Finding your niche
Standing out in a crowded marketplace can be challenging but having a niche offering can attract a much-needed loyal customer base.
With more than 7,000 independent coffee shops in the UK, it’s becoming harder than ever for individual cafes to stand out from the crowd. A few years back, a coffee shop seemed distinctive if it had specialty coffee, sustainability credentials, a location near a transport hub or a relaxed environment. Now, these things aren’t enough, leaving cafes searching for other ways to set themselves apart. For some, it’s a case of finding a niche – an added element to draw in the customers.
There are many potential niches that a coffee shop might choose. Common examples are cafes with a theme, an activity or a sole hero product that they base themselves around. Board game cafes are one of the most popular, booming in number since first hitting the UK in 2012. The UK is in the top three board game cafe locations in the world, alongside France and North America (according to research by Arizton). In 2016 alone, some 5,000 board games cafes were opened in the US, and while the UK market isn’t quite at this number it is constantly growing.
The cycle cafe Look Mum No Hands! opened in London back in 2010 and has refined its identity to become one of the leading cycle cafes in the world, alongside the likes of Fix Coffee + Bikes in Toronto, Canada. A team of bike mechanics and baristas with an enthusiasm for cycling and espresso turn the pedals of the business, attracting like-minded folk to their specialty cafe. Elsewhere in London, Lady Dinah’s Cat Emporium in Shoreditch, based on the cat cafe concept that’s huge in Japan, proves popular. It opened in 2014 following a £108,000 round of crowdfunding and a partnership with a local shelter. Booking up in its first two months of opening, it inspired dozens of other moggie-filled cafes to spring up across the UK.
At the heart of every successful niche cafe lies a carefully balanced equation of skill, concept and audience awareness. “When an entrepreneur makes a conscious decision to open a cafe with a specific niche, they’ve got to have a very pure concept that’s right for the market they are trying to attract and a team that can serve all aspects of it,” says Jeffrey Young, CEO of Allegra Group.
“Coffee is critical: you have to be very credible in your chosen specialism and you have to be hugely credible in your coffee,” he continues. “If you open a cycle cafe but all you do is put a few bicycles here and there without any specialist cycle knowledge, you risk being seen as gimmicky, so you’ll fail to capture an audience of proper cycle enthusiasts. You need to be very knowledgeable and up there with them and your shared point of interest. It is a tough act to do, and it does become two things that you have to do very well.”
There are some fundamentals of service and hospitality that you have to get right for this type of operation. Nobody wants to go to a pottery cafe where the clay technician goes between a messy potter’s wheel and a coffee machine, so you need to define roles and hire specialists to avoid people having to switch in. Ultimately, having a niche requires you to look very consciously at all the different sides of your business, making sure that they are all covered off very well.
A lot rests in knowing the business identity inside out, identifying what you are and what you are not. ‘”f you are a library cafe, you need to have space for the books in the right environment, not just dog-eared best-sellers tossed on a shelf,” says Jeffrey. “You can do things to add to your credibility, such as readings or book launches. Know what your customers want and work with it; if you know 60% are coming for your niche and 40% are coming for your coffee, you can make sure that you cater to and address those different segments appropriately.”
One of the biggest risks is weighing up passion with making money. Niche cafes need to think differently to most coffee shops; they are experiential and space limited, so the time customers spend at a table is valuable and desirable. Cover charges and bookable slots give owners control over how long people stay for and avoid having a money-losing situation where people nurse one coffee for three hours. If your niche is well executed and has a strong audience, and if your coffee is top notch, you’re on the way to making a name for yourself in both fields, and a tasty profit.
FIVE TIPS FROM OUR PROS: HOW TO SUCCEED WITH A NICHE COFFEE SHOP
1 THINK ABOUT THE CONCEPT THOROUGHLY
“Make sure you meet the needs of your niche. A good cycle cafe needs a knowledgeable hospitality team, comfy areas to relax after riding, room between tables to wheel bikes through, space to do repairs and custom fittings that reflect the theme. Keep it very pure and not at all gimmicky.”
Jeffrey Young, Allegra Group
2 HAVE A WATERTIGHT BUSINESS PLAN
“I thought I’d done a really good business plan, but there were lots of things I missed. Do a thorough business plan then ask people who run similar businesses if your assumptions on things like staff costs etc are correct.”
John Morgan, Thirsty Meeples
3 BALANCE YOUR NICHE WITH YOUR COFFEE
“Regardless of how great an experience a niche cafe provides, nobody wants to go to a cafe that serves horrible coffee. Know your market and deliver what they want, but keep both sides of things moving harmoniously.”
Jeffrey Young, Allegra Group
4 TREAT SPACE AS A PREMIUM
“Start small so you can create a vibe easily, but remember that will limit how much you can make. Cover charges can help keep the turnover of customers high if the demand is there. Don’t be shy to ask for help from your landlord; try to negotiate a low-rent period for when you first open.”
John Morgan, Thirsty Meeples
5 PRETEND TO BE THE CUSTOMER
“Sometimes when I stay in a hotel or apartment, little things make me wonder whether the owners have actually tried spending the night at their accommodation. Ask yourself: would I want to spend time in my cafe? What do I like about my favourite cafes? Is the coffee good enough here?”
Suzi Park, Stiwdio 3