The Chocolate Life

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I am currently in the process of renewing a commercial kitchen lease and have been considering opening a retail shop.  I wondered for those folks who have brick and mortar stores right now whether they could answer a few questions?
  1. How did you decide you would have sufficient business to support the overhead of a store?
  2. How long did the process take from location of space to build-out and opening for business?
  3. Did you stay on budget?  If not, how much above budget were you?
  4. How did and do you attract customers?  
  5. What items do well in your shop?  Are you a straight ahead chocolate shop or offer other "attractions" (i.e. cafe, gifts, etc.)
  6. How has your original vision changed over time?
  7. If you were to do things differently, what would they be?
  8. What things worked well for you?
  9. Any specific advice to offer?

Lots of questions, apologies.

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Hi Elaine,

 

You pose some interesting questions.  I won't be able to answer all of them here, but happy to share a bit of my experience starting a chocolate retail business (and studying others).  I am a retailer first and foremost, and chose chocolate because..well...I love chocolate and there was an open market here.

 

The most critical aspect of a chocolate retail outlet is LOCATION, LOCATION, LOCATION.  People believe they can open in the back streets and people will come because it is a chocolate shop.  Not so.  Most chocolate purchases are impulsive.  Opening on the back streets means you will spend a LOT of time and resource marketing and building yur brand awareness.   Don't be afraid of higher rents - they tend to deliver a higher level of foot traffic - and if you are where the people are, they will shop with you, letting you focus on selling and making chocolate (and not spend half your life stressing over how to get more people into your shop).

 

We did not start out making our own product - and only recently made the decision to go down that road.  If you are a manufacturer as well, you should have plenty of margin in your product to support a decent retail business, so long as you get the location, fit out, and pricing right. 

 

The main thing I would do differently is to offer seating in our stores. 

 

The last piece of advice I can give is to read a book called "The E-myth" - it will help ensure you fully understand the difference between making chocolate and running a retail business.    All the best.

Hi Stu,

Thanks for the advice - seems like most folks agree that location does play a big part.  What chocolate products do you sell, and what do you find sells well?  How long have you been in business?  Do you carry other items such as coffee, baked goods?  Why would you add seating?  

Thanks,

 

e

Hi Elaine,

 

We have been in business for just over 2 years.  We have conducted market research by sending a survey to 2000 random members of our database.  We found the following:

  • 57% of people came in to buy products for themselves
  • 38% of people came in to buy gifts for others.

From this, we have ensured we have increased our range of 'treat yourself' products and consolidated our gift offering - and as a result, our sales have increased.  So in terms of what type of products we sell... we have 120 different flavor praline & truffles in our cabinets  (some say this is too much, but we ditch poor performers and we move thousands of chocolates from these cabinets every week).  We sell a number of different 'treat yourself' products from slabs, tablets/bars, through to confectionery & fudge bags, Coconut Ice, a range of chocolate coated peanuts, almonds, raisins, ginger, etc etc etc.  In the gift range we have sourced unique packaging (we have an aversion to cheap packaging which seems prolific in our industry).  We then box up different chocolate selections for each packaging type.

 

Why would I add a cafe/seating?  54% of our database said they would like it if we added seating.  We do sell takeaway coffee, but if we had seating, we would sell a lot more coffee etc.  That said, it would also detract from our retail focus, so we just sit in our niche and leave the cafes to others for now.  The other issue with a cafe is where to draw the line...muffins..sandwiches...when does the line get crossed where you become more cafe and less chocolate shop?  We do not sell baked goods.

 

We are purely a retailer selling chocolate made by various chocolatiers - but our next move is into manufacturing our own product as well - we figure there is serious margin in this end of the market.

Hope that helps answer your questions, and I hope planning is going well for you.

 

 

You should look up your local SBA (Small Business Administration), SCORE (Retired Execs), and possibly SBTDC (Small Biz Technology Dev Center.)  All of these resources are free and can help you shape a plan, pro forma, and logic in running a business.  They are great to bounce ideas and vet your thoughts.  Our local SBA holds monthly classes on financing to marketing, YMMV but well worth looking into.

 

1. Finances don't lie often, extrapolate your current sales and run numbers that show what would be necessary to be successful in a shop.  If you don't feel you can hit those numbers figure out what would be necessary.

 

2. It took us a year and half to lock down the funding. For our area and department requirements it took us nearly 5 months.  We had a slew of stupid people working the permit desk and that caused error, then architectural issues and a few inspector slow downs.  Rule of thumb is double your expectations and then add a few more and you might be in the ballpark.

 

3. No, blew out the budget due to mechanical planners over planning without consent.  Builder built to spec.  We got lost in the middle.  Ride your project like a madperson.

 

4. NPR, Social Media, Farmers Markets, word of mouth

 

5. We are a chocolate, confections, cake shop.  Having sit down would have made us Health Dept, we fly under the Ag dept.  Much easier rule sets. YMMV.

 

6. Not much yet.

 

7. More money.  You need at least an 8-16month cash flow ability.  Our blow out on budget set us down to a 4 month window.  That hurt a lot.  If your opening date slides past certain seasonal periods you open in a rather large wasteland and year 1 survivability is key.

 

8. Good products?  Never stop marketing.

 

9. Do your due dilligence, form an advisory group of peers, vet vet vet your plan and don't go down the road until you can really and truly secure it.  Doing something on a whim, opening without enough reserves, or a myriad of other errors can cost your your sanity, wallet, or worse.  Like any real business endeavor just make sure every i is dotted and t is crossed.  Hire lawyers to proof your contracts and have an accountant ground your books.  You can never have enough advice, even if you don't want to take it all, if they all say the same thing it might be worth listening to.

 

We spent 3 years at area farmers markets and now have a shop.  It's not easy, it's not always pleasant, and you don't always get to pay yourself, but it is very rewarding. Good luck in your endeavor. :)

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