coffee shops get branded by the roasters that they serve and they don’t build their own brand. – I see. – So I wanted to help avoid that by creating a system that’s unique to us, that helps us keep our quality really high, which serves our values also helps us build our brand equity with our guests and knowing that they’re gonna get a consistently great experience with us regardless of whatever roaster we’re serving at the moment, they’re gonna find the best possible cup that they can get. – That’s pretty cool. (upbeat music)Maxwell tell us where we’re at and what we’re doing here? – Yeah we’re at U.S. Chef store, which is where we get a lot of our like dry paper goods cups, napkins, miscellaneous business items. – [Paul] And tell us when you first opened up the cart, right? Narrative coffee. – Yeah. – [Paul] So how did you build brand awareness and let people know you exist now.- I competed and did a lot of coffee competitions and those sorts of things. So I had a little bit of like, people knew who I was because of my involvement in that. And I think that really helped kind of start, it kind of gave people something to be excited about.- That’s true. – And then having our cart gave people a place to come and try out everything that we’re doing And we were sourcing our coffee the same way that we are now with that kind of large scale cupping process
where we’re tasting all the coffees. – So that really helped. – Yeah, I think it really helped just like give people an understanding of like what we were doing, If you’re someone who’s looking to start a business we’re excited to share how Taylor Brands can help you jumpstart the process. If you don’t know where to start Tailor Brands is an AI driven one stop shop for aspiring small business owners. Just answer a few questions on Taylor Brands website and they will help you generate a logo, create your brand identity and choose a domain, website, email and business cards They even help you get your LLC and trademarks. Once everything is set up, you can order branded merch and share your logo, website and digital business cards on social media. They can even help you with templates and get started making money.
The best part is you can get all this for the fixed cost payment with plans starting as low as 8 99 per month So make sure to check them out today and you can use code UPFLIP40 for 40% off Tailor Brands plans or click the link in the description below. (upbeat music)So what’s your total monthly revenue here at this location in Everett? – This location’s doing a upper seventies low eighties every month. – For a month? – Yeah. – Is the industry for you or for you specifically let’s focus on that is it pretty steady or is there a seasonality too? High summer, super low winter. Why would that be?- It depends a little bit on the location. Our shop here tends to do a little bit better in the summers and with a small dip and like early fallor mid-fall I guess, and then picks back up and then dips right after Christmas, of course So it kind of just depends on the location though. If you’re in a place that’s got a really big down town summer traffic, then you’re probably gonna be busier but coffee shops historically tend to do well in the winter cause it’s warm drink, people wanna be inside.
But I would say the industry as a whole tends to be a little bit busier during the winter times.- Okay. – We are a little bit busier in the summer times here. – Cool. (upbeat music)- How much you’re spending on an average month for advertising? – None, nothing, zero dollars. – You’re not spending anything? – Nope.- How are you advertising your brand, your coffee, your experience, everything, which platforms give you the best ROIand bring in more people? – Yeah, I would say Instagram has been our primary driver for most of the time that we’ve been open That’s a really good way to stay connected with our guests regularly, that’s been really great. We also use Facebook. We’re gonna start diving into TikTok a little bit I think at some point being not native to TikTok for me means I gotta find some folks on my crew who are gonna do a great job doing that. – Are you asking customers somehow to leave a review or post some pictures like on cups, is it on business card or has this happened naturally? – Just happens naturally. Yeah, I think part of it’s you gotta create places where they can. So the design of the space is built around it. There’s great lighting in here, that was all very intentional.
When we designed the space, we included lighting as part of our design process ’cause it just makes for better pictures overall.- [Paul] Makes sense. – I call it Instagram bait. – Instagram bait? – Yeah. – Okay. – So just little things that like help people have a good, nice place to take pictures ’cause people wanna share what’s going on in their life and the experiences they’re having So having good places to do that makes a big difference. So it naturally encourages people to do it. It’s architectural influence I think they call it something like that. For somebody that wants to get in to the coffee industry, right? – Whether it’s a cart or a smaller place but they don’t have much money. What advice would you have for them? Are there options out there? – There are, it can be a little tough if you do start on your own and you start small, it’s a good idea to work for somebody else for a while first, learn the ins and outs of the business on someone else’s dime. I think that really makes a big difference And then, you gotta redo your research more ’cause there are a lot of small costs that show up. Those things can really hurt you so doing your due diligence is really, really huge when you don’t have a big budget.
