finally launched

So we finally launched on August 15th and this is the first opportunity I’ve had to update this blog, which should tell you just how frantic it has been. Let me start at the beginning (and be warned, this is 3 months of update…it’s a long one!)

4 years studying Law and I still didn’t insist on a proper contract!!
The last time I wrote, I was getting extremely impatient with the shop fit out process. our shopfitters, proved to be extremely unreliable. Nick, the owner of the shopfitting company, had promised me that the works would be completed within 4 weeks of signing the contract with TFL, so in theory it should all have been completed by late June. As it turned out, despite the fact that we had agreed and signed off all the designs and plans back in April, and that I had paid deposits, Nick did not contract out the actual bar build until much later. As a result, the bar itself was not completed until late July!! To make matters worse, they kept saying that the internal works in the shop would only take a week, and therefore they did nothing until August when the bar was actually ready to go in. Then, when they began the internal works, they ran into all sorts of problems causing even more delays. In short, the entire project was poorly managed by them, and they took on multiple projects which all had to be delivered at the same time, and in his own words “the wheels came off!” Two other juice bars had exactly the same delays that I experienced at the same time, showing very clearly that these guys didn’t know what they were doing. Even once the bar was “completed”, there were quite a few things which still hadn’t been completed or done properly including some plumbing works. Some final things still haven’t been completed and probably never will! And after all of that, they had the audacity to demand more money for the work (almost 30% extra). The delays they caused meant we didn’t open the bar until the end of summer, which we were relying on to build up our customer base before we go into the colder months. Needless to say, we are disputing their claim for a higher amount, and I’m so annoyed about it that I’m happy to take them to court over it if it comes to that.

The marketing campaigns kick off
Meanwhile, back in the juice bar, we launched on a sunny day, and from day 1 we had lots of people come in first thing in the morning. They’d all seen the sign up and were eager for us to open. Of course, despite all the training, we were terrible at keeping up with orders and our service was a bit slow, causing many potential customers to walk away from the line. After a couple of weeks though, we found our rhythm, and got much more faster and smoother at taking and executing the orders, and business started picking up. We did lots of local marketing, with our leaflets, sampling the smoothies outside the shop and corporate days for local companies offering 50% discounts. We built good relationships with our customers and lots of them became regulars.

Sales started at around £200 per day, and slowly increased. We introduced fantastic snacks such as health bars, which sold well. We tried sandwiches, but found that it didn’t really work. We were selling organic sandwiches from “Fresh! Naturally Organic”. However we found that since we are surrounded by food outlets (Pret, Eat, etc), we were only selling a handful a day. We originally thought it might encourage people to buy a smoothie with their sandwich, but we found that those buying sandwiches rarely bought a smoothie with it, probably as the combined cost was too high. We couldn’t sell cheap sandwiches as it doesn’t go with our brand, and there is a ‘treats’ in the station, so if someone wants cheap sandwiches they go there. Since our minimum order on sandwiches was about £50, and we only sold a few, we were losing money EVERY day. Finally, after a few weeks, we scrapped it, and moved the £1,000 display fridge we’d bought into a warehouse. So the whole experiment ended up costing us around £2k, but we had to try it!

When do we reach breakeven?
In the meantime, total sales were increasing, and we were regularly hitting £350/day. This was driven by smoothies. We wanted people to understand that for every day purposes, maximum nutrition comes from juices, especially our super-juices that contain vegetables. Nonetheless smoothies made up two-thirds of our sales particularly as the breakfast smoothies were gaining popularity, indicating that people were using it as a meal replacement. We started selling more of our ‘breakfast anytime’ smoothies, with oats or granola-top. Sales gradually started climbing towards £400/day.

Now all this time, bear in mind that our basic breakeven figure stands at around £800/day give or take. Juices and smoothies have low margins due to the high product costs, so the gross margin (ie. sales price – fruit, cups, lid, straw and VAT) is around 55%. The margins on hot drinks, like the teas, are higher at around 70%, but we sold very few of these. Given the level of rent and rates, staff costs, overheads, etc. We had to sell around 250 drinks per day to break even, and we were hitting around 120-150.

Also, it’s worth noting that we are a ‘natural tonic bar’ situated bang-slap in the middle of an extremely dense office area, with around 40,000 potential customers, half of whom use the station, and around a quarter of which pass the shop on a regular basis. Nevertheless, we found that despite all our marketing efforts, people just didn’t know we were there. People would stop in the shop two months after launch and be shocked when we told them how long we’d been open. As with most office workers, they walked past each morning and evening in a zombied state and never noticed us, despite all the bright colours and sampling outside the shop. Needless to say therefore, many of those workers that used other exits from the station had never heard of us. We kicked off marketing campaigns targeting offices in the local area, offering 50% discounts, which did create more awareness, but the campaign was limited by the amount of time I had to devote to it, given all the other hats I was wearing. I had to call up each company and arrange for someone to distribute vouchers internally (we’d already done the external flyering so thought this was a better approach) But all this took time.

