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George Lyons is c.e.o. of Cable Car Coffee Company in San Rafael, California, an in-line shop chain and manufacturer of exact replicas of San Francisco cable cars that are converted into drive-thrus - one of which they are running and another which will open shortly. He says it has been an extremely costly process to even begin to open their next drive-thru location, in a parking lot in northern California.

“We’ve already spent ten thousand dollars on an on-site traffic study and another ten thousand for a freeway study - before we are even allowed to apply for the permit!” He adds, “If you have a friendly planning department, it’s wonderful. If not…it can be the worst nightmare you will ever experience in your lifetime.”

So, while a drive-thru is less expensive than an in-line store - starting in the $20,000s for the absolutely no-frills model…and beyond $100,000 for more deluxe versions - a significant investment must be made. “The worst thing you can do is start out thinking you can do one of these things for ten thousand dollars - that’s not going to happen. Those days are long gone. The kinds of units that were done on the west coast five to ten years ago are now under much more strict regulations,” says Blackman.

Beyond all the red tape, this is not to say that a profit cannot be made by a drive-thru operator. There are many successful drive-thru operations that gross in the hundreds of thousands of dollars or more. “The going-in costs are a lot less [than an in-line store], and your operational costs are a lot less while your bottom line is a lot more,” says Lyons. He notes that Motor Mocha, one of the first successful drive-thrus, started in Seattle and its one location has made over 1 million a year for over 10-15 years. He says he projects his own company’s next drive-thru will make about 1 million in turnover and net around $375,000.

Still, other operations do take a nose-dive, or just barely make a profit. So what’s the secret formula? It seems people in the industry agree on three top things that can “make it happen” (though there isn’t a consensus on the order of their importance): location, atmosphere and quality of product.

Grant thinks the vibe the unit gives off should be first and foremost on the operator’s mind. “The magic espresso bars need to have is a very hip atmosphere. When people drive up they get a warm, excited feeling about being there - and then they drive away with that warm feeling ….They’ve gotten their drink and they’re ready to go out to face the office or whatever.”

And, of course, no one would doubt that location - proximity to high traffic flow - is important. Parking lots of existing businesses or strip malls, and vacant lots - for example, where an old gas station once was - are usually the most feasible places to set up drive-thrus. “You’ve got to be on a main thoroughfare…preferably where there’s a [traffic] light where people don’t have to fear a fender bender,” notes Grant.

Brian Maxwell, franchise coordinator for Dutch Bros. Coffee says that, “one lesson we’ve learned is that it has got to be easy for the customer to get in and out. There may be 50,000 cars going by every day and you may be able to see the unit, but if you have to go around the corner or over speed bumps - if its inconvenient for the customer they may just keep going.” Blackman advises: “Good locations are also where there are big corporate parks, like medical facility corporate parks - wherever there are a lot of people coming and going on multiple shifts. You’ve got to do a demographic study….The best piece of advice I can give somebody is to do their homework.”

As for the third, main ingredient for drive-thru success - quality of cup - good machines, good roast and well-trained baristas are all pretty essential. Blackman advises her customers to cultivate a relationship with a good coffee company, and the equipment will often come for free. And, as in any espresso business, getting machines which have a good service warrantee is key.

All in all, the growth of the espresso drive-thru industry comes down to what Maxwell calls his customers’ “demand for efficiency.” According to Lyons, that is the one thing the small espresso business owners can have over the big boys. “Starbucks is just killing all the mom and pops out there - one by one by one - because they can afford to pay higher rents, and they can also afford to pay higher wages. We do not want to compete with them - we want to go with something that they [in general] are not doing, because we don’t believe that the inline stores themselves can compete with Starbucks anymore.”

Tea & Coffee - February/March 2001


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