So if you haven’t a ton of money, obviously you’re not gonna be able to start big start somewhere where you can. – Exactly start small, start with what makes sense, find somewhere else to pop up Like if you’re trying to start a cart, find a barber shop to post up into or find somewhere that people are that you can kind of get out there. Start building a strong foundation for your business and then just build up years and get some experience doing it. What about break even point? When you got started what was your initial cost here? The build out, everything else. Yeah, we took out a loan for about $290,000.The build out itself cost 181 and then all the equipment was another about 65, 70 is hand then operating capital, just to buy inventory, flow, labor, all that sort of thing.- Did you have a plan on how soon you wanted to see that back and if so, what was the break even point when you got all that money back?- Yeah definitely, we broke that point a bout six months in revenue wise. – Wow. – Yeah. And the overall initial investment we were really high value oriented in terms of what we invested in. And we invested in things that I knew would give usour best chance at return. – What do you mean by that high value, like equipment? Equipment definitely, efficiencies and systems on the bar.
So like we weigh all of our shots and instead of having to manually flex around with a scale, we have a scale that’s built into the espresso machine that automatically turns off the espresso once it reaches the right weight. We have high efficiency grinders that work really well So we put money into those things ’cause those are primarily where our incomes comes from. So the total throughput that we could process in a way that was still keeping quality high as much higher with those equipment investments than if we were try to save money on something like an espresso machine, that’s the place where it’s ultimately gonna hurt you the most. – Why are systems super important for a coffee shop?- Systems, they provide a structure and a framework for everyone and they keep you kind of on track and they force you to keep looking at metrics, paying attention to things. Know your numbers thing.- Exactly. And I think they really help you have a handle on what’s happening in your business at all times They also help reduce waste.
They help increase efficiency so that way your staff are able to work more effectively and efficiently which creates more value in the business as a whole. And you can then share that with them and have more for yourself It’s a win-win at every level. All right, you guys ready to do blitz with Maxwell? It’s super frigid out here but it’s fun. All right, @ProductDesignOnline is asking how much do people really care about the coffee beans, like type, quality versus the overall experience and consistency?- Well, I think they’re tied together but research by the NCA says that they care second most about quality, first most about convenience.- Okay, awesome. Alfonso Sandoval is asking what was your strategy as a beginner coffee shop owner to compete with well known bigger coffee shops? – I’m playing a different game. So I’m not trying to have the same product every single time people come in. I’m trying to create a fun experience for people every time they come in. – @Aria is wondering how would you go about finding a GM or assistant manager for your current store if you decide to scale and build another shop?- We are deciding to scale, yeah. I really try to hire from within. I try to give my staff the most opportunities that they canso that sometimes looks like investing in their education. So that’s a big one, but if not then the big question for me to ask is what do I need from a person and what qualities am I looking for? Figuring out a process that helps you determine those qualities along the way instead of just in one interview.- Havana Day, I think that’s just as, is asking what systems simple, as they may be do you have in place that allow your business to be sustainable without micromanagement? – Maybe we’ll mention that in the interview but if anything else. – Yeah, definitely. I definitely think having checklists and those sorts of things are really important.
Honestly, the biggest one is easily communicating your values. So our values, we use them as a rubric for decision making for our staff specifically so that way we don’t have to micromanage people. – Quinn Bloodmoon, ooh, is asking if you could open up five more coffee shops, where would you open? – Depends on the situation in the market. – You got two and we’re at Bellingham let’s talk about three more. – My initial plan for the next couple is more locally.- Okay. – You gain more efficiencies by having them within a certain geographic distance My first two are a little further apart than I was initially planning. Just a good opportunity. – Usually take an hour? – Yeah an hour.- Last question. What’s your favorite business book or books? – Yeah, my favorite business book is Let My People Go Surfing by Yvon Chouinard the founder of Patagonia. – Let my people go surfing. We will give out that book for free to one random person who comments below and answers these two questions. How can we improve this channel? And what business tool would you guys like us to build? And that’s it for blitz. (upbeat music)Let’s talk about some of the merch that you have and why it’s here specifically, who chose it, just interested for our viewers, kinda how you chose all this. – Yeah, so being in a coffee shop primarily, coffee is a real big player. So we have lots of different bags of coffee. These are all coffees that we bring in, we serve all the time. – It’s beautiful label by the way.
