What's the secret to a successful coffee shop?

Having detailed an answer to Why do most café startups fail?, I guess it is only fair that I also provide an answer to the question about why some succeed.

There is no one secret to a successful coffee shop, in fact most secrets in business boil down to either hard work, extensive experience or luck ... or a combination of all three. I have taken success for this post to mean financially sustainable with an appropriate ROI for the owner which means not necessarily giving the customer everything they would wish for.

I have established and managed more than 15 coffee shops with varying degrees of success. While there may be hundreds of reasons why a coffee shop might succeed (including luck), here are the ones that I pursued in Australia that lead to successful outcomes for me.

1. Consistently serving the finest espresso - It is rare in business to discover a product where consistently offering 100% quality is the best commercial decision you can make. In fact I am the greatest advocate for the '80% is perfect' commercial model. But espresso coffee is one of those rare products where consistent 100% quality matters. Customers will walk past 10 other competitors to get the best espresso which is why this factor alone means you don't need the highly visible, most expensive location. So buy the best espresso coffee machine (3/4 group Italian made with e61 groupheads and set to the right pump and temperature levels) install it with a water purifier and demineralizer, use a conical grinder, and only buy top quality Arabica or Arabica 90%/Robusta 10% freshly roasted beans and make sure every cup is made by a fully trained barista who is continually seeking the 'the god shot'.
2. Ergonomics is vital - Make sure the coffee workstation and layout is such that the barista hardly moves their feet in performing all their coffee making duties and they are not competing for the space with other staff members or functions. High volume coffee sales are the foundation stone of every coffee shop, so make sure this workstation is perfectly laid out with easy access to underneath bins, bean storage and bar fridge milk, having the right height benchtop with easy access to cups, grinder, accessories and reachable overhead storage of supplies. The best setups also have a small inbuilt sink to allow for quick, easy ongoing cleaning. Also, place the cash register on the front counter in close proximity to the barista's workstation. This allows the barista to hear the customer orders and get a head start on making them in the busy times while allowing the barista to work alone in an efficient way in the very slow times.
3. Use loyalty cards - I resisted using these for a long time ... but they really do work. Make sure it is a quality card that will survive some wear and tear and look good in a customer's wallet. Nothing better than seeing a new customer's face light up when you give them a buy 7 get the 8th one free loyalty card but tick off 6 of them so that on their very next purchase they get a free one 'maybe for a friend'. Cheapest customer acquisition and referral system ever.
4. Promote multiple sales - A coffee shop will never make enough money to pay the bills from coffee sales alone. Coffee may be the prime motivator for customers coming to the business, but they must leave with multiple sales if you are going to be successful. As a target, coffee should be no more than 40% of your weekly sales and 2 item sales per customer transaction is the 'holy grail' benchmark. So make sure the traditional coffee accompaniments (muffins, cookies, cakes) are close by at the point of sale and the coffee shop offers cold food, cold drinks and some hot food to ensure the best chance of multiple sales.
5. Limit the assortment - Many newbies in the coffee shop game think that wide assortments and extensive product offers are a key competitive advantage. They forget that the customer is simply hungry or thirsty or both and that a wide choices for most people creates anguish. So cover the necessary categories but with limited strategic offers. (e.g. three flavors are enough, three sizes are enough, three types of food/drink are enough). Every item you add to the assortment creates many multiples of management effort (costs) and mostly without adding anything to the revenue streams or customer experience.
6. Merchandise your margins - Price according to perceived customer value not according to accounting determined markups. For some well known items (coke can) you will need to be at or even below market price and this loss should be made up with high margins on other items that are exclusive to you or in the 'don't-care and addictive' mindset of your customers. So don't add a blanket markup to your entire product assortment, but price line by line according to customer expectations and what the market will bear.
7. Get your beachhead strategies right - Getting traction in a competitive marketplace like coffee shops is vital and you will need to have a clear understanding of how to get customers to initially give you a go and a plan for keeping them returning and referring you to their friends. This is a whole other topic that I have now written about here ... What are some Biz Dev best practices for startups?.
8. Counter service - Counter service is the cheapest most efficient and effective service system for a coffee shop and it is now fully accepted by customers thanks to the global success of McDonalds. Counter service is hassle free for both you and your customer and it significantly reduces your wages bill. So get the customers to order and pay upfront, give them a number on a stand along with their drinks and deliver the food or better still give them a buzzer that calls them up to the counter when the food is ready. Counter service means that you can handle the peak demands that occur in coffee shops at breakfast and lunch and it is a lot less stressful on everyone ensuring the friendly banter can remain an important part of your offer.
9. Pre-make as much as possible - Custom-made offers assume that the customers know precisely what they want. They don't. Customers see you as the expert and are hoping that you will suggest to them the right combination of food/drinks they should be trying. In a coffee shop context I found it best to pre-make the food and leave the custom making to the coffee. Custom food is also a high cost option for you because you can't get the economies of scale making-to-order and it limits your turnover in those peak periods where you should be busy pumping out the sales as quickly as possible not spending the time making custom orders.
10. Understand what you are really selling - Too many businesses, including coffee shop owners, don't fully understand the need they are really satisfying for their customers and so they often concentrate on the wrong parts of their offer. Customers frequent a coffee shop for many more reasons than just hunger and thirst. There is the escape from a stressful office, the chance to maintain or grow a relationship, a place to get away to do some reflective work, a chance to engage with familiar coffee shop staff at a particularly lonely time or as a place to do business and reach an agreement. Understanding the needs you are really catering to, will help you better construct your offer and make decisions that keep your customers returning and so maintaining the coffee shop's success.
11. Target takeaways - I know all your friends will tell you to get comfortable lounges, free Wi-Fi, table service and lots of in-house entertainment ... but customers sitting on one cup of coffee for hours enjoying all these benefits, won't pay your rent. My most financially successful coffee shops had a limited number of not-so-comfortable bench & bar stools to make the coffee shop look lived in and loved, but I concentrated on building the takeaway business. Takeaway customers pay the same price as the sit-down customer but without any of the occupancy costs and you will serve 10 of them by the time your sit down customer has finished sipping on their first cup of coffee as they enjoy a chat with their friends on Facebook using your free Wi-Fi service.
12. Serve on the front line - Thanks to Jason Chen for reminding me of this other important aspect of building a successful coffee shop. Coffee shops, like restaurants, are much more a people/service business than they are a goods/transactional one. While a goods/transactional business can still succeed with a non-present owner (convenience store), a coffee shop needs the owners care, attention and engagement. Customers expect it and staff are far more enlivened when the owner in on hand taking orders or making coffee or is generally hovering in active care of the business.

