How to Beat Your Coffee Shop Competition

How to Beat Your Coffee Shop Competition

How to Beat Your Coffee Shop Competition

Running a coffee shop can be challenging on its own, but dealing with the competition brings an added layer of challenges you need to face.

When you first choose your coffee shop location, you will want to be aware of the existing competition. Next, you will need to analyze the market and determine whether your coffee business can survive that level of competition.

Additionally, you have to be aware of the potential that yet another competitor can move into your market after you – increasing the level of competition.

And believe me, your competition will be aware of you and have already studied your coffee business.

Here in Seattle, where the competition is fierce, I've seen competitors move in right next door. I won't name names – but it's common here on Capitol Hill, in Fremont, and Queen Anne – for those of you familiar with Seattle.

First, I want to say that your coffee shop competition isn't necessarily bad – competitors can help grow the market share suitable for everyone. After all, in the end, we are all consumers – and every consumer likes choices. And more choices often equal better service, better coffee, and lower prices.

But much competition can slowly eat away at your business, reduce your sales, and squeeze your profit margins. If you aren't vigilant, your coffee business can collapse under pressure.

Therefore, the overarching competitor strategy should always be:

Stay on your toes and never let up.

In this post, I will talk about beating back your coffee competition and improving sales by doing simple things within your control.

As they say, the best defense is a great offense.

How to Beat Your Coffee Shop Competition

When it comes to your coffee shop competition, you may consider a multi-step approach for coming out on top. But, of course, the essential first step is to “clean house” and improve the things under your direct control. 

When you face any level of competition, the goals should be:

1. Keep your customers
2. Grow your customers
3. Generate more sales

There isn't one thing that can help you achieve these goals. Instead, there are several factors that you may want to consider.

Among them are:

Understanding Your Unique Selling Point

Recall from your coffee shop business plan that your Unique Selling Proposition or USP is that “special thing” that makes you different.

You may need to reacquaint yourself with your USP… understand it and then leverage it to make your business stand out. You might need to reassess and develop a new USP if your product has changed.

It’s a good idea to come back to your USP occasionally and see if it’s still adequate within the current market and competition.

Offer High-Quality Products – Consistently.

If people want to get lousy coffee, let them get it from your competitors. Be the competitor that offers fantastic coffee – not mediocre coffee or good coffee – but fantastic coffee!

You don't want to be known for “Just Okay” coffee – or worse!  Offer high-quality coffee and food – consistently.

While you might not be great at everything, pick your battles. Eliminate poor-quality options. Your coffee should be among the highest quality available in your market. The same goes for your other products like tea, milk, baked goods, and everything else you serve. If it's not excellent each time, you don't serve it.

Offer the Best Service – Consistently.

People may forgive mediocre coffee, but not poor service. Therefore, your attention is needed to be on both – high-quality products and excellent service – every time. Offering the best service – consistently – is essential.

Consistency is what wins the day for most customers. That's why customers flock to McDonald's, Starbucks, and In-n-Out Burgers.

Customers love knowing that they will enjoy the same good food or beverages anywhere they go. They also like to know that they will be treated with a friendly smile and a nice chat every single time.

Further Reading: How to Start a Coffee Shop Successfully

Be Open to Customer Feedback

Each of your customers offers insight into your competitive field. They know the prices, menu options, and differences between your coffee shop – and your competitors'.

It's no secret that your customers make the best source of information when it comes to keeping up with the competition.

For this reason, you want to pay attention to their feedback. So train your employees to write down customer feedback and email you or put it in a journal near your coffee shop POS system.

In addition to feedback, please note how you will respond to their feedback.

Keep monitoring the reviews of your coffee shop online on sites like Yelp, Google, or TripAdvisor.  With online comments, people feel more free and open to sharing their opinions. They might give you a great insight into the aspects of your business you can’t even think about. Additionally, I always respond to their feedback.

Deliver High Value

When customers feel they get an outstanding value for their purchase, they feel good about spending money at your coffee shop.

Decide on how you will deliver excellent value to your customers. Some people may refer to this as a unique value proposition (similar to a unique selling point or proposition).

Value is not exclusively based on price. It may also be based on other essential factors to your customers. As mentioned, this may include exceptional customer service or high-quality coffee, among other things. You may also want to support some local farmers in coffee-growing countries or any charity project – people like to feel that by buying your coffee, they contribute to a bigger cause.

Collect Data from Your POS System

Your complex data collected by your coffee shop POS system will help answer what your customers are buying and when. This data does two essential things. First, it allows you to answer what inventory you need to keep and schedule your baristas.

If you are experiencing rushes from 8 a.m. to 12 p.m., you may need two or three baristas to work morning instead of just one. If you are running out of oat milk and bagels by 9:30 am, then you're going to have several disappointed customers.

For more information on coffee shop POS systems, please read What's the Best Coffee Shop POS system.

