Survey of 100 Roastery Coffee Shops

Business Management is

More Difficult than Roasting The Korean coffee market is currently under a roastery coffee shop fever unprecedented worldwide. In what

environment do the owners of roastery coffee shops actually manage their shops and what do they think

of the current situation? To find out, Monthly Coffee conducted a survey of 100 owners of roasteries among

subscribers of the magazine, members of the Specialty Coffee Association of Korea, and the list of roastery

coffee shops provided by roaster selling companies.

13%

6%

47%

7%

27%

1~2 6~93~5 2010~19

17%

43%

13%17%

10% 7%

46%

20%

27%

General shop management>>

1.Where is your shop located?To the question where their shops are located,

47 percent replied residential areas accounting for almost half of all. We can tell from this that most roastery coffee shops are located in residential areas. This was followed by °∞other°± such as college areas, areas without special commercial zones, commercial areas or combined. Of the respondents, 13 percent said their shops are located in commercial areas,

Basic survey of respondents>>

Korean Coffee Market 3

• 2012 09

followed by subway station areas at 7 percent, and offices at 6 percent.

2. What is the number of coffee shops within your shop’s 200m radius?

This question was asked to find out how many coffee shops are located within the 200m radius from their shops. It may differ depending on the commercial zone, but we can tell the degree of competition by looking at the distribution of coffee

Number of respondents By sex By ageBy region

Seoul 50, Gyeonggi-do 20,

Gyeongsang-do 14,Jeolla-do 10,

Chungcheong-do 3, Gangwon-do

Total 100 Male 87, female 1320s 7, 30s 60, 40s 27,

50s 3, 60s 3

Commercial Area

Business Office Residential Station etc

Number of a Nearby Cafe Operating Experience

Less than 1 year

More than 1 year Less than 3 years

More than 3 years Less than 5 years

More than5 years

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What was the most difficult about running a roastery?

W h a t e v e r s h o p o n e r u n s , t h e r e a r e m a n y difficulties. But we asked what they found the most difficult about particularly running a roastery. Answers provided to choose from were managing the coffee bean stock, profit rate, uniform taste, civil complaints from the neighborhood, work load, and other. Managing coffee bean stock had the greatest number of respondents with 30 percent saying they found it difficult to measure the amount of coffee bean consumption and appropriately managing the stock according to the frequency of roasting. The answer with the second largest number of respondents was work load with 23 percent saying that they only have one person managing the business and having to take care of everything.

Level of satisfaction with the operation of roasteries>>

Generally, in individual roastery shops, the owner is responsible for the roasting, extracting and providing services as well as other detailed items. As such, they find the work load difficult to handle as they need to process and manage as the owners of the shops, the roasting schedule, shop management schedule and other items. The answer with the third largest number of respondents was uniformity at 17 percent. Roastery coffee shops find it difficult to provide uniform taste meaning they worry much about roasting itself. Other answers included low profit at 13 percent, other at 10 percent, and civil complaints from the neighborhood at 7 percent. Compared to other questions, the answers were not biased toward one but relatively diverse meaning they commonly feel various difficulties running a roastery which requires management in various areas.

10 www.coffeero.com

shops within a distance considered close enough to be considered competing shops. For your reference, coffee shops here include all whether with or without roasteries. Fast food shops whose main business is not selling coffee were excluded. According to the results, 43 percent responded 3~5. Those who responded 1~2 was relatively low at 17 percent but 13 percent said between 6~9, 17 percent between 10~19, and even 20 percent over 20. This means about 80 percent of roasteries compete with more than three up to 20 competing coffee shops in their neighborhood.

3. How many years of roasting experience do you have?

This was a question separate from the period of shop operation because the period of shop operation is not necessarily the same as the period of their roasting experiences. The survey results showed that 37 percent had over one and below years of experience. This means

that the number of shop owners who started to learn roasting in the last three years is increasing. This was followed by 33 percent responding over 5 years and 27 percent over 3 and less than 5 years, both of which are relatively high. Below one year was minimal at 3 percent. The ratios of those answering over one and below three years, between three and five years, and over five years were similar without drastic differences.

