Coffeebar owner, Greg Buchheister's first move was getting on the phone with his vendors and setting up hand sanitizing stations in each location at the very beginning of the outbreak.
Scaling back his employee base was one of the most challenging components of reacting to the pandemic. For employees who are vulnerable, live with vulnerable family members or weren’t comfortable continuing to work, Buchheister encouraged them to file for unemployment as quickly as possible.
Strategic Pivots in Operations
Employees of his that need to continue earning a paycheck to support their families make for some hard decision making as the business owner.
“In the Menlo Park location, out of 45 people, 35 wanted to keep working and that’s just like, ‘what do you do when you can only afford to keep six per day?’ That’s tough. Luckily, that location has a huge parking lot and business is 30-40% of normal, so we can keep more people on and run at a break-even level. – that’s our goal through this.”
After furloughing 120 of 170 employees, Coffeebar created a small enough staff to adjust operations on a daily basis to best serve the community.
“We pivoted to a break-even-only model. As long as we break even, we will keep our staff. If we can do better, we will add more back on.”
His next major concern was all of the food they had planned on preparing during normal store operations.
“Business up until this point was normal and all of a sudden, you’re at 15% of what’s normal and still have $4-8K of food in the fridge. So, we turned into a market temporarily and sold at cost.”
With grocery stores sold out of basic necessities like eggs and toilet paper, Coffeebar’s market was highly successful in selling off excess product. Since Coffeebar’s vendors aren’t setup to go direct-to-consumer, Buchheister will continue ordering food and household supplies in market baskets for sale.
Tips for Small Business Owners
Do Not Wait to Talk to Your Bank, Landlord and Vendors: Say your rent is $10K a month – if you’re only doing 15% of normal sales, rent will wipe out your income, and then some.
“The first thing we did was ask for delayed payments to interest loans. We talked to our landlords and said, ‘this is what we’re facing: 15-20% of normal volume.’ And we asked for rent abatement for a few months and a percentage rent moving forward.”
Reach in a collaborative, “let’s figure this out” kind of way. Go have the difficult conversation now and create those partnerships. Do not wait until you get an eviction or default notice.
“Be overly communicative not only with employees but vendors, so everyone is well aware of the situation and pay off whatever debt you can, so when you come out the other side you can function and focus on operations without having a bunch of overhead.”
Take Advantage of Your Resources: Use existing social media pages and email lists to reach customers and keep the conversation about your business going online. Buchheister recommends bringing the same personality to social posts that you would behind the shop counter – get creative and make content that connects with your audience authentically, not just hocking your product.
Coffeebar was forced to figure out their idea of text-takeout on the fly, which has been great for business. Each store has its own Google number that customers can send orders to for pick-up.
The shop also sells beans, shirts and hats online. Home shipments of coffee beans have ramped up drastically and customers are now receiving their orders the next day.
Keep Your Workers: Retaining staff is always more favorable than hiring new ones on. Training people and revamping your staff is hard and time consuming. Buchheister plans to gradually bring on more staff on the break-even model as social distancing measures are gradually lifted.
Looking Forward: We’re in this Together
“Coffee has always been an industry that’s fairly recession-proof, but now we’re talking social distancing, so at the moment it's text and take out, and thankfully, coffee isn’t the $100 per person night out on the town; people need it to function, in order to start their day. We are happy to pivot our business to still be able to fuel them up."
With high hopes and a realistic outlook Buchheister is planning into the fall for changes to his business as a result of Coronavirus. While he says he would love to plan himself wrong, his biggest worry is potentially facing another round of layoffs if business owners bring back their staff using government loan money and business levels don’t come back.
“You only get eight weeks and whatever you don’t spend turns into a loan and that has to be paid back in two years. So, you don’t want to ramp up your whole staff only to lay off everyone because the business can’t support it.”
In the meantime, online sales are Coffeebar’s silver lining, bringing in more orders in one day than they saw in three to four months. Subscriptions and online coffee orders have gone through the roof, which is a part of the business they’re learning more about and could prove to have long lasting positive effects.
“It’s a crazy time. It’s like war. But it’s not like war because this is happening to the entire world and every group of people is facing the same problem. We are all in this together.”