- How does the independent coffee shop survive?
- How can coffee shops maximize their revenue?
- Is it possible for them to even double it?
- The answer—according to some—is kava.
Can Kava Save the Independent Coffee Shop?
For coffee shops around the nation that close up shop early, there is a huge untapped market potential in that half day remaining, and it appears possible that many are looking towards kava in order to fill that void.
Entrepreneurs are in constant, perpetual discussion over how to improve the performance of coffee shops and improve their margins and profitability. Single coffee shops in the U.S. tend to have a hard time making money. By one calculation, if 200 customers come in and spend an average of $5 six days a week, 52 weeks a year, the gross revenue would be $312,000. The average net profit of an independent coffee shop is about 2.5% and thus $312,000 would become…$8000. Baked goods and breakfast foods can add some extra revenues but nothing majorly significant unless you have the ability to franchise and become a popular chain.
A commonly proposed solution to increasing revenue is “simply” turning into a bar at night. In recent years, Starbucks launched “Starbucks Evenings” where after 4pm they would transform into a more restaurant-like setting serving food and alcohol. The rationale behind this addition was that “customers craved a meeting space where casual eats and drinks were available […] often with a local connection.”
At more than 400 locations nationwide, customers could get beer, wine, and unique foods. However, the program did not go well and was eventually pulled from most stores with the chain rather deciding to wholly focus on its coffee and breakfast foods. Forbes’ Nikki Baird claimed that the main reason for the failure of Starbucks Evenings was that the transition “wasn’t relevant to the Starbucks brand.”
Baird goes on to say, “Ultimately, it’s actually a classic growth strategies issue. Starbucks’ analysis focused on customers and one of the company’s strengths: as a third space. They saw customers looking for an evening context to the third space, and they organized to provide it. But they didn’t look at brand adjacency. It would’ve made much more sense for Starbucks to introduce alcohol as a coffee-based experience, which leverages the company’s clear brand strength in coffee. Instead, the company embarked on a new type of service (table service) while also introducing a new set of products (beer, wine, and evening food). That is really hard to pull off because it asks your customers to get to know you in a totally new context.”
The challenges faced by a massive entity like Starbucks can be magnified and multiplied when they are faced by smaller, independent coffee shops. Alcohol licensing can take as long as years and involves substantial upfront costs. It must be pointed out that, “Adding alcohol by no means is an easy way to make a profit. There are complexities. You have to deal with local and state regulations, and training staff to serve responsibly and to understand the product.”
And this is where kava can come in to “save the day.”
Kava as an Alternative to Alcohol
Kava can be a less expensive option to sell and fill that nighttime market void than alcohol is. It does not require the lengthy and expensive licensing alcohol does. It is classified as a dietary supplement and thus falls under the regulatory control of the FDA meaning simply that “they have authority to intervene if and when safety issues surrounding kava arise.”
Kava also appeals to an increasingly growing market for supposedly healthier alternatives to alcohol. With kava, it is claimed that “you can achieve the same calming, euphoric effects of alcohol without all the negatives.” Kava can provide a sense of relaxation without several of the negative effects of alcohol. Allegedly, it does not impact mental clarity, is not a narcotic, provides natural pain relief, does not disrupt your sleep cycle, and is relatively low-calorie.
Kava can even be brewed into a non-alcoholic “Kava Pale Ale” that provides “the refreshing taste and buzz of beer without the alcohol and hangover” for those who desire it.
Kava and Coffee
Arguably, kava can also be seen as more brand-adjacent with coffee shops than alcohol is. In other words, kava can fit—or at least be forced to fit—more seamlessly with the branding of coffee shops and the products they currently sell.
Possibly because of the pervasive lack of knowledge of kava and the lack of knowledge of the history and culture surrounding kava, kava has been mistakenly perceived as interchangeable with everything from tea to kratom. We have previously raised the issue of kratom and kava being associated with each other to the point of perceived interchangeability evidenced by google searches for “kava bars” turning up the same results as google searches for “kratom bars” with most establishments serving both kava and kratom.
On a somewhat similar note, google searches for “kava bars” increasingly turn up results that almost entirely all also serve coffee or are primarily coffee shops. Depending on your perspective, this can reflect a growing interest in the kava market as well as an increasing awareness that selling kava can expand a coffee shops profitability and appeal in the nighttime market.
With the AluBall Kava Maker and AluBall Kava Machine, kava can be made as easily and quickly as a cup of coffee. Further, it requires no training meaning that “customers can trust they'll be getting the same high quality kava every time regardless of who is behind the bar.” There are recipes for making coffee-like kava beverages, and the AluBall Kava Maker can actually be used to easily and conveniently make cold-brew coffee.
It will be interesting to see how the increasing pervasiveness of kava and the growing market demand for it impacts the independent coffee shop.
Will they try to capitalize on kava’s appeal through a rebranding of their current coffee business? Will they switch from coffee shop in the morning to kava bar at night? Or will they become something in between?
And how will the market react? Will consumers appreciate the variety and alternative products in the local coffee shops (possibly turned kava bars…)? Or will they reject it as a nonadjacent branding or product that does not fit with what they are familiar with?
Will 10,000 new “kava bars” indeed open up overnight across the U.S.?
Only time will tell.