4. What is the capacity of your roaster?We asked the capacity of their roasters (if using

more than two roasters, the sum of both). Those using roasters of 1kg capacity accounted for the most at 40 percent followed by 30 percent of 3kg. This means that about two thirds of all roasteries use small roasters of between 1~3kg capacity. These were followed by 17 percent using roasters capable of roasting over 6kg and 7 percent of 10kg capacity. Only 6 percent answered using below 1kg or several roasters adding up to over 20kg.

9-11 Survey of roastery coffee shops.indd 2 12. 04. 10 오후 8:42

1.Average number of cups of coffee sold dailyThis question enables indirectly finding out a shop’s sales. Fifty to

hundred cups topped the list at 43 percent, followed by 100~200 cups at 24 percent. Those selling 10~30 cups remained at 13 percent, and 10 percent said they sold 30~50 cups, followed by over 200 cups at 10 percent. The results show that when there are 10 shops selling a minimum KRW one million worth of coffee provided that the average cost of a cup is KRW 5,000, there are over 10 shops selling around KRW 100,000 worth of coffee a day.

2. Ratio of the coffee menu to all drinksOf all drinks sold daily, we asked what the share of various coffee drinks

includ9ing espresso and americano was. There wasn’t a single shop selling less than 10 percent and 6 percent answered between 10~30 percent, which the lowest. Those answering 30~50 percent accounted for half at 50 percent. This means that the coffee menu accounts for about half of all drinks sold. On the other hand, the fact that the coffee menu does not surpass even half of all drinks in a roastery that does its own roasting to provide fresh and tasty coffee, means that roasteries have not been able to appeal to clients their identity as a roastery. Those who answered coffee took up 50~70 percent of their drink menu stood at 37 percent. That is, only one third of roasteries are benefiting from their identity as a roastery and appealing to clients as a roastery.

3. Ratio of hand-drip coffee to the entire coffee menuIn the coffee industry, we normally think of “roastery coffe shop = hand-

drip coffee.” We investigated the actual ratio of hand-drip coffee sold to all coffee drinks. The results showed that 13 percent sold less than 10 percent, 40 percent sold between 10~30 percent, scoring the highest, and 17 percent sold between 30~50 percent, while 13 percent sold between 50~70 percent, and 17 percent sold over 70 percent.

4.Ratio of coffee bean sales to total salesWe found out the ratio of coffee beans sales to total sales of the

shops. Less than 10 percent accounted for 13 percent of respondents and 50 percent answered 10~30 percent, meaning that the sale of coffee beans account for 10-30 percent of total sales for half of all respondents. Next, 17 percent answered 30~50 percent and 7 percent answered 50~70 percent. A significant number of respondents, that is 13 percent, answered over 70 percent. Although the sale of coffee beans has just started being vitalized in all roastery coffee shops, it is clearly an area of potential growth in the future.

Roastery menu and sales>>

13%10%

43%

24%

10%

10% 30~50%10~30% 50~70%

13%

40%

17%

13%

17%

10~30%

6%

30~50%

7%

50~70%

50%

over 70%

37%

• 2012 11

Operating of Satisfaction Roastery

Operating Difficulties of Roastery

Operation Reasons of Roastery

Very satisfied53%

Very dissatisfied3%

Usually7%

Satisfied37%

Qualityimprovement

47%

Beans for sale30%

Differentiatedconcept17%

Lower cost6%

Revenue13%

Beans inventorymanagement

30%

Other10%

Overload work23%

Complaints7%

Uniformityof taste17%

Average Daily Sales of Cups

10~30cups

More than200 cups

30~50cups

50~100cups

100~200cups

Contrast Between Drinks and Coffee

Sales Rate of Hand Drip Coffee

over 70%

9-11 Survey of roastery coffee shops.indd 3 12. 04. 10 오후 8:43