Products, Operations, Technology

Major products include beverages and food. Beverages include brewed coffee and tea; espresso drinks (cappuccinos, café lattes); cold blended beverages; bottled water; soft drinks; and juices. Food includes pastries, bakery items, desserts, sandwiches, and candy. Many coffee shops sell whole or ground coffee beans for home consumption. Some coffee shops sell coffee or espresso-making equipment, grinders, mugs, and other accessories. (First Research)

 

Market Size

The US coffee shop industry includes about 20,000 stores with combined annual revenue of about $10 billion. Major companies include Caribou Coffee, International Coffee & Tea (The Coffee Bean & Tea Leaf), Pet’s Coffee, and Starbucks. The industry is concentrated: the top 50 companies generate more than 70 percent of sales. (First Research)

 

Industry Participants

 

Within 5 miles of the subject, are 37 businesses involved in the coffee industry, including chains, restaurants, and tea houses reporting annual revenues in excess of $54 million. Of these 37 businesses, 20 are Starbucks coffee shops capturing $35.7 million in revenues or 66% of the market share. An additional 8 coffee houses are franchises capturing $9.7 million represent 18% of the market share. The comparables – those closely held coffee shops/cafes that will compete for the subject’s business represent $8.3 million in annual revenues or 15% of the total market.

 

 

 

 

 

The Russet Cup is targeting three primary groups residing in their direct marketing area. These individuals prefer unique venues and avoid the big chains and franchises. They prefer their local neighborhood and will support local businesses if the business warrants.

 

Main Competitors

 

Roasterie Café

4511 W 119th St
Leawood , KS 66209

http://www.theroasterie.com/Cafe/

 

This competitor has been operating in the greater MSA since 2005 opening its first café in Brookside, Kansas and then at the Leawood location in 2010. The 3,300 square foot café offers an assortment of pastries, bagels and cookies. Beverages include Harney and Sons teas, signature blends, espresso and specialty drinks. The café has 11 employees and generated $11 million in revenues in 2011. The subject’s advantage is its smaller, cozier environment.

 

Take Five Coffee Bar

5336 W 151st St
Overland Park, KS 66224-8701

http://www.takefivecoffeebar.com/Welcome_to_Take_Five_Coffee_Bar

This competitor operates from a 3,300 square foot space. The café has WI-FI. In addition to serving coffees and smoothies, the café offers more food offerings with a full service kitchen offering light breakfasts, and sandwiches and wraps. In the evenings the café has musicians performing on a small stage. The Café also has a full liquor license. The broad offerings of amenities do not make this a true comp for the subject. 

Homer’s Coffee House

7126 W 80th St
Overland Park, KS 66204-3715

http://www.homerscoffeehouse.com/about.php

 

This competitor operates from a 6,300 square foot space in a shopping center. The shop was established in 2001 and in 2011 reported $2 million in revenues. The shop employs 21 employees and provides music on the weekends. The subject’s advantage is its smaller, cozier, and quieter environment.

 

Morning Glory Espresso

5606 Johnson Dr
Mission, KS 66202-3323

http://www.morninggloryespresso.com/

 

This competitor is similar in size to the subject operating from 900 square feet in a retail shopping center. The Morning Glory Espresso has been operational since 2005 and has 3 employees and reported revenues of $300,000 in 2011. The coffee shop is open 6 days a week and open for breakfast. The shop has a full kitchen and in addition to pastries provides traditional breakfast offerings. The store is for sale, which could potentially impact market share.

 

Revo Cup Coffee

11030 Quivira Rd

Overland Park, KS 66210-1239

http://revocup.com/blog/

 

This competitor occupies a 2,100 square foot shop and has 7 employees. In 2011 its annual sales were reported to be $700,000. The Revo Cup is a specialized roaster. The owners from Ethiopia roast the Ethiopian coffee in the store themselves, providing a truly unique roasted coffee experience. Due to its unique roasting methods, and its limited food offerings, the subject should do well against this competitor.

 

Daily Dose Coffee and Bar

12056 W 135^th St,

Overland Park, KS

 

This competitor occupies 2,700 square feet in a strip center and has been in operation since 2003. The coffee shop/bar is open 7 days a week and has a full kitchen. The shop occasionally offers live music on the weekends. The shop employs 9 and reported revenues in excess of $900,000 in 2011. 

 

Java Crossing

8830 W 95th St

Overland Park, KS 66212-4051

This competitor leases a 2,700 square foot stand alone pad in a shopping center. The shop has drive throughs on both sides with a small walk up. The business was established in 2003 and is privately held. The store employs 9 and reported annual revenues of $900,000 in 2011. Known primarily for its convenience and breakfast sandwiches, this shop does not directly compete with the subject’s indoor sit down experience.

Hattie’s Fine Coffees

4195 Somerset Dr

Prairie Village, KS 66208-5242

http://www.hattiesfinecoffee.com/Home_Page.html

Established in 2005, Hattie’s has a staff of 17 and annual revenues of $1,700,000. The store is larger than the subject and occupies 5,100 square feet. Hattie’s Menu options are similar to the subject with a focus primarily on coffee, lattes, pastries and simple breakfast sandwiches. The facility has a great reputation and following. To capture a portion of this market, the subject will have to convince these customers that a cozier and quieter atmosphere is a more enjoyable café experience.

 

Market Segments

The Russet Cup is targeting the three top segments of the population representing 39% of the population in the Overland Park area:   

 

· Boomburbs (29%) – Younger families with a busy, upscale lifestyle. Median age of 34. Most households operate on two incomes; median household income is $100,000. Product purchases reflect a suburban lifestyle; one of the top markets for SUVs, lawn /garden purchases and casual apparel. Technically savvy; active in golf, tennis and swimming.

· Enterprising Professionals (10%) – Young, highly educated, working professionals. Single or recently married, median age of 32, median household income is $65,000. Lifestyle reflects youth, mobility, and growing consumer clout. Residents go where the jobs are located. Love to travel and exercise; rely heavily on cell phones, PCs and the internet to stay connected.

· Prosperous Empty Nesters (12%) – Well educated and experienced, residents are enjoying the transition from child rearing to retirement. Median age is 46; median household income is $64,000. This market segment is active physically and financially. Display interest in homes/communities. 

 

 

 

(Source: North Star)

 

Market Tests

Research from Yelp, FourSquare, and GooglePlaces, indicates the Overland Park market is in need of a new local café. The locals have been clamoring for the current private shops to improve service and/or reduce prices to keep pace with larger chains and franchises, thus providing a unique niche for the right entrant. 

 

While employed by a national restaurant chain, Mr. Jones was constantly directing patrons to offsite coffeehouses for those seeking that final dessert and cup of coffee prior to finishing their evening. This is the reason he ultimately began seeking the location for his coffee house.

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