In 2018, there were about 24,000 coffee shops in the UK with a collective market value of approximately £9 billion. This number was projected to rise to over 30,000 by 2020, along with an increase in value of more than 50% to £15 billion.
While exact figures are unknown, today approximately 6,500 across the country are defined as independent (somewhere between 21 and 27%). And although London has seen a rise of almost 700% in independent specialty coffee shops over the past decade, other smaller cities in the UK, Europe, and beyond have seen similar increases. Altogether, this points to the rise of the “neighbourhood coffee shop”.
We’re using this term to refer to coffee shops which thrive in smaller towns and cities. Often, they have adjusted to a different pace of life and a more manageable volume of regular customers. In turn, this supports them to deliver a more personal customer experience.
To learn more about this trend, we spoke to José De León Guzmán of Kofra Coffee Roasters, a roastery and coffee shop in Norwich. Read on to find out what he said.
Defining the neighbourhood coffee shop
José is the Managing Director of Kofra – a Norwich-based roaster and coffee shop with three locations throughout the city. He tells me that his Guatemalan roots have been a big part of the business’ success and philosophy.
“I was born and raised in Guatemala,” José says. “‘Kofra’ comes from the [Spanish] word ‘cofradia’, meaning ‘community’ or ‘brotherhood’.”
José says Kofra has a real focus on the local community, as well as roots in Guatemala. “[It’s] a space within a determined area that has the right ambience and atmosphere for that area. As a natural result of this, like-minded people use [the space to] get together as a kind of pit-stop.”
This is a big part of what a neighbourhood coffee shop is. It balances convenience, price, and quality to bring people an atmosphere that they want. And while prices are often lower in smaller towns and cities, and proportional to local people’s incomes, convenience and quality remain high on the agenda.
“When we open new coffee shops at different locations, I like to [allow] the neighbourhood to come make the coffee shop ‘theirs’,” José says. “They establish those relationships to understand what they expect from us. In turn, we adapt to cater to them.”
But for him, it’s not the product, the price, or the atmosphere that creates the community. Instead, it’s the relationship between barista and consumer – and even between consumers themselves – that create their own inherent communities and define what a neighbourhood café is.
“You are selling more than coffee and sandwiches – that is the responsibility of a neighbourhood coffee shop,” he concludes.
Why would someone open a café in a smaller town or city?
The logic is simple; smaller cities and towns have fewer people in them, therefore meaning fewer potential customers, and less potential revenue. So why has there been such an increase in neighbourhood cafés?
Let’s look at the UK as an example. Cities beyond London have seen huge increases in the number of new specialty coffee shops. Nottingham, in England’s Midlands, saw the biggest rise with a 69% year-on-year increase, followed by Sheffield with 48%, and Coventry with 37%. All of these cities are at least 150km from London.
The case is similar in Norwich, where Kofra is based. The city consumed the most coffee per capita across UK towns and cities in 2020, and in 2018 alone, the number of coffee shops in the city increased by 66%.
“Norwich has a great coffee scene – a lot of people come here and are [impressed],” José explains. “In any area of the city, you will find a good coffee shop. The passion is there.
“It’s a university [city]; that brings in multiculturalism, [and a lot of people who] demand great coffee.”
José believes that younger people have been driving this move towards specialty coffee in Norwich and other similar cities. “They know where the coffee comes from, they know how it should taste, and they demand [high quality] service.”
As for the benefits? José adds that the slower, more relaxed pace of a smaller city makes it easier to make meaningful connections with a local customer base.
“It’s easier for us to fit into the routine of the customers,” he explains. “[Their] routines create those relationships where you get to know each other, ask their names, and so on.”
Familiarity will support a team to remember regulars’ orders, strengthening a business’ place in the community. This can drive improved customer loyalty in the long term.
“[We] see you and [we] know that you drink a cappuccino to [an exact] temperature – you know [their] drink and it creates a relationship.”
Sharing the same, smaller geographical space may also play a part. Larger cities often have more commuters and tourists, meaning that customers often don’t actually reside in the same place as the coffee shop in question.
“You [may] support the same football team or find that someone in your family went to the same school – that is more difficult to find in a bigger city,” José adds.
Finally, lower rent costs and business rates will give aspiring chain owners more opportunity to scale. For instance, they may have the financial freedom to open more locations at an earlier stage, which would not have otherwise been feasible in larger, more expensive cities.
