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23 and own shave ice shack, coffee shop, yet stuck

Ryan Wolf

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First off, I'm glad I found this site last night. So far, I have spent about four hours perusing through threads and posts, along with ordering the TMF book which I am stoked to read once it arrives.

My background: I dropped out of college after realizing that I learned so much more from talking to real people and reading books than I did by spending thousands of dollars on school. Although I knew that college wasn't for me, it took me three semesters before I finally called it quits.

Sometime while I was in college, I decided to buy my first business, a shave ice shack. It's been alright. The gross ROI to date is 2,937% in four summers. Decent.

I took most of the money that I made from the shave ice shack and opened a coffee shop in February of 2016. As I'm not a big coffee drinker, my only initiative was to make money and open more coffee shops. My mom, however, is a coffee fein and since I knew she hated her job at the time, I decided to let her be the manager of the shop so that she'd be happier and so I wouldn't need to worry about hiring someone else for that job. Well, it turns out that coffee shops aren't cheap to open, and aren't cheap to operate while building a clientele. The shop only breaks even, at best, which is better than it was doing but that's not saying a whole lot. The location is terrible. I didn't do enough research before opening. I can't close it down yet due to the lease, but when that time comes, it'll be a delicate situation. I guess this is why you never hire family...

I have had to move back in with my parents and deadbeat brother. My time is fairly limited as I work many hours every day in the coffee shop. I don't like serving -or drinking- coffee, though. My bank account is dwindling and credit cards are maxed out. I'm temporarily stuck. I haven't yet figured out where to go from here.

If you have suggestions, general motivation or criticism, let's talk.
 
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First off, I'm glad I found this site last night. So far, I have spent about four hours perusing through threads and posts, along with ordering the TMF book which I am stoked to read once it arrives.

My background: I dropped out of college after realizing that I learned so much more from talking to real people and reading books than I did by spending thousands of dollars on school. Although I knew that college wasn't for me, it took me three semesters before I finally called it quits.

Sometime while I was in college, I decided to buy my first business, a shave ice shack. It's been alright. The gross ROI to date is 2,937% in four summers. Decent.

I took most of the money that I made from the shave ice shack and opened a coffee shop in February of 2016. As I'm not a big coffee drinker, my only initiative was to make money and open more coffee shops. My mom, however, is a coffee fein and since I knew she hated her job at the time, I decided to let her be the manager of the shop so that she'd be happier and so I wouldn't need to worry about hiring someone else for that job. Well, it turns out that coffee shops aren't cheap to open, and aren't cheap to operate while building a clientele. The shop only breaks even, at best, which is better than it was doing but that's not saying a whole lot. The location is terrible. I didn't do enough research before opening. I can't close it down yet due to the lease, but when that time comes, it'll be a delicate situation. I guess this is why you never hire family...

I have had to move back in with my parents and deadbeat brother. My time is fairly limited as I work many hours every day in the coffee shop. I don't like serving -or drinking- coffee, though. My bank account is dwindling and credit cards are maxed out. I'm temporarily stuck. I haven't yet figured out where to go from here.

If you have suggestions, general motivation or criticism, let's talk.

This might seem like super basic advice but I will give it anyway. I managed a coffee shop for about 7 months with 30 staff while the owner took time off. I would look into more desserts and ice-cream/gelato. We always only broke even on the coffee side of things but the real money earner was people ordering that "little" snack to go with their coffee. If you can make your ice cream on location you will make 500%+ on it. Super simple to make and it can sell really well with some good flavors and combos. Same with desserts.

Maybe that is the most obvious advice ever since you seem quite clued in but just some small insight in how we made our money.

Welcome to the forum and as others have said you will get huge value out of the book. Solid first post.
 

MJ DeMarco

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First off, I'm glad I found this site last night. So far, I have spent about four hours perusing through threads and posts, along with ordering the TMF book which I am stoked to read once it arrives.

My background: I dropped out of college after realizing that I learned so much more from talking to real people and reading books than I did by spending thousands of dollars on school. Although I knew that college wasn't for me, it took me three semesters before I finally called it quits.

Sometime while I was in college, I decided to buy my first business, a shave ice shack. It's been alright. The gross ROI to date is 2,937% in four summers. Decent.