We have wine, that’s all chosen by our wine buyer. We have equipment for brewing, things that just help people make good coffee at home.- And then what’s behind you. Why don’t we show our reviewers? So you have some branded stuff obviously.- Yeah we do, yeah. – But you mentioned you don’t have a branded cup. – Yeah. – Why is that? – It’s experience oriented. So like our takeaway cups are definitely branded, sorry.- Takeaway is branded? – Yes, takeaway is branded but sitting for here, we don’t have our logos on everything ’cause people know where they’re at and it creates like an atmosphere, you know? So I think it just helps create an environment where people feel welcomed Also part of our current marketing strategy is not just built around getting our brand out there but around social media influence and organic grow hand people sharing, which always has geo tags and those sorts of things. – Right, and we’ll talk more about social media later.(upbeat music) – What’s the best way to create the best environment for your employees. What do you do specifically?- Number one is having good open channels of communication, creating a place where people wanna work by having competitive pay, having as many benefits as you can afford, given where you’re at, listening to people, hearing what they have to say, making sure that people feel valued and that they know that they’re a part of a team and people want to work at a place where they believe in the vision of it, the mission and why that place exists. – Do you do like team meetings every morning or every week?- We have a monthly staff meeting and then we use kind of intercommunication with slack and those sorts of things.
And then we have staff hangouts and those sorts of things for team building and whatnot.- Do you need kind of encouragement of feedback to you or to your partners, like how does that look, how does that work? – Definitely yeah, we have open communication lines so people can talk to me anytime. Everybody has my cell phone so they can text me and call me if they have any questions. Oh yes, definitely. And we also have like monthly one on one meetings where we can kind of talk with everybody, figure out what their experience has been like, if there’s any challenges that we can kind of help address ahead of time. So yeah, those are all the ways that we do that. (upbeat music)- What’s the idea behind there as well? – Just efficiency yeah. So the backup cups here, they get moved over to here quickly. Dishes that are dirty from over there, they can get all cleaned. They can get moved up to here and they don’t have to ever cross paths. So anytime people cross paths is a time where you lose efficiency.
Anything else that you wanna highlight in terms of this setup and its efficiency so others can copy and do the same? – Yeah definitely. It’s really important to consider your flow of your espresso drinks and making sure that your movement finishes with your milk. So having your grinders on the opposite side of where your drinks are being handed off is really important. I see people make mistakes on that sometimes. Make sure that everything’s nice and tight but not too tight is really important. Anytime you have a barista moving side to side or anybody moving side to side or just moving in general, that means they’re inefficient. (upbeat music)- What about other suppliers, anything unique there that you wanna highlight of value to our viewers, how you choose them? – Yeah, definitely. We work really closely with our dairy, Grace Harbor Farms. They’re up in Lynden. I think all did an episode with them actually at one point. – We did, check it out. Grace Harbor farms is one of our episodes, so that’s, that’s pretty cool. – So we work with them. Their milk is consistently the highest quality that I can find. So it’s just about quality for us. The relationship has been really good too. They’ve been amazing to us but that’s been great. And then, we work with just kind of larger suppliers for like paper goods and those sorts of things. (upbeat music) – You’ve got an incredible coffee shop here.