Exceed Customers' Expectations

As you begin to understand what your customers want, you will know their expectations for your coffee shop.

You want to understand the point at which you exceed your expectations – every time! I call this effort in the development of excellence.

If you consistently focus on developing your excellence – even if you make the occasional mistake – you will consistently outperform your competition.

The large majority of competitors are happy with being mediocre. If you shift your perspective to deliver an outstanding experience consistently – your customers will gravitate to you.

Re-evaluate Your Space

Coffee shops often provide wonderful spaces for their customers to meet and enjoy their coffee. Your great space can give the added value to your clientele that we discussed above.

Put yourself in the shoes of your customers – how is your space impacting your overall experience? Do you feel welcomed? Does finding a place to sit down look appealing? Do you feel safe and cozy or cold and sterile?

You'd be surprised how relatively small and affordable changes can impact your customers' experience.

Look at:

• The color of your walls
• Your seating
• Lighting
• Level of sound (ambient and background)
• Room temperature

Again, listen to your customers and never stop thinking like a customer.

Train Each Employee

To deliver excellent customer service and products, you need to make sure that your employees are trained. Your devotion to consistent barista training will pay off in dividends. Hiring great baristas and training your baristas has many benefits. That’s why it’s certainly worth the cost.

Barista training helps maintain the consistency of your coffee shop and reduces costs, and boosts employee morale. Training improves:

• How your employees interact with your customers
• How they are making coffee
• They fulfill other important operations like opening/closing duties, cleaning duties, inventory management, etc.
• How do they maintain your expensive equipment
• How do they react to customers’ requests, questions, or complaints
• Upselling to your patrons

Reassess Your Coffee Brand

Your brand encapsulates an emotional connection between your coffee shop and your business. It's not just your logo, your slogan, or your theme.

How is your brand performing? Is it understandable and memorable? Do customers feel good about it? Does it create positive connotations?

Look at your brand. It might need a little refresher. Some big companies – and coffee shops are not an exception – update their branding every 5 years. It might be a slight change – like new colors or a change in your logo font – to make it more modern and stylish.

Freshen Up Your Menu

Staying focused on your customers means providing them with the menu they want and a price they can afford.

Trying to be everything to everyone will not be an effective strategy in most markets in the United States. Unless you are a Bodega serving coffee in New York or a general store in Missouri, offering everything is tough.

Utilize your customer feedback and your coffee shop POS information to see what is working and what you need to be selling. Additionally, find out what your competitors are selling and see how you can add something similar to your offerings – and freshen up your coffee shop menu.

Your Marketing & Promotion

In politics, the saying goes – if you don't define yourself, your opponents will.

The same is true for business.

If you don't define who you are – the market will, customers will – and even your competitors will. Understand who you are – what your mission and USP are – then craft a marketing and promotional strategy that supports those.

This also means that you should stay active in your marketing efforts, especially with your online presence. Promote your seasonal options and bundle deals online in social media like Facebook and Instagram, utilize more creative and visual media like TikTok and YouTube. Take advantage of your POS system to create an email subscriptions list to send out your promotions.

If you don’t have it yet, you might want to introduce something like Happy Hours as a part of your promotional efforts. Or consider having live music in the evening, local craft fairs during weekends, etc.

For more information, please read 10 Ways to Market and Promote Your Coffee Shop.

Have Loyalty Cards

Rewarding people with repeat business through loyalty cards or points may be a good option for some coffee businesses.

Customers love working towards getting a free item. Find that special reward that would motivate your customer to keep coming back.

Today, you don’t need to print out loyalty cards – because modern POS systems allow you to do it digitally. However, some people still like to hold a physical punch card since it creates an emotional connection.

Be Aware of Pricing

Customers are aware of prices. They know that you might be 10 cents more expensive than Starbucks. In retail coffee, you never want to compete on price. Competing on price is a losing battle.

With that said, determine your prices based on your costs and profit margin goals and make necessary adjustments.

Focus on delivering value through your quality, service, and USP. Your customers will feel good if they pay for the quality and uniqueness of your coffee drinks.

Beat Your Coffee Shop Competition

What You Should Do:

• Always make every customer feel welcomed
• Learn each customer’s name
• Always solicit feedback
• Make revisions and improvements
• Offer barista training
• Maintain consistency

What You Shouldn't Do:

• Don't get into a price war
• Never talk bad about your competition
• Never serve mediocre coffee
• Don’t neglect the paperwork
• Never stop learning about all aspects of your business
• Don’t abandon your online presence

How to Beat Your Coffee Shop Competition

When it comes to beating the competition, it starts at home – with you and your coffee shop operation. Revamp your operation – your hiring, training, and your menu to offer the best quality products with the best customer service.

As you have seen, consistency is the name of the game here. One of the reasons why fast-food chains and other corporate coffee giants have so many sales is that their customers trust their consistency of products and service. Utilize this customer need to develop your excellence.

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