I took most of the money that I made from the shave ice shack and opened a coffee shop in February of 2016. As I'm not a big coffee drinker, my only initiative was to make money and open more coffee shops. My mom, however, is a coffee fein and since I knew she hated her job at the time, I decided to let her be the manager of the shop so that she'd be happier and so I wouldn't need to worry about hiring someone else for that job. Well, it turns out that coffee shops aren't cheap to open, and aren't cheap to operate while building a clientele. The shop only breaks even, at best, which is better than it was doing but that's not saying a whole lot. The location is terrible. I didn't do enough research before opening. I can't close it down yet due to the lease, but when that time comes, it'll be a delicate situation. I guess this is why you never hire family...

I have had to move back in with my parents and deadbeat brother. My time is fairly limited as I work many hours every day in the coffee shop. I don't like serving -or drinking- coffee, though. My bank account is dwindling and credit cards are maxed out. I'm temporarily stuck. I haven't yet figured out where to go from here.

If you have suggestions, general motivation or criticism, let's talk.

I'm gonna guess you are the type of entrepreneur who will really get a lot of value out of TMF -- in other words, you'll end up KILLING IT in something CENTS focused. Your early successes (and tries) are commendable -- I wouldn't be too worried about them as you're racking up tons of experience points.
 
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ChickenHawk

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I feel your pain. A few years ago, I also opened a coffee shop with my Mom. Not good. Not good at all...

Fortunately, once you read "The Millionaire Fastlane ," you'll better understand where you went wrong in your choice of business. I had so many "lightbulb" moments reading it, and I think you will, too. One of the best things about the book, IMO, is that it helps you rule out ideas that sound lucrative, but ultimately become a job in disguise.

Happily, you're young and ambitious, and already far ahead of your peers as far as experience and ambition. That should take you far, once you find the right project to focus your energies on.

Welcome to the forum, and best of luck to you!
 

Fox

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@Fox

Very interesting. Although I had thought of adding ice cream, I never thought about making it in house. I'll look into that for sure. As for other desserts, I do sell a lot of other options but most of them are only keystone markups, nothing like a 500% margin.

I really appreciate you sharing your experience with this.

Another sneaky thing he did was everything in the cafe was non-matching. Every chair, table, cup and knife was different. His logic as it was super cheap to maintain since he could just grab bits from wherever and add them in to replace stuff. We actually grabbed a couch once from outside student accommodation and just added it in. People loved it! He also had local artists list art for sale on the walls so he had cool pictures for free. Lots of little bits to save money and increase profits. Staff could eat food for 20% off on break too but the mark up was actually 50% already and it was deduced from their wages before payroll so even saved double ha.
I could tell stories all day, I learned a lot working there.
 
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Ryan Wolf

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Another sneaky thing he did was everything in the cafe was non-matching. Every chair, table, cup and knife was different. His logic as it was super cheap to maintain since he could just grab bits from wherever and add them in to replace stuff. We actually grabbed a couch once from outside student accommodation and just added it in. People loved it! He also had local artists list art for sale on the walls so he had cool pictures for free. Lots of little bits to save money and increase profits. Staff could eat food for 20% off on break too but the mark up was actually 50% already and it was deduced from their wages before payroll so even saved double ha.
I could tell stories all day, I learned a lot working there.
The non-matching, that's awesome haha. Wouldn't work with what I'm doing right now but I love the idea. I actually already have art on walls from local artists that's for sale. I don't take commissions on it -- I'm just appreciative of free artwork. I also do coffee education each month and have a huge turnout for each class. That's one of the few days where the shop does really well... I need to do more of those each month...
 

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In hindsight, I can see it was a bad endeavor that was cloaked in a good looking suit,
I can relate!

What ended up happening with your shop?
The shop is still running (not so much as a coffee shop, but as a different kind of retail outlet), but happily, I'm no longer involved. Because it involved family, it was complicated, as I'm sure you know firsthand.

In the end, I lost some money and time, but was able to recover in the long run and learn from my experience. The only upside is that the business was much more of my mom's dream than my own, and it wouldn't have survived the first year without both of us working so hard on it. Now, it's all hers, and she seems to be happy with it.