I think it’s more than just that ’cause I’ve tried your food, absolutely amazing. The vibe here it’s loud but I hope you guys can hear every thing we’re gonna talk about. – Yeah. So let’s talk about the food and the services that you offer. How did you come up with that? Who’s the inspiration and so forth?- Yeah, totally. On our food side of things that comes a hundred percent from our chef. Her name is Megan. She’s got some experience in food for a while and she just loved what we were doing and just wanted to help. And she kept pestering me about doing a food program here and finally was confident I could pay her enough to do it And so then we said yes. And it’s become a huge part of our business. – What’s the best seller? Give us a couple things that people just tend to love.- Yeah, our food items or coffee items? – Both. – Both. Yeah, as far as coffee goes, I got 12 ounce espresso milk is classic We also sell a lot of filter coffees which are made by hand and then just straight up espresso, we sell quite a lot of here And then as far as food goes, our breakfast burritos are really popular here. And then our buttermilk biscuit sandwich, we make all of our biscuits by hand hand laminated and they’re really flaky and tender. So we sell a lot of those. (upbeat music)- What other systems do you want to highlight that you use here that are beneficial to your business? – Definitely. So we have SOPs or standard operating procedures for all of our stations. So like the espresso station, the host station, all of our kitchen stations. So each of those has standard operating procedure. We use checklists regularly. So everyone’s making sure that we’re staying up on top of all of our activities. We have a really in depth POS, point of sale system that helps keep track of every piece of data that we need to know. We’re really engaged with Google and Yelp and all, Instagram and Facebook. – In terms of marketing, is that. – Yeah we’re paying attention on all of those things.
So I view myself as someone who’s just here to support my staff, to give them the tools that they need to serve our guests the best possible way. So building in systems that help with that in terms of training, strategy, helping ensure that we’re communicating our menu changes to them because we do change our menu so much compared to a lot of other places. – Building back to your core values right?- Exactly, yeah. So building those communication systems in is really huge, especially at scale ’cause the larger you get the more small problems become big problems. – Exactly. – So trying to clean all those up that way we can scaleis really huge. – Well said. (upbeat music) How do you manage your time as a business owner of multiple locations? Any time management tips, any apps you use to communicate with all the people working together? – Yeah definitely. We use a lot of systems in the company. We use Homebase for scheduling. So all of our staff get scheduled through that. It helps communicate. It tells everyone what the schedule is at all times. We use slack for team communication. And then we use Gusto for payroll, which is really like very easy. I usually will try to sit out throughout a week and figure out and prioritize what are my most essential things that I need to get done this week? What are the things that are of next importance? And I try to structure them in that way.
And I try to think of my time in terms of what can I specifically do that nobody else within the company can do.- Makes sense. – And try to attach as much as possible, I estimate a dollar amount for how much economic value I’m adding per hour essentially. So the things that are higher value are things that I tend to focus on. The things that I need to get done that nobody else can do are the things that I focus on. So delegating, ensuring that we have good roles, clearly defined, we have good job descriptions for all of our staff, so that way everything is getting taken care of. And then I have staff that pick up slack and if they see a problem, they fix it.(upbeat music) – Well we’re stuck at this aisle probably cause we’re buying gloves.- So I’m gonna get some mediums and larges here. – So what are these running these days with inflation?- They’re 665, a box. – It’s definitely been a lot higher than it used to be. The easiest to go for around four, $4.And right when the pandemic started, these got crazy expensive ’cause of everything they need for it.
So they’ve come down a little bit, which is nice. – [Paul] Do all of your employees wear gloves all the time?- Not all the time. If they’re handling something that’s ready to eat, we require gloves. So anytime they’re handling something, that’s not gonna get cooked before it goes in someone’s mouth, we require gloves for.- Is it cheaper to get a whole box or is it the same thing? – Yeah, definitely. It’s it is a little bit cheaper. Right now it’s the same thing. – It is, yeah. – Used to be cheaper, but it depends on the thing like cups definitely cheaper to get by the case.- Gotcha. (upbeat music) How many employees do you have and what’s their average pay?- Yeah, so we have 20 full-time employees for the whole company. 12 of ’em work here at Everett and then eight work up in Bellingham. The average pay for most of our staff right now is 16 50 ishper hour plus tips. – Split tips or is it. – Yeah everybody splits tips equally across the shop.- Have you done it the other way? I was always wondering, ’cause sometimes certain people split, sometimes they don’t. – Yeah we started with the other way.- You did? – Yep and our food crew asked if they could be cut into the tip pool and our staff voted on it and agreed to it.
