Our industry is getting more competitive by the day. In 2019 alone, an estimated 1,658 new coffee shops opened their doors in the United States. Customers have more coffee options than ever before, and it’s forcing cafes of all kinds to get creative in how they present themselves and access new ways to generate sales.
One of the biggest ways coffee shops are expanding sales, reach, and influence is by roasting coffee in-house—and when you consider the benefits, it’s not hard to see why.
Let’s explore four key reasons shops are starting to roast their own coffee, explained from the perspective of successful shop owners.
In this exploration of the roasting upside, we’ll discuss:
- The 5 revenue streams that roasting in-house unlocks
- Why roasting boosts brand loyalty—and why that’s more important than ever
- How traditional wisdom about roasting startup costs isn’t accurate anymore
Should you start roasting coffee for your own cafe? By the end of this article, you’ll have a pretty good idea if this is the right opportunity for your business.
Build a Stronger Brand and Own The Customer Experience
You can likely remember when good coffee was hard to find. These days, customers have no shortage of coffee shop options, so it’s more important than ever for coffee businesses to create a meaningful, emotional connection with customers.
Emotionally-connected customers visit more frequently, spend higher amounts, and are more likely to share their brand loyalty to their friends and family. Research consistently affirms that emotionally-engaged customers are 50% more valuable than baseline customers—they’re your regulars that prop up the entire business.
Unfortunately, with customers options comes less commitment, and brand loyalty is at an all-time low. Coffee shops must work harder to stand out, create deeper relationships with customers, and provide stunning experiences.
Roasting coffee in-house is one of the best ways to own the coffee experience, become a stronger brand, and draw customers close.
Seabird Coffee in Cohasset, Massachusetts is a clear example of the brand-boosting power of roasting in-house. The community response to Seabird branded bags of coffee was unmistakable. People were proud to have coffee roasted in their town and neighborhood.
“I’m selling 3x more coffee and bags than I was before. The response has given us more confidence, especially behind our own brand that we’ve worked so hard for. I’m proud of it. I’m super proud of it.” — Brian Mclaughlin, Founder
Seabird was already selling bags of coffee from their wholesale partner, but volume and margins were low since it wasn’t a made-by-Seabird product. But when Brian replaced those partner bags with his own, sales and profit margins shot up overnight.
It’s like the difference between baking in-house and ordering from a wholesaler, or cooking fresh food instead of heating up frozen plates. People love things that are made close by, with focus and intention, by people they know.
Take Ownership of Coffee Quality and Freshness
One of the most common frustrations with buying from a coffee wholesaler is that you’re at the mercy of a team you don’t control.
Shipping delays can wreak havoc on a quickly growing shop. Offering lists don’t always reflect your budget or brand. And even experienced coffee roasters have off days that produce not-so-delicious coffee. When you’re reliant on another roaster across town—or across the country—there’s little you can do about it.
Roasting your own coffee puts you in control of your supply chain, and in many cases, allows you to elevate your coffee quality.
- Create roast profiles to your customers’ unique tastes
- Roast on your schedule, not someone else’s
- Own the flavor quality, and improve over time
- Create a mix of coffees that’s right for your brand and budget
When Steve Holt, former co-founder of Ninety Plus Coffees, wanted to launch his own coffee shop (Unravel Coffee in Denver, Colorado), he knew from the very beginning he wasn’t going to build his brand on someone else’s coffee.
“You can get coffee just as good, if not better, than some of the bigger players. But the greatest benefit is that you own this. Now it’s your cafe and coffee. You’re the head chef, and you can really sell that to your customers.” — Steve Holt, Founder
If you’re the kind of operator who likes to own your quality, the pivot to roasting in-house likely feels inevitable. For many, it is.
Unlock Revenue Streams: Ecommerce, Wholesale, and More
Coffee shop revenue primarily follows a straightforward food service model: you acquire raw goods (coffee, milk, etc), turn it into a finished product, and serve it in real-time. Like the saying goes, it all comes down to “location, location, location”.
Roasting coffee in-house opens you up to new revenue models and business expansion that’s not dependent on your physical location.
Let’s touch on a few big ones:
- Ecommerce — Not everyone can visit your physical location. Whether they’re social distancing, just moved across the country, or just don’t want to put on shoes, ecommerce gives customers anywhere access to your brand and products.
- Subscriptions — Customers who are emotionally-engaged aren’t shopping around with other roasters. By capturing their regular attention via a subscription, you can generate meaningful recurring revenue.
- Third-Party Partnerships — Getting your coffee into third-party marketplaces and subscriptions, like Trade or Mistobox, can feel like a shortcut to rapid growth. We’ve heard roasters describe boosting their sales volume by 50% or more with a single partnership.
- Customer Wholesale — Offices, restaurants, and other coffee businesses have to get their coffee from somewhere. If they’re not roasting their own, they’re looking for a partner. Many of the most successful coffee roasters are built on wholesale sales as the reliable revenue that enables business growth in other areas.