The biggest lesson I learned: Never go into business with family. In fact, I came away thinking I'd never go into business with anyone else, ever again. If you're smart and ambitious, giving up control in any way is a huge downside. Now, with your mom, I realize you're the owner and technically have all of the control, but in reality, I'm betting it's not that simple -- because with family, it never is. :)
 

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Thanks for sharing your story.

The book is great on audible too. Well worth listening to MJ as well as reading it.
 

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Ok so you're in a public library? That changes everything.

tumblr_nj6cg4I6Xh1trbh6do1_400.gif
 

Ryan Wolf

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@ChickenHawk

I've told her that I plan to close the shop down if the numbers don't improve dramatically by February 2017. She always retorts with what customers are saying and how the customers think that business will pick up. People mean the best, but numbers don't lie. That said, I'm not sure what to do with the shop. I'll most likely sell the shop or sell whatever equipment I can, but I've also flirted with the idea of just giving her the shop. I'll know for sure in a few months...

Yeah, I'm done working with family after this!
 

Ryan Wolf

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@Fox

Very interesting. Although I had thought of adding ice cream, I never thought about making it in house. I'll look into that for sure. As for other desserts, I do sell a lot of other options but most of them are only keystone markups, nothing like a 500% margin.

I really appreciate you sharing your experience with this.
 

MJ DeMarco

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That means it doesn't matter whether or not you have a logo. People know your store is there when they enter the library. Nobody is going to stop at a library just for a coffee and walk out.



Who? Your customers? No customer is going to tell you that your coffee isn't that good in front of your face. I myself have been to restaurants where I didn't like the food but told them it was ok or good when the waiter came by and asked.



Starbucks is not competition? Wtf? What planet are you on? Starbucks is "high end" in most people's minds. Their coffee is premium to McDonald's or other fast foods. The customers are absolutely the same.



You do not follow in their footsteps. Not even close. They listen to their customers. You don't. In fact one time they moved to pre-made fraps from a machine and they discontinued it when customers didn't like it. They then carried out a huge ad campaign inside the store advertising that their fraps are back to being made by the barista mixing ingredients.




Are you f'ing kidding me? You even get requests for an item that you don't even have on the menu!!! That means a LOT more than one person every two weeks wants a frap. You don't see traditional coffee shops because they've all gone bankrupt.



I don't care about the library I asked about your store. What kind of chairs do you have? Are they the cheap crap? How do the floors, menu board, and counter look in your store? If Starbucks has better decor and they are like McDonald's then what does that make you? How much rent do you pay a month?

My advice is the same. Just shut down. Your coffee shop is a total failure and lost money because your bank account is empty and your credit cards are maxed out. It's like paying McDonald's to go work for them. If you open the same exact coffee shop in another location then you'll just go out of business again.
There's a line between constructive criticism and talking shit. Don't be a dick.
 

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I also do coffee education each month and have a huge turnout for each class. That's one of the few days where the shop does really well... I need to do more of those each month...

Very interesting. Can you expand on this, open up to other groups?

Somewhat related - a local brewery has a large back room. I know at least one night of the week the room is filled with people playing board games.
 

Ryan Wolf

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Yes, my hours are closely related to the library, though I have a walk up window so we open an hour before the library. We've tried opening much earlier through the window but that was definitely not worth it. Most people either want a place to sit in the mornings or to just sit in their cars at a drive through. I don't have a separate entrance and the library won't let anybody in until the library is ready to open. I have complete control over everything else though. We have a few different bakeries that supply us with amazing food, pastries and sandwiches. I order small but move through that inventory almost entirely each day (took a few months to figure out how much of what sells, and when). I just implemented a new rewards program so I'm hoping that makes a difference in sales. As for the last two sentences, I'm not sure I understand them well enough to give you a satisfactory answer.

@fhs8

Based on customer feedback and speaking with my friends who own coffee shops, the location is a major issue, primarily because people don't know that we're here. Here are some key points:

The morning commute is on the other side of the road
There are many people who come into the library that don't even know we exist (in a corner, away from entrances)
We are not allowed to have any signage on, in or around the library
People think they have the wrong address because they're at a library instead of a coffee shop
People are afraid to talk because it is in a library (silly, but we hear that concern often)
The only school even close to the library is an elementary school (not my ideal clientele)
As I stand here right now, there are eleven people inside the library other than the librarians.

