In November of 2018, I close my coffee shop, Helix Coffee and Yoga House, after only 18 months of being open. There was highs and lows of owning your own coffee shop, but I wanted to take some time to write out some of the mistakes I had made, that lead to the decision to close the shop.
Before we get started, I should give some background. Helix Coffee & Yoga was a collaboration of my wife and I . She was practicing to be a yoga instructor and I had been running a coffee catering business, Green Joe Coffee Truck for 3 years (give or take). We were self-financed, though at the end I had to borrow $5k from a friend. We agreed that I would continue to manage that friends websites for 2 years, so in the end, we didn't have any debts going in. So that was nice.
I found the building for Helix on Craigslist. I had been looking for a location for the 2 businesses (coffee/yoga) for about 6 months. I had taken a map of the city and pinpointed all the Starbucks and local coffee shops. I also looked at the yoga studios in town and compared locations. It would have been smart to look at all the closed coffee shops and yoga studios in the last 5 years. But, I didn't think of that at the time. So, I found pockets where competition might be high, but the area appeared to be thriving. When we finalized a location, it was in the shopping district of my city, under 2 miles from the University of New Mexico and 1 block off Central Ave. (Route 66). The area is hip and centrally located. It had mediocare foot traffic, but a demographic that supports local business, including yoga. The building was an old house that had been renovated by the previous landlord. It was zoned as Residental-Office and under my municipal laws, I had to increase the zoning by applying for a conditional use as a commercial kitchen, which is the equivalent of a restaurant. The application process for this is 6 months, no matter what. So, we put in for the zoning right away and began that red tape while working things out with the landlord. At the time, there was one other location that I was looking at. So, we went back and forth on things like rent, property responsibilities. We ended up making an agreement that I liked. It was 3 year lease, with a 3 month out (meaning if I can't start the business in 3 months, then I can pull out with no penalty) . I also had requested that I sign the lease as an LLC with no personal guarantee. This means if the business does go under, that I'm not personally responsible for any debts I owe. It protects my personal assets. Finally, the responsibilities, he was responsible for the HVAC system. I was responsible for yard maintenance. Everything else was negotiable. Lastly, I didn't owe rent unless the zoning went through and then started 2 weeks after zoning approval. This allowed me to start working on the permitting process without having to cough up rent. And so I did. My father-in-law was an architect, so I was able to get his help on the process. He gave me a architect 101 course and allowed me to work on the menial task of the drawing up the plans. Things like locating electric sockets, lights and doors/windows. It got a little meatier than that when the plans got rejected (x3 times). Each rejection required revisals which required the codes (plumbing, electrical and HVAC to be observed). Finally, after 3 rejections, the plans were approved. As the plans were moving through, my wife and I were working on getting a zoning approval. To do this, we had to visit the neighborhood associations meetings and gain their approval. This took 2 presentations (they meet once per month) and on the second presentation they agreed to write letters of recommendations. We also obtained LOR's from other community leaders (my wife's boss, local business owners). Finally, we presented our case to the city, with the neighborhoods letter of approval and were able to get the conditional use approved. With the zoning approved, I then had to get approval from plumbing, electric, fire marshal, mechanical (HVAC) and traffic (parking lot). There was a few more loose ends to tie because we were a historical building and were not able to be handicap approved (ADA). So come July 1st, 2017 Helix Coffee & Yoga opened for business.
Off to the races we were. I had previously started collecting emails to my patrons at the coffee catering business, so we were able to launch an email campaign right out of the gate. I had written the local TV, Radio and Newspaper to release a press-release of a new coffee shop in town. I made google listings and ads, Facebook ads and Yelp ads to spread the name. We used Yelp and Groupon to help our search engine listings. We made our WiFi password, "WeNeedReviews" and posted it in all the rooms. I put up yard sale signs on very street post in a major traffic area within 3 miles. We passed out flyers to every local business. Stapled 8x11 to telephone poles. I went in an hour early everyday to pass out flyers door to door to every house in a 2 mile radius. Our name caught like wild fire. In the first 6 months in business, I was making $300 -$400 a day. But I made mistakes here. I didn't have a strong customer retention program out of the gate. Eventually, I started to collect email and phone numbers for email marketing campaigns and text campaigns, but it was later in the game, when the "buzz" settled down. I came from a coffee truck and I wasn't use to building business like this. It should have been one of the first things I did. Because when you got a buzz going behind your name, you want to try to gain some of those initial customers as regulars. That business was all about gaining regulars.
