Owning and operating a coffee stand drive-thru business can be a really fun and profitable venture…if it’s a well-thought-out and carefully planned business venture. The best way to make sure this is the case is to gather a lot of information, and you can do that by asking the right questions when you’re buying a coffee stand drive-thru business.
So, what are the right questions to ask for buying a coffee stand drive-thru?
- Ask about the location – traffic, customers, competition, landlord
- Ask about the business operation – employees, customer likes/dislikes, menu popularity, hours
- Ask about sales and profits – sales per day, monthly expenses, overall profits, review records
- Ask about general information – motivation for selling, age of stand, how long currently owned, employee info, who knows about the sale
- Ask about being successful – customer feedback, avoiding prior mistakes, marketing
There’s no limit to the number of questions you should ask. The more information you can get about a coffee stand drive-thru business before deciding to purchase it or not, the better off you’ll be. It’s not a decision that should be made without performing the proper research first. Don’t be afraid to ask about what you want to know. You want to know you’re making a sound decision.
Now we’ll talk about what questions will help you to know that.
Questions About Location
The location of the drive-thru coffee stand business you purchase is one of the most important factors that will affect its success. You want the location to be one that has a lot of traffic—foot and vehicle, is easy to get to, is highly convenient, and doesn’t have a lot of competition around. Let’s look at some questions to ask about the location.
What’s the traffic like around the coffee stand drive-thru?
You definitely want to know about the traffic the location gets. Are there a lot of people traveling to and from work past the coffee stand? Also, what about foot traffic? Coffee businesses get a lot of business from people who are simply walking or driving by. So, it’s important that the location you choose to own a coffee stand in has a good flow of different kinds of traffic.
What are the customers like at the location?
Different areas can have different types of customers. The location might have a lot of college students around, or maybe there are lots of stay-at-home parents who get out and about in that area, or there could be a large population of elderly people. Whatever kind of people are around, you’ll want to know that because it will help you to know what to put on your menu, when your busiest time might be, and other important factors that will help to dictate how you should run your business.
What competition is in the area?
This is might seem obvious but it is such an important thing to know that we need to mention it. You can drive around and find out where the competition is in the neighborhood, but it’s still a good idea to ask the owner of the coffee stand drive-thru business that you are considering buying who their biggest competitors are. They will know who has the best chance at stealing business from their location and what the reasons are most likely.
Is there a lease that comes along with the coffee stand drive-thru, and what is the landlord like?
In some cases, there won’t be a lease involved in the purchase of the coffee business you’re looking at. But, in many cases, there will be. You need to know what the current lease terms are, if they’re about to change, and what it’s like doing business with the landlord. Ask if there have been any problems with the landlord, what the person is like, and how they respond to any maintenance requests that have had to have been made.
Questions About Operation
You should make sure to ask about the operation of the coffee stand drive-thru business you are considering. You don’t necessarily have to do everything just the same as how the current owner has been doing things, but there are some benefits to knowing how things have been run at that location. It will help you to know what you should try to do the same and what things you should change.
What are the hours of operation and why?
You should discuss what the hours are for the coffee stand drive-thru, as well as, what the busiest and slowest times are. Ask why the current owner decided to go with the hours chosen. Find out if any other business hours had been tried and what the outcomes were. There’s no sense in trying something that has already been found to be inefficient.
You could find, though, that only a limited amount of hours have been tried. If that’s the case, you might be able to bring in a whole new customer base just by being open at different times. Of course, you’ll have to consider the cost of staying open longer too, but there might be a good opportunity there for your coffee business.
How many employees does the current owner have?
Ask about the number of employees needed to man the coffee stand drive-thru business. You can also find out what the owner thinks of the employees he or she has and who is worth keeping and who’s not. You may feel that you’d like to find your own staff members, but if there are valuable members already on the team, they could be good assets to keep around. They know the business and they also bring with them familiarity for current customers.
What does and doesn’t work in the daily operation of the drive-thru coffee stand?
This is a question you should ask the employees working at the coffee business. The people who are doing the daily operating of the stand will sometimes know how something could be done better and more efficiently. You could use their knowledge to your advantage if you decide to purchase the business and make it more profitable in the long run.
No business runs perfectly. There’s almost always room for improvement. Recognizing that up front is a really good thing to do. If you get any suggestions from the current employees, give them careful consideration. There may be some really good ideas amongst the staff that just haven’t been heard yet. Making them feel that you are open and approachable could go a long way toward keeping some really great and reliable employees also.
What do you like about coming to this coffee stand drive-thru?
