Restaurant Accounts

[christian]

We have an opportunity to pick up some local restaurant accounts. The price of entry is at least a brewer. We then face the question of getting into the frac pac business whIch seems much too labor intensive to do by hand vs getting these accounts portion grinders as well vs pregrinding and getting these accounts to agree to flll their brew baskets by scoopingvs maybe these accounts are not cost effective for a small startup roastery. Any words of wisdom would be much appreciated.

[ChrisSchooley]

Restaurant accounts a re really tough for small roasters unless it's just a perfect match and you've found a restaurant partner who is really invested in doing great press pot service and will buy their own water tower. Generally in order to get restaurant accounts, you have to supply equipment as well, and for a smaller roaster outfit this can really overextend you, as the coffee usage doesn't quite balance the equipment support.

[timd]

My first question for restaurants is: Which meals do you serve?

If they do breakfast and are a busy location, it can be a lucrative proposition to invest in some equipment. If it is just lunch or dinner, typically it is not going to amount to much unless they do catering.

Hand packing fracs is a nightmare. Most often you have to use older coffee because off-gassing will shred the bag. Buying valve bags for small packs gets cost prohibitive. In the long run a portion grinder is a better deal despite the up front investment. If the account is turning coffee fast you can sell them ground coffee, however if they are buying 10 pounds every 2 weeks it seems like a rough way to represent your coffee.

If you have the equipment on a shelf ready to lend it isn't a bad deal. If you have to spend $1400-$2400 out of pocket to buy a brewer, grinder, carafes etc. then you have to determine your break-even point based on your net profit per pound. If the account is buying 15 pounds a week it will take a long time to recoup your investment. If they're buying 80 pounds a week it seems reasonable you could recoup your investment fairly quickly.

Then you get to equipment servicing. If you have an in-house tech they can put them on a regular service schedule and it is not a big deal. If you have to pay for an outsourced tech to upkeep their equipment or repair it when it breaks you have to figure how much this will cost every year. Techs get expensive fast and there isn't much incentive for the restaurant to take care of equipment they don't own.