- Grocery Wholesale — Getting your beans in grocery stores can be a challenging task, but the resulting regular sales volume and brand exposure can make it all worth it. For more details, read our guide on selling to grocery stores.
Steve from Unravel wasn’t shy when we asked how roasting coffee in the shop helped him survive the COVID-19 pandemic.
“We can pretty much roast any day of the week, then send the coffee out either the same day or next day. We saw an increase of about 400% in our online sales from mid-March to mid-May.”
You can always serve more food, sell products from other companies, or start some kind of local membership, but nothing opens up new growth opportunities like roasting your own coffee.
Roasting Your Own Coffee Saves Money in The Long-Term
Coffee shops that don’t roast their own coffee are always looking for ways to raise their average order value (AOV). The more valuable you can make each customer, the better.
Coffee shops that roast in-house, however, have a second opportunity to grow: increase profit margins per every cup of coffee sold.
Buying wholesale beans at $8-12 per pound leaves little wiggle room for margin growth. There’s a floor to how little you can pay—but you sacrifice quality in return.
High-quality green coffee generally costs $4-5 per pound, shaving COGS in half. There are still operating costs to running a commercial roaster, but if you’re buying more than fifty pounds of beans each week, the ROI is likely positive.
Our friends at Beans ‘N Cream coffeehouse in Sun Prairie Wisconsin
“We’re experiencing really nice margins using the Bellwether, which was part of our consideration in the first place. The more you use it, the more profitable it can be. I think we were going through a couple hundred pounds of coffee per week at my small shop. Now we’re selling about a thousand pounds per month.” — Jeff Gauger, Founder
The math will be unique for your business, but it’s no secret that the fastest-growing and most successful coffee shop brands also roast their own coffee. The higher the margins, the easier it is to scale and open new locations.
The 3 Big Hesitations to Roasting Coffee In-House
It’s hard to argue with the potential upside, and most of us dream of roasting our own bean someday. The thought of picking coffees, tailoring roast profiles, and creating those exceptional customer experiences cross all our minds.
But there are significant roadblocks to roasting… aren’t there?
- I don’t even know where to start with sourcing green coffee. Sourcing is a multi-dimensional challenge: flavor quality, environmental-friendliness, farm partnerships, shipping and logistics. It’s not an easy ocean to swim in. There’s no reason you have to learn it all alone.
- Doesn’t learning to roast coffee take years of training? It’s true that the difference between a new roaster and someone who’s been roasting for five years is easily noticeable—at least, it used to be. Technology is making it easier for everyone to roast A+ coffee you’re proud of, without years of training.
- Starting a roasting operation is expensive, isn’t it? Ask business owners how much it took to start their roastery, and you’re likely to hear $100,000 or more between training, warehouse space, ventilation, and the commercial roaster itself. Thankfully, this isn’t always the case anymore—we’ll share why in a moment.
These challenges can feel daunting, but the sentiments largely reflect an older time. Sourcing and roasting are more accessible now, and there’s little stopping you from getting started.
The Simplest Way to Start Roasting Coffee in Weeks, Not Years
Traditional roasting equipment requires a huge financial investment and takes years to learn—and then you still have to figure out sourcing all on your own.
🙌 That’s why we created the Bellwether Roaster, a commercial coffee roaster that blends sourcing and roasting in one device the size of a refrigerator.
- Responsible sourcing is a breeze. Our veteran coffee buyers partner with farmers around the world to create our Green Coffee Marketplace, a simple platform for buying pre-vetted green coffee that’s right for your business. We take care of the contracting, customs, and all the other hurdles. No-hassle sourcing? Check.
- Roast starting from day one. When you buy coffees from the Marketplace, our in-house roasting experts provide four unique roast profiles for each coffee (light, medium, dark, espresso) that can be used without any tinkering for reliably delicious coffee out of the box—even if you don’t know how to roast. Training to operate the roaster takes less than a day. Start selling ASAP? Check.
- Create your own roast profiles. Roasters who want more control and creativity can edit profiles or build new ones from scratch. The Bellwether app allows you to customize your curves with more precision and consistency than traditional gas-powered roasters. Creative liberty? Check.
- Don’t hire anyone new. The Bellwether is a full-enclosed, automated system, which means it can follow your roast profiles consistently, no matter the humidity or temperature. That means your baristas can start a roast cycle, keep serving customers, and come back when the coffee’s ready to be bagged. Roasting talent? Check.
- No warehouse, no ventilation, no massive up-front cost. Since the Bellwether is small enough to fit inside your existing cafe, generates zero emissions, and plugs into a standard outlet, you can completely avoid most of the costs traditionally associated with starting a roasting business. That big bank loan? Not necessary.
The path forward for new coffee roasters is clearer than ever. Getting started has never taken less investment, time commitment, or stress.
And coffee quality hasn’t dropped one bit.