Dein Problem ist nicht Überexpansion, sondern fehlendes Talent

0:00I sell coffee to um tired people. Yeah, sleepy addicts. Um and we do about three or we do three to four million in revenue across three brick-and-mortar locations. I'd say four cuz we just opened the third one two months ago. Um but I also have a roasting operation that does 800k um vertically integrated but also selling to other businesses B2B.

0:27And I would like to be at 10 million for the retail um and open 20 locations so 30 to 50 mil in 10 years. My constraint is the woman in the red dress, the roasting side, which I I need to keep to vertically integrate as I scale the retail. But yeah, I need the wholesale to keep it operational. And so I'm going to

0:52>> enough scale with your three stores. >> Yeah, with three stores not enough volume to justify uh roasting facility. >> Does it make enough now? Do you have to sell to new customers or you have like reliable customers that keep buying every month? >> Yeah, we I have like 15 reliable wholesale. >> Yeah. >> B2B. >> So, um I don't I don't hate the strategy. Um it does make some sense. You know, I had a yesterday, not yesterday, Jesus.

1:18Uh I had I had a business that came in that had a laser tag park, a burger shop, a cafe, um an antique uh dealership all in in the same building. So, you're better than that. So, don't worry about it. This this makes sense cuz the pieces are kind of aligned here, right? Um I would from a The thing is you're not over expanded, you're under talented.

1:43>> Right. That was my second constraint. Yeah. >> And so, what are margins of the business again? >> 15 for the retail, 30 for wholesale. >> You have to fix the retail. Yeah. Like I wouldn't want to scale to 20 locations. >> Right. >> It's like you have to get the margins in that thing to like 40 plus. To to like like I'll paint it like this. If you have the perspective that you have because who here's brick and mortar? Let me get hands.

2:12Okay, so about a third or half of you. Um if you have the perspective that you have one store, two stores, or three stores and you're like, "Okay, I am making some money. I would like to make more money and the way that I would make more money is I'm going to open more locations." That is not the right frame of mind. You have to make those stores so profitable that you don't know what to do with all the money you're making. And then at that point you're like, "Well, I guess I should open more stores cuz I have all this money." That's the that's the vibe. That's what it should feel like when it's right. And right now it doesn't feel that way to me just listening to what you're saying.

2:41And so I would want to dive into probably the pricing and the marketing um of the stores. I think that's like thing number one. The wholesale business I'm fine with as long as it takes zero attention from you. >> Yeah. >> So if you already have the business there and I'm guessing you have some manager who runs it hopefully. >> employees. I don't do anything. >> Okay, that's like I'm okay with it. I would just say like no new customers. Like if you like the point of that is not to make more money. The point of that is to just like just keep the vertical integration for you know your special beans.

3:15It sounds funnier than it it is but anyways. Uh So Um how many how many stores do you need to not to for it to like for the roast to make sense for the for your stores? Also the margins are really bad cuz you're vertically integrated. >> Yeah. >> Cuz if you weren't vertically integrated, you'd like that 15% would be almost gone from your cost of goods. >> Oh no, it's so the 30% is I sell to the retail just like it's it's not um

3:42>> No, no, but like your other stores get it at cost. >> No, that's yeah, that's why I I buy it at retail cuz it it's separate. Just to keep it Yeah, yeah, cuz it's a company. >> Okay. >> Yeah. >> Um We still have to fix 15% margins. >> Yeah. So, if it was completely vertically integrated, it would it would be more like 20, 25 cuz coffee's the biggest cogs, obviously. >> Yeah. >> Yeah. >> I think um it's probably a combination of it's not it like unfortunately, you probably have like a like a five or six small things type change that has to happen.

4:14So, it's basically we have to look really deep into the financials and say like, all right. Let's look at Yeah, let's look at hours and staffing. Like, how can we optimize staffing mix? Is there some different way of doing comp for the team that still allows us to give them maybe some more flexibility, but we save a little bit on payroll or payroll taxes. Um from a pricing perspective, if we look at the menu, what are the hot items? How's the menu laid out? Can we put it in a different order so we can have a higher percentage people take the higher uh percentage profit things. What are the scripts that the people at the caf uh the cash register are saying so we can get a higher percentage of a you know, attach rates to these basically like it's going to be like 20 of those things that we have to put together because again, like I really would strongly discourage you from opening more stores and encourage you to triple the profit of your three stores rather than opening up six more.

5:05>> Okay. >> Cuz I think you do that and then the opening up six more will become inevitable and you'll have more than enough cash flow in order to do it and you won't feel as strapped and as like I can feel your pressure right now. Um and I don't want that. >> Is that something I would hire for cuz that was my next second concern. >> chain like Who Yeah, who would I need to solve that problem if it's not me doing anything? >> Um This is not me shamelessly plugging L2, but you just like we could help you do it. But um that would be the first thing I would do. But it's less than an employee.

5:38Um that would probably be thing one. Um it's it's it's the it's the the I just went over, right? So, it's like how do we get them in? how do we get them increase order value, how do we get them to come back more frequently, what do we do for for hours mix, what do we look at comp, um what are we doing from a marketing perspective? Do you do any ads or is that all word of mouth? >> Um some ads, like yeah. >> Yeah, so you'd have to probably have to cuz with with coffee and kind of like uh food type stuff, it's almost always has to be grassroots, but there's some pretty banger things you can do um that do actually like drive a lot of foot traffic in. Um those are like that's like six things that we have and like and then the the scripting at the cash register has to be down pat. Like it has to be nailed. I mean, it's probably put a little incentive structure in place that they have, you know, incentive to do it. It's just a little it's a hundred small things. Un- like unfortunately. The good news is that it's not like you have to like hey, you should get out of coffee.

6:28>> Yeah. >> Uh all right. Um that's the good news, right? Um and I probably look at the menu cuz I'll bet you right now if we looked at the whole menu, there's probably like 50% or more of the things that are just not even ordered that often and you're like cash is sitting in inventory, things like that that we could just optimize cash conversion cycle um for the business. I know that's a lot of things, but that's probably the real answer rather than like the one sexy bullet. >> Yeah. Okay. Thank you.

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