Weekly Musings 2/12

I was on vacation in Chicago last week which is why there was no post.  Visited some old favorites as well as new place.  Check them out in the review categories!

Time and labor efficiency in coffee

While touring the Chicago coffee scene with Debra, we got to talking about why pour overs were so expensive; I had just paid $3 for my macchiato while her Ethiopian V60 was $5.75.  The bottom line is that a pour over takes so much longer to make and requires more barista attention and that labor is where the cost comes from.  After reading James Hoffman’s post on opportunity cost, this labor cost has been at the forefront of my mind.  It’s a good read that applies concepts of opportunity cost in business specifically to the coffee shop; I think it fails to address the reality of actual downtime in many slower shops, but it’s very applicable to high volume places.  Debra and I got into the discussion of the value pour overs bring to a shop.  This shop in particular (Damn Good Coffee) was running four staff members on a Sunday morning shift (tends to be a peak time).  One was solely on the espresso machine, one on the register with flex work, one doing pour overs with flex work, and one on cleaning duty with flex work.  I took the stance that pour overs here were hurting the shops bottom line.  The addition of a slow bar to the shops menu required them to have 4 staff members on hand when three would have been likely enough (or even two with great synergy).  With labor being one of the largest shop expenses, reducing that expenditure by 25% has the potential to greatly increase overall profitability.

On the flip side though, Debra brought up the point that slow bar coffee has become a defining factor in the craft movement.  When you walk into a local coffee shop, you expect something single origin and fancy; it’s a draw for many coffee aficionados.  For these, the increased price tag is justified by how much more they enjoy a well crafted, single origin cup o’ joe.  On top of that, it develops the brand’s culture.  By offering coffee that is more expensive with more attention to detail, a shop displays this craft as part of their identity.  She argues this brand development could potentially be worth the opportunity costs of having a barista on slow coffee duty.  And to build on her point, more baristas sharing labor allows for a greater degree of customer interaction which is invaluable in building rapport and establishing a regular customer base.

In my shop experience, the four person split is pretty standard:  Register, espresso, cleaning, and flex.  These tasks are necessary for a shop to function; the question is do we need four people to complete these four tasks?  At Mercantile though, we ran two person shifts (solo shifts on slow day and off peak hours).  On a three group head machine, we could crank out three drinks a minute and consistently hit quality standards.  The choke point was often at the register when a customer asked for something that wasn’t espresso based.  When person on register would need to run to the fridge or pantry or slow bar to serve a customer, they couldn’t take orders and the flow of service broke down.  I’ve seen similar set ups in other shops; 9th Street Espresso at Chelsea Market in NYC comes to mind first.

Both of these options make sense depending on the style of shop you are aiming to have.  9th Street Espresso was just a counter with hundreds of people walking by per hour; high volume, bare bones espresso makes sense.  Damn Good Coffee had (limited) seating and a decent amount of foot traffic which allows for a different grand vision that is open to slow bar.  At the end of the day, the right answer is what allows you to stay in business while building the brand of your dreams.  While I doubt having pour overs on menu will kill a business, paying an extra staff member for every shift just might.   If the revenue is there to support the extra staff costs and you want to bring high quality pour overs to the masses then, by all means, go for it.  I lean 9th Street in my personal approach to business – keep margins as low as possible and serve as many people as you can – but I see the value in other options as long as those options are sustainable.

 

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