Which way now?

My research showed that there are some juice bars in London, and their numbers are growing. The biggest of these is Crussh, with about 15 stores around London. As well as juices, they offer the usual sandwich bar offerings, pre-made salads, etc. I was surprised that they hadn’t incorporated a salad bar into there, as I think it would work well. Apart from Crussh, I found that a number of smaller operators have set up juice bars recently, as well as the start of franchise businesses such as Zumo from Ireland and Boost from Australia. Nevertheless, this is a growing market and there is definitely room for more to enter, although we have to be careful because the market is in its infancy, and Brits are still not as clued onto buying juices in the winter. This mindset is changing though. Zumo and Boost are targeting the casual market rather than the office market, so really Crussh is the only real competitor in this space.

Now I also wanted to incorporate a fresh-tossed salad bar, as well as teas, coffees, soups, and the usual sandwich offerings. However with the salad bar I ran into a snag. For the protein element of the salad bar offering, I would need to offer some of the usual meat and fish items, and I also wanted to offer a range of vegetarian protein items, such as different marinated soya pieces. However, not only do I lack a food retailing background, but I am also no chef, so I would need to find a way to prepare these items before bringing them into the store. Under usage rules, I cannot cook things on-site (although heating is fine). As well as finding ways to work with this, I managed to build a load of contacts with firms that can supply many of the items we would need, and they could also prepare some of the items for us. However once again, in order to ensure the items offered are as fresh as possible, we would need to prepare on-site or close by.

While I was investigating every aspect of this potential business, I ran into another snag. – London retail property rentals are astronomical. So far, for decent locations around the city, I am looking at around £100k plus rates of around £30-40k, plus service charges. Add to this the shop fit-out costs and other start up costs will mean the initial investment will be pretty hefty. While I am confident of the broader idea, the practical operational aspect, as well as limited profit margins make it much more risky. While that in itself doesn’t worry me, what does worry me is that a few companies that got into this about 2-3 years ago are now starting their expansion program. Pure California, Chop’d, Tossed and Salade are some examples. Of these, Pure California most closely resembles my idea of juice and salad bar. Basically it would take me a few months to get the premises sorted out, then at least a few months to refine what we are doing, therefore expansion would be at least a year or more away. These other players however have gone through their learning curve, got extra funding in place, and are now going for it. It looks like I’m technically late to the party, and anything I do now, especially with limited funding, limited experience and a huge outlay, might be a very risky venture.

This market is technically the fast-food market, which is where the problem comes in, because the fast-food market in London is massively competitive, and the sandwich/coffee markets are absolutely saturated. While there is still lots more room for this new juice/salad bar venture, these other firms have built up the backing of experienced industry veterans, and therefore have a huge head start on me. What I need to do is narrow it down and focus the business more on a niche area.

The other thing to also bear in mind is that while general fast-food retailers can be profitable, in the city it is known that places like prêt and Eat make little over 10% return on equity. There are huge costs involved, while prices have to be quite competitive. While the newcomers have higher pricing, this might be unsustainable as we head into a recessionary environment.

I thought about lots of ways to differentiate – nutrition-driven juices; customised salads; e-commerce driven marketing, customisation and ordering; vegetarian range (for increasing number of “meat-reducers”). However I'm just not sure it is enough to build a profitable business on. I need to refocus. If I stay in the food and beverage market, I need to find a good angle, a niche that will enable me to claw my way intothe huge market. Or should I scrap the food angle all together and go back to the original focus of juice bars. Better to be very good at a few things, than to try and do everything and screw it up! It’s a tough choice, especially since juice bars in the UK suffer from the weather issue – what to do for eight months of the year when the weather is miserable??