COVID-19 Small Business Survival Guide for Coffee Shops

It’s been a few weeks since state and local governments issued the first stay-at-home orders to slow spread of the novel coronavirus.

Overnight, coffee shops in many parts of the United States had to close their dining areas and rely strictly on carry out and drive-thru service.

Still, the U.S. Department of Homeland Security has designated coffee as an essential critical infrastructure. Millions of coffee drinkers need their specialty coffee fix – even if they’re drinking it at home! We don’t see that changing.

As an operator of several coffee shops and advisor to hundreds of others, Crimson Cup is using a range of strategies to help ourselves, our cuppers and our customers adapt.

This article covers some steps you can take today to protect your business and position yourself to grow again when conditions improve – as they inevitably will.

Remember, we’re always here to help independent coffee shop owners like you! Feel welcome to call us at 614-252-3335 or email marketing@crimsoncup.com if you’d like to talk.

The Pack Survives

Entrepreneurs are rugged, up-by-your-bootstraps characters. Many look inward to solve any problems.

But in times like this, the Stark motto in the HBO series Game of Thrones strikes a chord: “When the snows fall and the white winds blow, the lone wolf dies but the pack survives.”

Now is not the time to go it alone. The coronavirus crisis is bigger than any single person or business.

There was no way you could have expected or prepared for it.  Yet, through no fault of yours, it threatens the survival of your business, your employees and your community.

So, reach out and ask for support! You’ll find that many people and institutions and eager to help.

Step One: Talk to Customers and Employees

In a crisis like COVID-19, you want to communicate with key audiences early and often. Keep sharing information, even if you don’t have all the details.

Let customers and employees know what to expect from you. Your coffee business may adjust hours, edit your menu or limit service to drive-thru, carryout or delivery services. You may need to change these multiple times.

Post notices wherever you can – your door, your website, your social media profiles. Send out emails if you have a list of customers. Hold virtual meetings with employees who are working from home.

Two-way communications are key. Ask for feedback and ideas about what your customers and employees need.

Be sensitive to the needs of employees, especially if you must lay off some associates. Thanks to temporary enhanced unemployment benefits, some may be in a better financial position if you furlough them rather than reduce their hours.

While we’re all staying safer at home and sheltering in place, every little touch counts. Stay connected!

Step Two: Work Your Connections

Your next step should be to call your banker, accountant, attorney and any other business advisors. Talk about what you may need to secure liquidity, additional capital or financing during an economic downturn. Ask for advice on how to get it.

As discussed below, governments at all levels are responding to the crisis with programs to help small business owners. Your advisors can help you learn about and take advantage of them.

Next, call your Chamber of Commerce, advisory board members or other small business owners. Ask what they are doing. Share resources and brainstorm solutions to any common problems.

Make sure to share whatever you learn with the group. We are all in this together!

Step Three:  Apply for Government Programs

The demand for government financial relief is high! Banks and businesses quickly exhausted the initial round of funding provided in the $2 trillion federal stimulus bill called the CARES Act that was signed March 27. A second round of funding was approved in late April.

You should prioritize applying for any assistance your business might need before appropriations run out. Your banker and other business advisors can help in wading through the details.

Finish your application even if you hear that funds are no longer available. It is possible that Congress will add more funding in the future, and those with completed applications will be at the front of the line.

The three primary Small Business Administration programs from the CARES Act include:

• SBA Paycheck Protection Program provides loan forgiveness for retaining employees by temporarily expanding the traditional SBA 7(a) loan program. Loans are capped at $10 million.
• SBA Economic Injury Disaster Loans help small businesses overcome temporary loss of revenue because of the COVID-19 pandemic.
• SBA Express Bridge Loans. If your business has a business relationship with an SBA Express Lender, you can to access up to $25,000.

 In addition to these new programs, the SBA offers debt relief options for small businesses that hold existing loans.

A number of states, including Ohio, have set up programs to help small businesses. Ask your advisors or your state’s department of commerce for information about these.

Step Four: Ask Your Landlord or Mortgage Holder for Rent Relief

Rent or mortgage payments are the biggest fixed expenses for most coffee shops. If you’ve had to reduce hours or close your business temporarily, paying your full rent or mortgage places a big drag on your balance sheet.

Reach out to your landlord or the bank holding your mortgage and ask what relief they can offer. Many landlords will agree to defer or forgive rent payment, although they may require proof of your financial hardship. We’ve found that people are understanding and want to help. It’s in their best interest to retain a good tenant for the long term.

After you’ve contacted your landlord, take a hard look at other expenses. Cash is king in a crisis. You may need to delay or cancel orders, ask utility providers to delay payments and reduce staffing levels.

Step Five: Adjust Your Menu and Services

Stay-at-home orders have changed consumer expectations and spending patterns. These may be temporary or long-lasting.

At present, we are seeing increased demand for drive-through and delivery services. There is less demand for carry-out that requires customers to enter a building.

It may be some time before many Americans feel comfortable being close to others in a coffee shop.

Ask yourself, what does it mean for your coffee house while you can no longer be a community gathering place? How will you be affected if your local area needs to practice social distancing for a year or 18 months?

Brainstorm ways to adapt to the current trends. There may be creative alternatives if your shop currently lacks a drive-thru. For example, one of our customers essentially created one by changing the direction of cars entering the parking lot.

If you do have a drive-thru, make sure everyone in your local area knows you’re open. Post on your website, social media and Google My Business listing. Update signage where possible.

Many cities have small business support pages and websites where you can list your services for free. Add your store.

Shelter-in-place orders have strained grocery supply chains to the limit. At the same time, they have left many restaurant suppliers with unsold food.

We’ve seen a few coffee shops use their commercial supply chains to offer takeout meals or even high-demand perishables like milk, eggs and bread.

Before expanding your service offerings, ask your customers what they need most – and see if you can supply it at a reasonable price that covers your own expenses.

Step Six: Engage with Policy Makers and Small Business Advocates

You and other small business owners provide jobs and economic growth to local economies.

In fact, small businesses employ around 50 percent of all workers. There can be no quick economic recovery unless small businesses can hire or rehire their employees.

Make sure elected officials at all levels of government know what support you need to stay in business.

You may choose to engage individually or work with your local chamber of commerce and other business groups.

One place to start is the U.S. Chamber of Commerce, which has published a list of COVID-19 resources.

Step Seven: Plan for Growth

Since Crimson Cup began roasting coffee in 1991, we have seen business cycles come and go. No matter how bleak things look at the moment, the economy will turn around. Your job is to ensure that your company is still in business when good times return.

Remember, your business may look considerably different a year from now. You may need to adapt your menu, your hours or the way you deliver delicious coffee drinks. Some employees may need to take on different responsibilities.

We’ll update this article as we discover new resources. In the meantime, there’s no substitute for talking directly. Call us at 614-252-3335 or email marketing@crimsoncup.com if you’d like to discuss your challenges and opportunities.