Here’s a question for customers of the business. There’s nothing wrong with asking customers why they come to this coffee stand. You can find out a lot of valuable information by talking to your potential customers. You don’t even have to approach them as if you’re going to buy the place. Just ask as a prospective customer so that they feel comfortable. Then you’ll get the most open and honest answers.
What are the most popular menu items?
You should definitely find out about the items on the menu that are bringing in the most money. There’s nothing wrong with coming in and changing the menu since it’s going to be your business. But if you take something off the menu that was a real crowd-pleaser, you’ll be doing yourself a disservice. It will cost you money because it will cost you your customers.
According to Forbes.com, it costs five times more to bring in a new customer than it does to keep the ones you have. That means that it makes sense to keep items on the menu that are already selling really well so you don’t lose the customers that frequent your shop for a specific menu item.
Questions About Sales and Profits
Before you decide to buy any kind of business, you’ll want to know if it’s been profitable and what the state of its sales are. Don’t ask about sales alone though. Just because the sales numbers sound good doesn’t mean they are. You need more information than that to put them into context. So, ask, ask, ask, until you understand the whole picture.
How much are sales per day?
Ask about what the average sales are in a day. Sales will vary from day to day, week to week, and month to month. Looking at the average sales per day though will help you get a good idea of how much money you’ll be bringing in if you take over the drive-thru coffee stand.
This information can also help you to know how many employees you’ll likely have to have on payroll. Or, it might help you to set a new goal for where you want your sales to be within a certain amount of time. You want to make sure you have a firm understanding of how the business is performing before you move forward in any direction.
How much are the monthly expenses, and what are they?
You might not know what all of the expenses are that go into running this kind of coffee business. This is a good way for you to get a better understanding of what you’ll be paying for every month and how much it will cost you to run your coffee stand drive-thru. Then you can also use this information to get an idea of what your profits will be too. You’ll be able to subtract the expenses from the sales to find out.
May I look at your financial statements for the coffee stand drive-thru?
Anyone who is selling a business should be prepared to share their books. It should be expected that a potential buyer would ask to see the business numbers. Here’s a list of documents you might want to get a look at:
- Property tax statements
- Profit/loss statements
- Lease agreement
If you find that you’re being met with irritation at asking to see these items, or any others like these, then there may be some cause for concern. Anyone who is going to be investing hard-earned money into something like this would want to see how the business looks on paper. Read more about the costs incurred by running a coffee shop here.
Questions About General Information
We mentioned above that the more information you have about the coffee stand drive-thru business that you’re considering, the better. There’s no end to the questions you can ask just to gain some general information about the shop. That’s not to say that you should just keep asking useless questions. Make sure you’re using your time and the current shop owner’s time wisely by asking relevant questions. Here are some good ones that will get you started toward gathering stuff you should know.
When was the coffee stand drive-thru originally established?
You’ll want to know how long the business has been there. Knowing the history of the place is important. You should know if there have been any other businesses housed in the coffee stand before too. Sometimes knowing this kind of stuff can help you figure out how to fix things that come up in the course of business. You’ll also know if you should expect some maintenance issues to be popping up in the near future or not.
How long has the current owner been running the coffee stand drive-thru business?
The person you’re talking to may have only been in the business for a very short time. Knowing how long they’ve been at that location will allow you to know if there were things that the owner never got a chance to address, how long the stand has been doing well or not, and if the business has been handed down from person to person previously.
Something to mention here is about the number of previous coffee businesses that have been at that location up to this time. If you find that there have been several different businesses with different owners, you should see what you can dig up about why so many people have moved on from that location. There may be something that you can’t see on the surface. It could be that none of the previous owners saw it before making the decision to open their coffee shops. If you can’t figure it out, but you feel like there are an awful lot of previous owners, you should consider looking for a different option.
Why is the owner selling the drive-thru coffee stand?
There are a number of reasons why business owners decide to sell their companies. They range from trying to get out from under a bad investment with a business that is failing to grandparents who have decided it’s time to move closer to the grandkids. Knowing what the motivation is for selling can tell you a lot about the business in some cases. Depending on what the answer is to this question, you may also want to ask some follow-up questions to uncover anything that might not be good about the coffee shop.
Do the employees know the business is going to be sold?
This is just good to know so that you don’t inadvertently “spill the beans” and anger the coffee stand owner. Sometimes employees won’t be told right away for fear that they will quit or start behaving differently in their jobs. Make sure you respect the fact that the coffee business owner doesn’t want the employees to know if that is the case.
Questions About Being Successful
Don’t be too proud to ask for advice. You’re talking to someone who has been running the very kind of business that you want to own. Even if they weren’t doing very well with the coffee stand drive-thru you still stand to take something from their situation and learn from it. Some people can give advice in terms of what you should do, others can give you advice in terms of what not to do. Ask some questions about what’s been tried at this location and what things have been successful.