Probably worth mentioning why I haven't included high traffic location on the list. The reason is that it doesn't necessarily work for coffee. Sure, you have to be located in the area where there are a sufficient number of people, but you don't need the high traffic location in that area. For a start it will carry the most expensive rent, secondly you will be competing for that space with A1 tenants (Banks, telcos, fashion houses, franchise chains) making it near impossible to get as a stand alone coffee shop business anyway and thirdly, high traffic does not always translate into high turnover for coffee. I made that mistake once failing to realize that coffee is a destination rather than an impulse purchase and too much traffic can mean that people are more focused on getting somewhere else rather than stopping to enjoy your offer. Believe me, my #1 will overcome the need to get that high traffic location and the lower rent will make your coffee shop far more financially sustainable and successful.

This is not an exhaustive list but it will give you some ideas on what you should be considering if you want to build a successful coffee shop. I will return to this answer and add to it as I remember more factors that made some of my coffee shops a success. I have also added an answer to What is it like to own/run a coffee shop? which provides further insights into the coffee shop business and What is the most challenging part of running the operations of a coffee shop?

Is the 3 body problem in physics solved or not?

Have physicists solved the 3 body (or n-body) problem ? another question : is this problem pure classical mechanics or something else with classical mechanics ?

The folklore is that the three-body and higher n-body solution is not only unsolved but unsolvable, and that Poincare and Bruns proved this in 1888.

This folklore is wrong. Or at least, it’s astonishingly misleading, even if you start adding the caveats of “closed form solution” or “analytic solution”. For Poincare and Bruns proved nothing of the kind. You have to tailor your criteria for what counts as a “solution” suspiciously closely in order to hold that there’s a sense in which the two body problem is solvable, but the three and higher n-body problem is not.

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Let’s start with the two-body problem. Here it is.

m1x¨1=Gm1m2r312(x2−x1)

m2x¨2=Gm1m2r312(x1−x2)

(where r12=|x1−x2|

). There is a well-known (and rather neat) approach to solving this that is taught in all intermediate courses in Newtonian physics. The steps are to substitute in an “effective” mass term and transform to a centre of mass frame to reduce it to a problem of central potential, move to polar co-ordinates, eliminate the time variable, and then make the simple but but effective substitution of u=1/r

, whereupon the whole problem collapses into a familiar form of differential equation that can easily be shown to be satisfied by an ellipse, a hyperbola, or a parabola — the selection depending on the initial conditions.

This approach works by quickly searching out and exploiting the constants of motion (the linear momentum of the centre of mass, the various angular momenta, and the total energy of the system) to simplify the problem down.

This process allows you to write down the equation of this curve as a function of the radius r

and angle θ

, and you can do this in so-called “closed form”. That is, it can be written in a finite number of functions and terms from a general accepted set of “allowed” ones. This “allowed” set includes algebraic functions, exponentials and indefinite integrals, and not usually much more than that.

This definition of “closed form” looks pretty arbitrary. Why choose those set of functions, why specify a finite set of them, and so on? What it tries to do is capture a sense in which the orbit can be calculated in some “manageable” form — at least manageable in the pre-computer age when all calculations had to be done by hand.

Before we leave the two-body case we should note one more interesting thing. There is a reasonable sense in which the two-body case is not “solvable” either.