And it took a little bit of a hit at first and then it picked back up to where it was and it has now exceeded where it originally started.- Probably helped the morale, I would think. – It does. Yeah. It helps everyone feel because our food team especially is so involved in the overall process of serving our guests, running food out. It helps everybody understand that we are working as a team to create the best experience for our guests, helps break down that like that’s not my job mentality that sometimes happens when we all kind of realize like our work together is for the purpose of serving our guests and making people feel welcomed. So everybody takes ownership of that. (upbeat music)- As far as we must have equipment, obviously the espresso machine. Well how much was the espresso machine for example?- Yeah the espresso machine was $17,400. – Nope. Are you serious? – Yeah. – Wow. Yep and the grinders, it is like a vehicle. The grinders are about two and a half, three grand a piece.- What else is a must have, just even if it’s a small scale operation? – Yeah, grinders are really important. So grinders and espresso machines are where you should put the bulk of your money.
Cause that’s the bulk where your business is coming from. You should additionally buy good fridges’cause bad fridges break down and then you have to repair them all the time. Other things than that is having a good POS system. Making sure that it’s connected to stable internet is really important. ‘Cause when that goes down, you can’t make money. And then if you’re in a place where people wanna sit, you gotta have good wifi. It’s gotta have good internet.- Absolutely. – ‘Cause that’s actually how people use coffee shops. – And you have awesome furniture here too. – Yes.- That’s a must have right? – Yeah, guest experience right? (upbeat music) – If you could go back and give yourself, the younger version, even though you’re pretty young 31. – The younger version, a piece of advice, what would it be? One or two things, what do you know now? – I think the first one is to continue investing in yourself and to learn to say no sometimes.- Yeah? – Yeah. Not take every opportunity that comes to you. – Have you, have you had to do that? – Yeah there have been a few location expansionopportunities that we’ve passed on that seemed like they make good sense, but weren’t quite, they were close and they just weren’t slam dunks. – ‘Cause that could make or break you. – Yeah, especially when you’re small.
When you think about it, if you have one location and you go to two, one of those fails, that’s 50% of your business.- Right. – If you have 10 locations and one fails, that’s only 10% of your business. So making your steps carefully at the early out set is important to me. – [Paul] So these are the cups, how much we’re getting, 600 of Yeah these ones are about a hundred dollars a case. That’s up 35% from where it was just two years ago. – You could go through those pretty quick. Like myself during the interview, I used one cup and I wanted to go for a second ’cause I threw the other one in the garbage. So I was like, how do you make that more efficient?- One of the big ones is having as much reusable as possible and encouraging people to bring reusable cups that they’re planning on going elsewhere.
And then we just do a lot of dishes. (upbeat music)- Profit margins. – Yeah. – Where are they at on the high to the low and I’ll elaborate.- Yeah, it depends on what we’re doing specifically. Coffee is a really high labor activity, it’s like when you go to a bar and you have a beer, it takes a bartender 25 seconds to pour a glass of beer versus it takes a minute and a half of someone handcrafting everything here. So labor’s higher here. – That’s a good point. – So, but on our low ends, it’s probably the things on our retail shelf, 30% profit margin for most of our retail retail items. And then our profit margins are closer to like 3-400%. That’s gross profit, so just minus COGS. But overall, what we’re shooting for as a business, our profit margins are about on a good year is about 10%.- That low? – Yeah. – I thought it’d be much higher than that. – Yeah, that’s industry standard for restaurant food and beverage is about 10%. (upbeat music) – For somebody that’s doing carts right now. But this thinking to go brick and mortar, what was your story? Why here, what’s important as part of the coffee shop industry?- Every good business has to fill a need period. I mean a lot of people, particularly folks that are interested in opening coffee shops, it’s been a dream that they’ve had for a really long time and that sort of a thing.