Is there anything the coffee stand is definitely doing right or definitely doing wrong?
You should ask this question to the owner, the employees, and to the customers. It’s good to get the perspective of everyone who is involved with the coffee shop. You may find that what the employees think is great, the customers don’t actually like, or vice versa. Asking for feedback, whether it’s positive or negative, is a great way to get ideas for starting your coffee stand drive-thru business off on the right foot.
People, in general, want to be heard. Just the fact that you ask for feedback at all can win you loyal customers, as well as, loyal employees. You’ll want to make sure that you do something with the feedback also though, but if you do, you’ll likely see some good results come out of your efforts.
Is there anything the owner feels was a big mistake when they first took on the business and how can you avoid making that same mistake?
Most people want to pay it forward. And just because someone is selling their business doesn’t mean they don’t want to see it thrive anyway. After all, this is something they’ve poured themselves into for many years a lot of the time. Picking the brain of the person who is selling you the business is a great way to get good information about things that could cause you some hiccups in your endeavors.
The only way to truly understand the ins and outs of a business is to actually have experience working in that business. You can learn a lot from the mistakes of others if you’re willing to listen. You could save yourself some time, a few headaches, and money in most cases. If you don’t ask about the mistakes the current owner has made with the coffee stand, you’re missing a big opportunity for learning and growth as a coffee shop business owner.
How has the menu evolved?
You should definitely spend some time discussing the coffee stand’s menu with the current owner. As we stated above, ask about the menu items that do the best. But, you’ll also want to know how the menu has evolved over time. You don’t want to end up going right back through some of the things the current owner has already tried and found to be a waste of time and money.
We’re not saying you shouldn’t try out some of your own ideas on your menu. We’re just saying that you should be smart about how you go about it.
What has been done to market the coffee stand drive-thru business?
You should also find out how the current owner has marketed in the community. You might find that the coffee stand is known for giving out free samples at certain times. There may be deals that customers expect, like happy hours or coupons. Those things are part of the marketing strategy.
You can also find out how far the owner has reached out to the community. There may be whole markets that haven’t been touched by any kind of marketing strategy for this business. That means there could be more customers for you to gain in untapped areas. This is also a topic that you’ll want to know about what didn’t work so well. It’s another place you can save time and money in.
There’s no magic number of questions for you to ask before buying a coffee stand drive-thru business. The important point here is that asking questions is your right, and is what you need to do before you decide to sign on the dotted line for a new coffee business. You need to know about the location, the operations, the sales and profits, some general information, and any information that will help you be successful. Asking any questions will be helpful, asking the right questions will lead to a more positive result.
Some Related Questions
Will I need something in writing from a legal adviser to have the right to see the coffee stand’s financial statements?
There’s no reason why you should need any documentation to see the financial numbers for the business. No person in their right mind would want to invest in a business that they haven’t seen any numbers for. Anyone who is serious about possibly purchasing the business will ask to see financial documents.
There are some people who will probably give you some push-back on this. It’s usually because there is something they don’t really want you to see. They want the business looking as good as possible for you so if there’s something not so favorable in the financial documents then they think they can push you off of wanting to see them.
If they refuse to let you see something, there are usually other ways for you to find the information contained in the documents. But it might mean that you should move on and keep looking elsewhere for your coffee stand drive-thru business.
If I find that a coffee stand drive-thru business is not very profitable, should I avoid buying it?
No, not necessarily. This is why it is good to ask many questions. You need to know why the business isn’t making a lot of profit. Maybe their expenses could be cut down. Maybe they’re not marketing the stand very much. Maybe there’s a competitor that hasn’t been accounted for.
Without knowing the reasons behind the low profits, you don’t have enough information to make a decision on whether or not you should purchase that coffee business. There’s a chance that you could be the person that turns it into a highly profitable and successful drive-thru coffee stand. Don’t be hasty in your decision-making process. Get all the information you need to make an educated decision.
How much does a coffee stand drive-thru business cost?
This is a tough question to answer because there’s no set figure to give here. There are a lot of factors that it depends on. Where is the stand located? How big is the stand? How many employees does it take to run? Are you buying the building or leasing it? What kind of equipment will you need for your menu? And other things as well.
Just to give you an idea of what it could cost you though, you’re probably looking at a range from about $50,000 to $150,000 for an initial investment. You can sit down with a financial expert and go over your well-laid business plan to get a better idea so you can know if you’ve got enough funds to make your coffee business purchase. If you find that you don’t have enough money at that time, the adviser that you are working with can also help you come up with ways to raise the funds so that you can make the purchase that you want to.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
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