The costs of running a roastery can quickly add up. Even after you’ve invested in a roaster, there are various running costs to consider, from rent and staff to packaging and green coffee. If you’re not careful, these outgoings can start eating into profit margins and, eventually, leave you with no choice but to close down.
However, by finding clever ways to reduce everyday costs, roasters can increase their chances of long-term success without sacrificing quality and consistency. Higher profit margins also provide greater flexibility to expand the business into new corners of the market, leading to further opportunities for growth.
Read on to find out about how specialty roasters can make their roasteries more affordable.
What makes coffee roasting expensive?
According to recent figures from the Office for National Statistics, around 80% of UK businesses fail within the first year. Among the most common causes cited are the lack of a long-term business plan and cash flow problems (or the speed at which money is coming into business versus how quickly it’s going out).
Specialty coffee roasters are no exception – significant start-up costs, high levels of competition, and relatively small margins mean roasteries are just as susceptible to failure as any other form of business. And, like other businesses, cash flow problems are among the biggest challenges.
The reason is that a roastery is expensive. Aside from the initial start-up costs, there are numerous running costs to consider, including permits, utilities, rent, storage, training, marketing, packaging, green coffee, and staff wages, to name a few.
In an article for Bean Scene Magazine, co-founder of Ordermentum, Andrew Low, says that many roasters fail because they don’t factor in these additional costs when handling finances.
He says that even after the cost of the coffee itself has been taken into account, expenses like factory overheads and delivery fees eat into profit margins and leave roasters with little to no profit on each sale.
However, due to strong competition in the market, it’s not usually viable to increase prices too far beyond the market average. The alternative is to look at ways of making the process more affordable.
Green coffee & blends
Sourcing high-quality green coffee that makes your roastery stand out comes at a price. High-scoring green coffee is often more complex and balanced, but buying the most expensive green coffee available is not always the best way to grow your roastery.
Instead, creating signature blends can be a more sustainable way of giving your brand identity.
In a lot of coffee blends are lower-scoring (and more affordable) green coffees that wouldn’t stand out alone, but add complexity to the cup when combined with other coffees.
“Like a good wine, selecting different origins (types) of coffee on the basis of their unique characteristics (aroma, refinement, quality, persistence, body) then mixing them together makes it possible to enhance the different personalities (good qualities) of each one, while minimising their faults,” writes Special Coffee Italy in a blog post on their website.
Leading roasters like Square Mile have established themselves using their iconic blend “Red Brick”, in which they source fresh, seasonal crops to recreate a signature flavour profile to which their customers have become accustomed.
The coffees used in a blend can then be offered as a single origin too, which can be roasted on an alternative roasting profile that highlights different characteristics held within the various beans.
Toll roasting & shared space
As the centrepiece of a roastery, roasters naturally constitute the most substantial investment, often costing tens of thousands of dollars each. However, once the roaster has been bought, it then costs considerable sums to keep it running.
To cut down costs, a good option when starting out is to explore the possibility of toll roasting. Toll roasting is a service in which green beans are sourced and sent off to an established roaster to be roasted to a certain set of specifications.
Once roasted, the beans are packaged and sent back, after which they can be distributed and sold under a different label. A “toll” is usually taken as payment, with the exact amount calculated by how much coffee is roasted.
As well as avoiding hefty start-up costs, toll roasting provides business owners with the opportunity to focus on sourcing quality coffee, building a brand, and generating a sustainable income.
Another option is to find a shared roasting space. This involves renting time on a roaster in a co-op style set-up for a daily fee.
Not only does this keep down costs, it also offers fledgling roasters the opportunity to learn from those who are more experienced. Roasters in shared spaces often exchange knowledge, offer guidance, and even form collaborative relationships.
For most specialty roasters, their coffee packaging is one of the most important marketing tools at their disposal. It’s often the first point of contact consumers have with a product and it can be highly effective at showcasing a brand’s identity.
Normally, bulk ordering packaging helps keep prices down, as cost per unit falls when the number of units increases. This is especially true of customised coffee packaging, which usually requires custom-made rollers to print unique designs, typically costing hundreds, if not thousands, of dollars. As a result, printing manufacturers tend to set minimum order quantities (MOQs) of 10,000 units.
However some packaging manufacturers, such as MTPak Coffee, offer fully customised coffee packaging with MOQs as low as 500 units. UV printing, in particular, has allowed a quick turnaround without the need to manufacture print rollers for each custom design.
As well as avoiding hefty bulk order packaging costs, low MOQ options enable specialty roasters to stay agile in a competitive market. It also means they’re able to offer multiple packaging designs across different coffees.
For example, if a roaster decides to offer a limited edition micro lot coffee, they can create custom-print packaging for that specific product. This helps attract attention on the shelf and contributes to building a strong brand identity.
Finding ways to make coffee roasting more affordable can help keep roasteries afloat and create opportunities to expand in the future. It also allows fledgling roasters maintain a competitive edge by keeping down prices, while increasing profit margins.
At MTPak Coffee, we help micro roasters keep down costs by offering low MOQ orders on fully customisable coffee packaging. Our range of sustainable pouches can be customised with your unique branding across as little as 500 units.
For more information on our low MOQ coffee packaging, contact our team.
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