Yes, the marketing could be -and will be- improved. I don't see the logo being an issue. Prices are very close to Starbucks. The quality is super high. The majority of customers are from referrals. My mom and head barista were trained and certified by the one of best coffee schools in America. With their knowledge is how we found our coffee roaster. Our selection is good but we don't sell fake drinks (made famous by Starbucks) such as frappuccinos or iced cappuccinos, etc. Our pricing was set by my coffee mentor (a guy who owns 8 coffee shops).

Honestly, thank you for bringing all of that up because thinking through it all was a good reminder of how I got to here, and what could possibly be issues.
 

Ryan Wolf

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That means it doesn't matter whether or not you have a logo. People know your store is there when they enter the library. Nobody is going to stop at a library just for a coffee and walk out.



Who? Your customers? No customer is going to tell you that your coffee isn't that good in front of your face. I myself have been to restaurants where I didn't like the food but told them it was ok or good when the waiter came by and asked.



Starbucks is not competition? Wtf? What planet are you on? Starbucks is "high end" in most people's minds. Their coffee is premium to McDonald's or other fast foods. The customers are absolutely the same.



You do not follow in their footsteps. Not even close. They listen to their customers. You don't. In fact one time they moved to pre-made fraps from a machine and they discontinued it when customers didn't like it. They then carried out a huge ad campaign inside the store advertising that their fraps are back to being made by the barista mixing ingredients.




Are you f'ing kidding me? You even get requests for an item that you don't even have on the menu!!! That means a LOT more than one person every two weeks wants a frap. You don't see traditional coffee shops because they've all gone bankrupt.



I don't care about the library I asked about your store. What kind of chairs do you have? Are they the cheap crap? How do the floors, menu board, and counter look in your store? If Starbucks has better decor and they are like McDonald's then what does that make you? How much rent do you pay a month?

My advice is the same. Just shut down. Your coffee shop is a total failure and lost money because your bank account is empty and your credit cards are maxed out. It's like paying McDonald's to go work for them. If you open the same exact coffee shop in another location then you'll just go out of business again.

Have a great night!
 

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I am in no way associated with coffee shops nor have I ever run a store - so take my advice with a grain of salt.

I believe that running a coffee shop can be successful even though it may be tough apply CENTS. This may not be your homerun business, but as MJ said, it is some great experience that you can learn from.

To go off of what Fox said, maybe you can try and add some crazy type of ice creams. I have see a couple of stores like yours on the news that have had lines out the door waiting for one specific type of food.

Example:
HT_milkshake1_cf_160119_v31x13_31x13_1600.jpg


The great thing is that you are the only person to be making this certain type of heart attack in a cup. If you want people to come into your store, coffee works. If you want your customers to bring their friends with them... this would be the way to do it!

So my point is, try and stand out from the crowd. You can do this with any food, you just need to be creative.

Just my two cents.
 
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Scot

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@Ryan Wolf as said before,you're doing better than 95% of businesses out there. I agree, I think the library is killing your business. If you can implement all you've learned from business and here, but in a better location, you could see a big improvement.

And don't give much thought to guys like @fhs8. He's concerned about logos and Frappucinos, which are not what's important. I'm pretty sure he doesn't own a successful chain of coffee shops.
 

Ryan Wolf

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@MidwestLandlord

First off, thank you.

I do agree that brick and mortar book stores and libraries are a dying industry. When I got the opportunity to open in the library, I took it quickly knowing that there is a coffee shop in a different library that is doing exceptionally well. Granted, that library is the main branch and is thus much more busy. I based a lot of my projections from their success, while not taking into account being in a smaller library, etc... I'm 100% responsible for not doing the proper due diligence on this library/location.

1. I'm in a hipster neighborhood, but that only provides is a small number of discerning coffee enthusiasts near me. Regardless of having news stories and other media recognitions about my shop, people are still just trickling in via recommendations from their friends. All in all, no, the library/neighborhood is not the right place.

2-3. You're correct - most people are in a hurry and would rather order from the convenience of their car, or go into a place that they know offers what they're seeking.

4. We (library and coffee shop) are open until 9:00pm. Probably not late enough. Your point is valid, though. Most people want to go to a place where socializing isn't frowned upon and where there is a steady rotation of people coming in and out (i.e. cute girls/guys).