The procedure outlined above gives you an equation for the shape of the orbital curve a body produces, but considering where we started (two second order differential equations in terms of r

and t) you might have been expecting a solution of r and t. It is not usually mentioned, but it is not generally possible to write down a closed form expression for r as a function of t for the two body problem. And we might be troubled by this. What if we want to wind time t

forward and solve where the body will be relative to another at a specific time? It turns out that we cannot write down such an expression in closed form (though a variety of parametric forms can be produced for as general cases as you could wish).

It’s worth stopping to consider why this lack of a closed form of the r(t)

isn’t thought important. It’s not important because we can derive any property that we find interesting from other forms of equation (e.g., the elliptical solution, or the parametric forms), and if we really want it in precisely the r(t)

form, there are plenty of tractable numerical approaches we can solve with a computer. But it’s interesting that we can make the two body problem “unsolvable” in a certain sense, so long as we put enough restrictions on what counts as a “solution”.

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Three-body problem:

It looks like this:

m1x¨1=Gm1m2r312(x2−x1)+Gm1m3r313(x3−x1)

m2x¨2=Gm2m3r323(x3−x2)+Gm2m1r321(x1−x2)

m3x¨3=Gm1m3r313(x1−x3)+Gm2m3r323(x2−x3)

That is, very, very similar to the two-body problem. But it’s much harder to attack.

There are certain special cases of orbits that can be solved in a similar way to the two body problem. Euler and Lagrange found some of the most important classes early on. These were usually cases in which the solution has some special property of symmetry, or in which one of the bodies could be considered with negligible mass.

In 1888 King Oscar of Sweden and Norway put forward a prize: the problem was to come up with a particular sort of solution to the three body problem (he set restrictions that made it quite similar to a “closed form”, though also he allowed infinite series, so long as they converged for all reasonable values of the variables).

No-one was able to meet the conditions as written, but Henri Poincare won the prize with a paper that moved forward mechanics in various important ways. It included an impossibility proof, of a type that was also presented by Heinrich Bruns at about the same time. This showed that the n body problem has no integrals, algebraic with respect to time, position and velocities of the n particles, other than the special cases already uncovered (at that point there were 10 types in all).

Why is this important? The whole episode was very important historically for the development of the understanding of differential equations. For Poincare’s work uncovered the strange nature of some of the orbits — they are what we would now call chaotic, and are the first known examples of such systems. (Poincare himself misunderstood these orbits and asserted at first that they were stable, which they are not).

But what Poincare and Bruns’ impossibility proof showed is that there are no closed form solutions producible by a certain method of integration. And this is certainly important: it shows that there are not enough constants of motion of the appropriate type to exploit in the way that we exploited them to produce the solution to the two-body problem. But this is sometimes now paraphrased into saying that general solutions to the three body problem cannot exist. This is wrong.

It soon turned out that we can produce solutions by other methods. In 1907 Karl Sundman developed a series approach for (almost) all initial conditions that actually solves the three body problem. It did not try attacking it via the method that Poincare and Bruns had earlier shown impossible, but went a completely different route and developed a series solution in powers of t13.

This converges just fine (though slowly) for all cases where the angular momentum is non-zero.

Now, you can come up with criteria by which this is not closed form. Most obviously, it gives solutions as infinite, converging series. But I have to say — come on! It’s pretty arbitrary that Sundman’s solution is not allowed, whereas the two-body solution is. You almost have to design your conditions specifically to admit one and not the other. Sundman’s solution certainly fulfils King Oscar’s conditions, since he explicitly admitted infinite series, so long as they converged.

But somehow, Sundman’s solution is not counted by the folklore. The contemporary influence of Brouwers’ Intuitionism in mathematics might have led to the perception that Sundman’s series solution was somehow not a true “solution”. But intuitionism is now almost totally rejected by mathematicians and philosophers, so this is not a good reason any more.

A better reason for objecting to Sundman’s approach is that it’s not very practically useful: it exhibits very, very slow convergence in most cases. So it’s pretty useless for real calculations: you have to calculate thousands of terms to get an accurate answer. But here we can switch horses: we have good numerical methods for the three body problem that — with the aid of computers — give us very accurate solutions to any degree of precision we please (though here, the chaotic nature of many orbits add some spice to the situation.)

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Washing up: in most senses you can name, the folklore about the three body problem is simply wrong. The three body problem is solvable. It’s been solved. The sense in which it is “unsolvable” is an arbitrary one. Poincare-Bruns’ impossibility proof shows important things about the system, but doesn’t show what the folklore says it does. And, in passing, the same is true of the general n-body problem. In 1991, Quidong Wang demonstrated a power-series approach to the n-body problem that excludes only collision cases.

But there’s one sense of “solved” which should not be allowed to apply. And that is the sense in which “solved” means “there’s no more to discover”. There is still a great deal to discover in the n body problem. The existence of Sundman and Wang’s series solutions does not reveal much about the character of the orbits that are admitted. New solutions are being discovered all the time (the last I know of was in 2013). In this sense, the problem will be keeping people busy — and producing new insights — for the foreseeable future.