“It’s a saturated market in [places like] London, where rents are high,” he explains. “For one shop in London, I would pay three times the rent for all three [of our] shops combined.”
Setting your Café up for success
Although being in a smaller city might mean lower costs and a better chance at securing repeat customers, it’s still important to research the area and find a location that can bring you maximum footfall. Additionally, remember that you will still have competition.
Conducting market research about the local community (such as looking at age ranges, whether or not there are a lot of families, and so on) will help you adapt and develop the right kind of café for a given area.
This research can also help you to plan the space your coffee shop will us. For instance, in an area with lots of families, a dedicated area for prams and pushchairs will help families and parents feel more welcome.
Once you’re up and running, make an effort to be a part of the local community. You can do this by holding cupping sessions or providing coffee at local events, for example. Not only does this promote your brand, it can help you develop a base of loyal customers.
“We only exist because the community decides to come in,” José explains. “It doesn’t matter how great we think we are, it’s about the people coming through the door. It’s up to us to repay that [custom] with quality and respect.”
As with any coffee shop, the success of a neighbourhood café will be down to its quality and consistency. Although they may be harder to find in a smaller city, hiring baristas who are dedicated and good at their job roles will support a good level of quality. If they know the local area well, that’s even better.
Finally, make sure you can deliver that quality in a consistent way. Word of mouth is especially important in smaller, more tight-knit communities. As such, you want to ensure that every single consumer experience is consistently exceptional. Routine quality checks, for example, will help to maintain consistency and quality.
Tips for adapting to the local neighbourhood
Each neighbourhood varies, and it’s important to acknowledge and adapt to these differences. Researching other local businesses, such as bakeries and roasteries, and reaching out to form mutually beneficial working partnerships can give you valuable insight into the area.
However, partnering with a local roaster to use and sell their coffee may not always be easy in smaller cities. “In Norwich, there are only three roasters. It’s not that common. Kofra has been open for 7 years, and in the first five years we didn’t roast.
“In the [first five years], I used my time to work with one of the best roasters in Europe – Caffeination – to find a style of roasting that was sustainable.”
It’s also important to note that customer visits tend to last longer at local, independent neighbourhood coffee shops when compared to regional or national chains (by as much as 80%).
Some 20% of visits to smaller, independent coffee shops last more than four hours, compared to 14% at larger chains.
If you can, focus on arranging tables and chairs in a way that allows customers to stay for extended periods of time without compromising sales. Creating dedicated areas for larger groups or students or workers will make them feel more welcome.
Providing the best customer experience
Research has shown that customers view coffee shops as a “third place” – a physical location between home and work that allows for social interaction.
Neighbourhood cafés are key in this regard for local residents. Research has shown that in smaller cities, people are more likely to visit a coffee shop for social reasons, rather than out of practicality.
José’s attitude reflects this. He thinks a neighbourhood café should offer more than just coffee. For him, it’s about serving the community’s needs, whatever they may be.
“If you need milk, you can go to the coffee shop and the chances are they will give you some,” he says. “If you need a parcel to be delivered, at a neighbourhood coffee shop, the [baristas] at the coffee shop will [receive] it for you.”
He also stresses the importance of consistent opening hours, especially during states of lockdown when other businesses are closed or operating on a limited schedule.
“If you say that you’re going to be open, then be open. There is nothing more disappointing than a small coffee shop that is not open when they are supposed to be – it’s unreliable.
“It’s about respect; the customer has already put on a mask and gone out of their way to visit the café, when they find out it’s closed.”
However, despite the difficulties, José says that for local coffee shops, the pandemic has shown how important a solid, tight-knit community can be.
“[We saw] relationships [forming] in the queues. People would talk [to one another],” he says. “The sense of togetherness flourished, and for me, that is the biggest reward that you can [receive] as a small coffee shop.”
The sense of community in smaller cities has a tremendous impact on coffee shops and roasteries. If you tailor your approach with it in mind, you can become one of the most relevant businesses in the local area, and cultivate a strong, loyal customer base.
To succeed as a neighbourhood coffee shop and a successful “third place”, businesses should embrace these ties, rather than adopting a cookie-cutter approach. Learn regulars’ names, remember their drinks, and form positive, meaningful relationships with them. It will result in lasting success.
See the Perfect Daily Grind article here: https://perfectdailygrind.com/2021/02/explaining-the-neighbourhood-coffee-shop-more-than-coffee-and-sandwiches/