I am going to stay open until at least February (I have thoroughly thought this out and it honestly doesn't affect me any differently between trying to close shop now or trying to work it out until February). I'm implementing new strategies of how to get to my target customers to my shop. If it doesn't significantly improve, I will be moving on to the next venture with some great new knowledge of what not to do.


@Scot

I appreciate it. I'm not sure what my next move(s) are yet, but I know so much more now then I did when I started!
 
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MidwestLandlord

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That said, the lowest of low class are in here at every open hour using the free computers, most of the time for unproductive time-killers such as gaming and YouTube.

...

White paper cups with lids only (not allowed to have open drinks in the library, so mugs and demitasses are out of the picture). Cups have the logo on them. Napkins change with the season and have no logo.

Nice looking place.

I said it before though, none of that stuff matters; cups, lids, logos, margins, seasonal napkins, loud machines, fraps, et al...if you can't get your product in front of the people who actually need it.

Take that drive and determination you have and use it to put a product in front of people where you can actually be rewarded for your time and hard work.
 
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Oh hey, one additional thought... When we owned our coffee-shop, one really chilly day, I made up a huge bunch of mochas, put them in little sample cups (with lids), and delivered the free samples to the employees of nearby businesses, along with some coupons (like for half-off mochas). Some of the people didn't know our shop existed, while others knew we were there, but weren't quite sure what we had. We picked up a few regular customers that way.
 

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I feel your pain. A few years ago, I also opened a coffee shop with my Mom. Not good. Not good at all...

Fortunately, once you read "The Millionaire Fastlane ," you'll better understand where you went wrong in your choice of business. I had so many "lightbulb" moments reading it, and I think you will, too. One of the best things about the book, IMO, is that it helps you rule out ideas that sound lucrative, but ultimately become a job in disguise.

Happily, you're young and ambitious, and already far ahead of your peers as far as experience and ambition. That should take you far, once you find the right project to focus your energies on.

Welcome to the forum, and best of luck to you!

I am eager to read the book. In hindsight, I can see it was a bad endeavor that was cloaked in a good looking suit, but reminiscing doesn't help me right now! What ended up happening with your shop?
 
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Ryan Wolf

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Very interesting. Can you expand on this, open up to other groups?

Right now I'm able to do one free class each month just because that's as much as the sponsors are willing to sponsor. The shop is in a library so in order to reserve a huge room of theirs for free, I cannot charge entry and can only use the room so often (the library is a sponsor of the program). That's a major road block for many things that I have been trying to do through the shop. However, I will be first to disclose that I haven't been trying hard enough.
 

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How did you figure out pricing? Do you know if your coffee/lattes are any good? How nice is the menu board? There's so much to fix that I would just close up shop.

So just close up shop because there is too much room for improvement? That seems like the most backwards thing I've ever heard.
If all of these problems could be improved on, it sounds like he would have a profitable company. If he is currently breaking even now, then imagine what would happen when he implemented some true business innovation.

I'd say quite the opposite. Stay open, unless there is nothing you feel you can improve on with your business. If you are at your max capacity and you can't grow your business anymore due to a lack of innovation, then I would back out.

As I said before, I don't think this will be your home run business, but it will be a great learning experience if you can figure out how to take a break even business to a profitable business.
 

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I've got a lot of experience in restaurant work, and used to own a cafe with a business partner of mine. My take on this:

You tied your coffee shop to a dying industry. Brick and mortar books are mostly dead (with exceptions)

What value does your coffee shop provide?

Seems to me, your value is:

1. "Real" coffee for the "coffee connoisseur"
2. A QUICK caffeine fix
3. A QUICK snack
4. A place to socialize (or waste time on the internet)

How does your shop provide that value?

1. "Real" coffee for the "coffee connoisseur"
You've said your coffee is high quality. But how does someone that wants that product, that value, know you are there? Selling a high-end coffee product really comes down to the right location, on the right street, in the right town, in the right state. For instance, I'm in the upper midwest, which would be a terrible place to try something like this. Is a library the right place?

2. A QUICK caffeine fix
This should really be your bread and butter. But you've said yourself that the traffic is on the other side of the street? How does a slowlaner or sidewalker make the decision to buy coffee? They hit the snooze button one too many times, are running late for work, and still need their caffeine fix...but they need it QUICKLY. If I'm a slowlaner, will I park my car, get out, and go inside a library for your coffee? Or will I hit the Starbucks or McDonald's drive-thru?

