Competing With Big Brands

A potential coffee shop manager once asked me how he could compete with big brands such as Dunkin' Donuts and Starbucks.

It can be quite a challenge to compete with big brands that have been well established in a city. Companies like Dunkin' Donuts and Starbucks spend millions of dollars a year marketing themselves to get people to buy their coffee and baked goods. On top of that, these stores are at the corner of almost every street. But where does your small coffee shop business fit in?

Does your coffee shop have hope? Yes, it does. However, it depends on a few important factors:

Location: Your coffee shop should be at least 500 metres away from the nearest Dunkin' Donuts or Starbucks. If you hear of any of these stores proposing to build a store near yours, I suggest you do one of two things: either relocate your store or come up with a unique and special product or service that the other two corporations don't have. In the end, it's not up to you; it's up to your customers. However, if you want to continue selling coffee, I suggest relocating to another area where the competition is minimal.

Product: Your coffee shop should offer some special products that other shops don't have. At the same time, you should try and maintain a standardized menu like the other stores, such as chocolate donuts, tea, and hot chocolate. When it comes to taste, your coffee should be almost similar to corporate coffee. Me personally, I love the coffee at Dunkin Donuts. Hence, the only reason I would love your coffee was if it tasted like theirs. The idea behind this is to get them to come in for the "special" products (e.g. strawberry cookies) and then try to sell them your cup of coffee. You need to show them that your coffee tastes exactly like Starbucks or any other major brand. If they are a new customer, make their coffee extra special because your first impression really matters. Please don't think of trying any "product differentiation" strategies for the standardized items (coffee, donuts, etc.). For example, where I live, there is a smaller coffee franchise that has around ten stores. Their coffee is different from Dunkin Donuts' coffee, and that's why I hate it. This could be because millions of people are so used to drinking Dunkin's or Starbucks' coffee, that another coffee just wouldn't make their day feel right - sort of like wearing those uncomfortable pants that you're not used to wearing to work. So what's my advice? Make your coffee taste like Dunkin's or Starbucks' coffee. Think about it. They did all the research and came up with the perfect cup of coffee that everyone loves. All you have to do is create a recipe that is similar to theirs, without directly copying them. This way, everyone will love your coffee too!

Promotions: Promotions are extremely vital to the success of your store. You may not have a corporate-sized marketing budget but you can still make this work. Since you may have just one store, concentrate your marketing efforts only on that particular geographical area. People aren't going to drive kilometres just to taste your coffee. Hence, you have to try appealing to the local population. Another promotional tool is coupons. Gimmicks such as "buy six coffees and get the seventh one free" tend to work really well since people depend on coffee almost every day. However, your coffee better be good if you ever want to see them come back for their second coffee. Here's another tip: Avoid the use of flyers to promote your coffee shop. Don't bother using flyers unless the flyer has valuable coupons or offers. So basically, don't use a flyer to "advertise" your store. A flyer isn't going to make people change their minds about their preferred coffee shop.

There are lots of other factors that could affect a coffee shop but these are the three major ones. But if you start off working with what I've mentioned, you should be fine. It's sad to see many independently owned coffee shops fail due to poor management skills. If you're the only owner of your shop, you need a variety of skills from coffee making skills to accounting skills to customer relationship skills. In the end, the best skill you can use is your natural instinct - or what you think will be good for your coffee shop.