I think sometimes they miss the importance of filling a need. Everett had a need for specialty coffee. There was nothing like what we’re doing here. It has a strong community of people who care about their products. We have close access to a lot of farms, a strong brewing scene, but there was nothing like this. So it seemed like a really amazing opportunity for us. Also the commercial rents are really low here compared to the rest of the Puget Sound region. – Okay. – So, it felt like we were in a structurally stable place from a business perspective to be able to take a chance on doing something that nobody else had done here before.- As far as the rents, what’s your overhead specifically just utilities and lease? – For this location, it’s about 4%.- 4%? – Yeah. – What’s the dollar amount? – It’s 2,800 for 1700 square foot.- That’s not bad. – Yeah. – Okay. – They’re really affordable here at Everett. (upbeat music)- Maxwell, let’s talk briefly about how your systems have changed as you continued to grow. Like what indicated that, hey, I need a new system in place because we’re at X point.- Yeah, definitely. You generally tend to notice when your systems aren’t working, when you see problems. So paying attention to your numbers is always huge.So walking your cash flow, if you just find yourself home running outta cash, it helps you understand. Also communication and feedback from my staff is really huge.
So incorporating their experiences, always trying to ask good questions to understand like are things being missed when certain things that I make I expect to happen aren’t happening then I know that that’s usually some form of a communication breakdown. There hasn’t been an effective system to help communicate that value to my staff.- Basically what indicates you and your systems potentially, if you have a problem, hey, there may not be a system in place that’s where we’re having this issue.- Exactly, yeah. – What it boils down to? – Almost always all of the problems that you run into are generally related to systems out side of personal conflicts within your team. (upbeat music)- What is the number one thing that you struggle with as a business owner today? – Yeah, businesses are often attached to personalities and I definitely notice there are certain things about my personality, just how I operate that are weaknesses. And one of those things is that I tend to have a lot going on in my head, but I don’t always share it. So one of the big efforts that we’ve been making this year is just to improve our company communication to our staff and creating better systems for that communication. – Awesome. Okay, well, you guys are enjoying this episode, we appreciate a quick like, subscribe and hit that bell so that you don’t miss any of our videos. (upbeat music)Anything else you want to highlight when it comes to social media exposure, Instagram for those running coffee shops and wanna get in the same industry. – Yeah, definitely. I think for like brick and mortar locationsfor coffee shops, staying on top of your reviews is really important. What I mean by that is responding to them. Taking time to take them seriously.
You should treat reviews not just as the interaction with the person, but also anybody who’s looking at the reviews too. I think that’s really important. Overall word of mouth is the most important thing for a brick and mortar retail business like this.- Gotcha. – When people are excited about an experience, they wanna tell their friends and that’s the best advertising you can ask for. So we also are we getting ready to work on like email marketing for online stuff. So we’re trying to take our online component of our business a little bit more seriously. We didn’t have space to do it here. And so we just weren’t able to capitalize on that but we have just secured a space to be able to connect with guests that maybe have moved or they believe in our brand. They wanna buy our coffee and the ways that we buy our coffee. And so we’re getting ready to launch a subscription service, those sorts of things where email’s gonna be a much more important part of our business strategy.
So no email list yet, but that’s in the future.- Yes, exactly. (upbeat music) – How many hours a week do you work then on that note, do you have to go between here and Bellingham? – I do, yeah. I’m up in Bellingham twice a week. It depends on the week. I would say my average week is about 60 hours a week. Some weeks I’m up in 75, some weeks I’m chilling at 35.Just depends on the week, but. – A father of two? – Yeah, father of two. How do you work? Work life manage that because that’s important, right?- Yeah, it is. – You burn down, you go crazy. So what are you doing? – It’s seasons, we tend to roll things in and do family time while other things are happening. So like last night we were here, my daughter has a unicycle parade tomorrow and she was decorating her unicycle here at the shop while we were working on stuff. So they kind of get combined.- Learned to blend them? – Yeah, exactly. And I try to protect my time with my kids and my family as much as possible. (upbeat music) – Any last pieces of advice to people in all kinds of industries or maybe specifically the coffee industry, what would you say with all your experience?Oh man, I think investing in people is really huge. Everything comes back down to people, our relationships, community, your staff it’s super huge. So continuing to invest in relationships and people is really important and take care of yourself, yeah.