3. A QUICK snack.
See the same points in #2

4. A place to socialize
What time does the library close? A lot of this "sitting at a coffee shop and socializing" happens after work hours, with the exception of students. Will I go to a library to stare at my phone and pretend to socialize, or will I go somewhere else? Would I rather go to the library, where I'm expected to be quiet and watch the homeless people, or will I sit in a Starbucks where it is loud and I can watch pretty girls?

Do you see where I am going with this?

The library customers, and your customers, are the SAME people. You can't provide value to your target customers if you can't reach them.

So either the business has to change to match the customers you do have (the library patrons) or you have to find a way to get your target customers to come to you. Being in the library, I don't think you have many options for the latter, and it would be very difficult in my estimation to adjust this type of business for the former.

Margins and everything else you mentioned don't matter AT ALL if you can't reach your customers.

Most retail comes down to either "high volume and low margin" or "low volume and high margin"

A coffee shop really is a high volume and low margin business, and you just don't have the volume.

I would stop wasting time and move on.

Hope I helped.
 
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Ryan Wolf

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Nice looking place.

I said it before though, none of that stuff matters; cups, lids, logos, margins, seasonal napkins, loud machines, fraps, et al...if you can't get your product in front of the people who actually need it.

Take that drive and determination you have and use it to put a product in front of people where you can actually be rewarded for your time and hard work.
Thank you.

I definitely agree, though. I need customers more than I need frivolous items.

I'm hiring someone to work here for three days per week finally, so I've got more time to give the shop it's best chance at surviving, and pursue my next venture (which will be a scalable product or service).

The shop is really beautiful.

Thank you.

Some random thoughts about what's been said so far...

IMO, unless you're looking to build a brand and/or expand, I doubt custom-printed cups or napkins would help. Probably, it would only increase your expenses and time-investment with very little, if any, payoff.

At all the suggestions of blenders, etc., I couldn't help but think, "Doubtful they'd allow such a noisy appliance in a library." The commercial smoothie-blenders DO generally come with a noise-dampening lid, but they're still loud, and quite expensive. Plus, you'd need an ice-machine or a freezer to store ice. (Not sure if you have one already, but I figured I'd mention that, for what it's worth.) In short, to sell smoothies or blended coffee ice-drinks, you'd need to spend another chunk of money. A commercial smoothie blender, one with a noise-damping lid and commercial motor, is around $1,000, and often more. It doesn't sound like you're in a position to throw more money at this shop, at least not yet. Sure, you could buy a cheaper blender, but then you're just buying different problems -- noise issues, issues with quality-control, etc.

I can't recall if you indicated where your shop is located, but from experience, I can say firsthand that if you live in a cold climate, those ice-drinks tend to be somewhat seasonal, with very few people wanting them in the winter months (even if the library itself is nice and toasty.)

Looking at all the information here, it appears that the primary problem is that this has become a job in disguise, and not worth your time and trouble. It sounds like your mom wants the job and enjoys it. Any chance of selling this to her? It sounds like you have big dreams and an eye toward passive income, while your mom has a real attachment to the shop, so maybe that's a potential solution?

Without breaking this down into individual quotes, I'll address it all in the order it was written.

The logo on the cups is actually just a stamp ($30 for the custom stamp). We stamp all of the cups ourselves. It actually looks awesome and has a very appropriate feel and look for a coffee shop.

Yes, there are feasible options, but I am limited in space and by how much it costs (would need a large ice maker/bin & blenders). Especially as it is a fairly seasonal drink and I am in a cold area, I wouldn't get the ROI quick enough to really help me out, regardless of how nice the equipment is.

Like I just mentioned to @MidwestLandlord I am finally hiring a person to take a few of my shifts. Finally! But yeah, I'm working on doing some sort of a deal with my mom...
 
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Ryan Wolf

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I don't know what your local market is like but in my neck of the woods there is a large college town and anyplace that has free WIFI and organic snacks is full of students.

I'm in a hipster town so I have a large offering of vegan and gluten free options. I'm also in a library so there is plenty of wifi for everyone.
 

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