Another mistake I made was not hiring soon enough. Here's the game you have to play. So, we spent everything we had on this business. Meaning I had no more capital when my doors opened. So, for the first couple months, while the money was good, I was trying to keep my overhead low, so that I can take home some cash and start building up those savings again. But the negative to this, is from the hours of 9-11am when the rush comes. There's no way to handle 5 people at a time in a timely fashion, and even if I was able to keep each customer down to sub 3 minutes a transaction, it's at the cost of not getting to know people. So, I should have hired out of the gate so that I could have built a bigger regular following with the initial buzz that we had.
I knew the winter months would be slow, but I didn't realize how slow. So, we needed to make $4k a month to keep our doors open ( a bit much and I'll get into that later). I needed to get $3k to pay my bills at home. So in order for me to work this job and keep the doors open, I needed at least $7k a month net. That meant 9.5k gross per month or $315 per day. Well, in January, Feb and March. We grossed under $4k each month. The little savings I had was quickly wiped out and I was forced to either get a loan (something I despised) or close my doors. I chose to get a loan. I borrowed $9k in hopes of getting us through the winter and into the summer. Now, I know some of you are thinking, " But winter is cold and I like hot drinks when Im cold". While this is true, you most likely enjoy those hot drinks from the comfort of your own home. The majority of the population doesn't leave the house, and those who do, search for a drive thru.
Now the yoga. The yoga was my wife's project and was expected to bring in at least 25% of the revenue. She held 6 classes a day, morning, lunch and evening classes. Most yoga sparks in the evening, but because of the neighborhood we were in, we hoped to catch some retirees. The yoga however, never picked up. In fact, it ended up costing me money in the long run because of having to pay instructors, pay for marketing and the general "pain in the ass" factor. We made a few mistakes here as well...
The first was to have a yoga studio and coffee shop combined. This was a major mistake. I didn't predict it. My thoughts were that we would tap into both markets and be able to bring revenue from both streams. Wrong. By combining yoga and coffee as a brand, what I created was an environment for the coffee enthusiast to say, "well I don't want to do yoga when I drink coffee, so I'm not going to go..." and thus never even stepping into my shop. I made it hard for the local die-hard to switch from his/her coffee shop. Furthermore, the traditionalist yogi, who is seeking spiritual clarity doesn't want to do yoga in a coffee shop, they want a sanctuary where they can find peace of mind. Thus, we cut off a large portion of our population by combining them into one title, "Helix Coffee & Yoga". A better approach would have been to simply call it Helix Coffee House and then put on local yoga events where people could come try yoga. But not brand it as a studio. The reason why, we are not going to get the traditional yogi anyhow, might as well market to the students and younger crowds by having these cool events like, "Pajama Yoga".
There are other benefits to this approach. Yoga being in the evening. Coffee in the morning. Wife works in the evening. Husband in the morning. When is family time? Probably above all the greatest setback I encountered was the shear amount of time that we were glued to the coffee shop. More than any other liability, it ate away at our schedule. If we weren't at work, we were on our phones setting up Facebook and Instagram post. If I wasn't doing that, I was managing yoga events. If not that, picking up inventory. Taxes. Marketing. Meetings. Interviews. This list goes on. To say 70 hours a week was an understatement. It became all consuming. As a husband and wife, we found ourselves being swallowed whole. We had to set boundaries almost immediately. No phones at dinner. Don't talk about work after we put our daughter down to sleep. Mandatory work meetings twice per week, one for long range planning and the other for immediate fires that need to be put out. Side note, I would have a succulent plant that I only watered during those meetings. Therefore, if the plant became droopy, it let me know we were skipping our meetings. (Google Van Halens No Brown M&M, for inspiration about this story). This sort of pressure, when come from all directions can begin to wear on personalities. What was once thought to be a cool project together, eroded into another all consuming headache.
So, enter the summer. Summer is where we make most of our money in the coffee business. To make up for lost capital during the winter, I started a training program that allowed me to hire per diem employees. This worked out great. What we did is create 4x2 tables to set up at fairs, markets and festivals. I had 2 of those, 1 large table and the truck. I booked every market I could. I would send out a table, cooler and premade iced coffee drinks and a trained employee to serve for 4 hours. They would pass out samples and 50% coupons to everyone they saw. That was the goal. It wasn't to sell coffee (the samples took care of that), it was to pass out coupons. This was a large feeder back to the coffee business. We opened up a semi-drive thru at the shop. We jumped on Grubhub and Groupon. I really engaged the coffee catering business full time to make up for the lack of the shop. On any given week I would have 8 -10 events planned. This took a toll on me. It wasn't just the shear hours. It was the constant energy of getting ready for the next event. The inventory. The employee schedule. Roasting. All of it was just tiring.
By the fall I could see the numbers weren't picking up where they needed to. So, my wife and I got off our payroll. We hired 2 awesome employees from the catering group. We paid them $10 hour plus tips. I got a second job marketing and my wife got a job teaching. For three months we watched the numbers. Of course, without us being in the swing of things full time, things like marketing suffered, customer connections...After 3 months, we were at the break even point, or just above.
So here we are, both working other jobs to keep this thing alive. All the money from the coffee truck is going into this things pocket. Originally, it was thought to be something we can do together that was fun, but rather became something that spread us apart and nearly broke the marriage. We just finished our busy time of the year and are heading into our slump and we have no reserve and a loan hanging over our head. So in October of 2018, we made the decision to close Helix.
Some other factors we didn't consider: Location. Because we had a "good " location for both business, what we really had was a mediocare location for each. I was one block from a main road. But one block is enough to dry up business. I didn't see my first customer typically til 9am. Which meant I was missing out on my morning commuters, which can be a big chunk of business. Because we didn't make the money in the morning, it was hard for us to pay for an employee in the evening. So then I missed out on all the studiers from the University. It put the coffee into a lose-lose. If I were to do it all over again, I would pay top dollar for a prime location. Something on the morning side of a busy road with great visibility. And fuck foot traffic. Foot traffic doesn't mean shit. Traffic is what matters. Shear numbers. I picked the location because its known for foot traffic, but what I needed was a shit load of tired, sleepy people driving past my shop.
Things that worked out well: Marketing and Value. Because of our off beat location, it forced us to get real creative with marketing. What I found worked best was samples at markets. Shaking hands. Making smiles. Passing out cards. As much as I'm a click-funnel geek and a "click per conversion" geek, the best return was just plain ol' face to face contact. So, we oriented ourselves in such a way that we could meet the most people in a limited amount of time: festivals and markets. The free samples really helped reel people in. Value was the other thing we did well. When a person came to the shop, we really made sure they had a good experience. If they wanted ice coffee, we asked, how much ice? If they wanted a Chai Tea Latte, we asked, traditional, sweet or semi-sweet? We really delivered a great service to our product as well.
If I were to do it all over again, here's what I would do: I would start with collecting customers info, probably Instagram promotions to get them to like my page. I would start this social media campaign probably 3 months out from opening. I would pick a great location on a busy street with good parking. I would make the build out similar to a minimalist brewery (I think this will attract the studier). I would set up the space to force social interaction. I would hire and train people right out of the gate. I wouldn't brand anything else with my coffee shop other than a possible roaster. I would host monthly pop ups and I would still maintain my connection to the farmers markets and festivals. I would start a customer retention program immediately to include a monthly subscription service. I would host DIY coffee classes such as "Mastering the French Press" and "Making Lattes on a Camp fire". All this would require capital. In a building that doesn't require much renovation, 30-40k. In a building that needs renovation 70-80k.
I certainly don't regret starting Helix. It taught me a tremendous amount of education that I would not get anywhere else. It was a journey I will always look back on as "that time I owned a coffee shop". It was life long goal that was realized and oddly enough, it provided a tremendous amount of confidence in myself, as I was able to work through the red tape of the city and get up there and slang beans with the big boys and take home some trophies. I only hope that this does not discourage you reader, but rather inspire you to learn from my mistakes and put your best foot forward. Where I failed, you will succeed if you can take my teachings and move forward with them. I have no regrets, but rather experiences. And isn't that what we are all here for?