Technology…why does it never work?
At this point, I was still grappling with the EPOS and website systems. The company that I had hired to do the EPOS and website development over-promised and grossly under-delivered. They had outsourced the development to a team in India, and I found myself on the phone to them every morning for about two months to get the EPOS and website up and running. The whole system was supposed to be integrated, for electronic loyalty cards, web-ordering, etc. As it turned out, it was a complete mess, nothing worked and we ended up going back to basics. But even then, as a standalone EPOS system, they couldn’t make simple things work, like the cash-drawer opening, or end-of-day reports. We’re still working through these problems. This was all a classic mistake of mine, I expected quite a lot, on a small budget, from a company that ‘said’ they could do everything, but could not give me concrete examples. Since it was a new concept, I accepted it, but in retrospect given the amount of time I have had to put into it I should have gone with a simpler system and with another company altogether.

At the same time, I was also working on all the marketing aspects of the business. As I said earlier I was doing all the local marketing, calling up companies and teaming up to do promotions, going out flyering and getting teams of people to flyer, doing specific corporate days for big local companies (TFL, Scotland Yard, etc). At the same time, I was trying to do basic bookkeeping so that I could get a grip on our incomings and outgoings. Even though we have an accountant, on a day to day basis I find it’s easier doing it myself. On top of all this, I was looking into every other aspect of the business, suppliers, products, even furniture all the way through to recycling bags, and small things like poster holders. All in all, I was getting very quickly swamped.

I just need a break…
So, I did what every entrepreneur does when faced with this, I took a holiday!! Now I know this sounds a bit crazy, but to be honest it wouldn’t have changed much. But given how busy the last six months had been, I’d promised Meenal (the missus for those not keeping up) that we’d take a holiday after the business was stabilised. Even though it was far from stabilised, I thought that we were running into a problem of being so deeply sucked into the business that I was losing sight of broader business objectives. I thought the two week break would do me some good too. So we went off to Tanzania on an amazing holiday.

Of course, as soon as I went, business fell off a cliff!! To be fair to everyone involved, it wasn’t because I wasn’t here – I’m not that important to the business. I have more than capable staff, and we had put everything in place, and got all the supplies we needed before I left. No, it was the first spell of really cold weather. Just as our sales were averaging £400/day, the cold weather causes sales to fall down to £250. Smoothies are cold, and seen as summer drinks by many, so the only customers that continued coming were those that bought breakfast smoothies, ie. as breakfast replacements; or those that appreciate that juices, especially super juices, are in fact quite warming and exactly what you need going into winter to build up the old immune system.

Reality sets in
At this stage the staff were getting pretty depressed about the situation. My most senior staff, Emanuele and Martina had both been away a few weeks earlier and come back energised and rejuvenated, but both were feeling pretty down about this. I guess in some way they also felt responsible since I was away and it happened on their watch. But to be hinest it couldn’t be helped. We hadn’t established the business enough for customers to shift to the winter drinks, the warming juices, the hot teas and herbal infusions, etc.

When I did get back, we were obviously in a bit of a panic, and had to focus very had on costs. For one thing our staffing level was very high for the number of customers. We were also spending a fortune on our supplies like fruit and veg, and we had to find cheaper suppliers. (incidentally, we started with organic fruit and veg, but gave up on that after a few weeks because nobody seemed to really care!)

Of course sales rebounded as the weather because a bit milder, up to around £400/day again, and when we introduced bagels they got even better. But again, when the cold hit, our sales dropped off again.

Sales per square foot…of the menu board
Now you’ve got to be thinking about what the hell happened with all our hot drinks. Given that 50% of our menu board is made up of teas, it’s shocking that it only generates about 1% of sales! That’s for a few reasons. 1. Most people see us as a ‘juice bar’. Ie. they don’t actually acknowledge the ‘infusions’ side of what we do. Hence nobody thinks to come to use for teas. 2. Not that many people understand what we mean by ‘infusions’, again giving them no reason to visit unless they want a juice. Thirdly, tea is still a new area. Sure people drink tea all the time, but they’re quite happy with their pg tips. Few people actually explore tea beyond that. When we finally did some tea sampling a week ago, our tea sales instantly shot up. We sampled the spicy teas, especially because they are bold and warming in the cold weather. They went down really well and instantly our tea sales that day went from £5 to £50. That’s right, 900% sales increase! Since margins are good on the teas, that’s where we should have been focusing in the run up to the cold weather. When people came in that day and saw our range of teas, many commented on how extensive the menu was. It was also interesting how many people, regulars, then said ‘I didn’t realise you did teas!’ 50% of our entire menu board is made up of teas, yet it is completely overlooked by people since they come in and consider us to be a juice bar. That’s definitely something we need to change.

Chasing our tails
We’ve finally realised that due to the delays in opening, we’ve been constantly chasing our tails. We should have been marketing the hot drinks 2 months ago, building up our presence as a ‘tea bar’, but instead we were still quite new and building up our position as a ‘juice bar’ as a result, when the time is right, ie winter, nobody knows about our hot drinks! We’re decided now to tackle all this head on, and have started working with a PR & marketing company, who have worked with startups before and helped them get off the ground with PR and local marketing, as well as helping with the consistency of the brand image and message both in the store and with our online presence. They’ve agreed to a fee structure with a low retainer in which they get paid more once they hit certain milestones. After the experience with our EPOS supplier and shopfitter, and this is the only way I want to work with people, I want their reward tied into our success as well. We’ve just started working with them so will let you know what happens. Our biggest issue is really that not enough people know about us, so if they can address that, I am confident that we can double our customers numbers fairly quickly.

Big shout out to the gang
Finally I’d like to touch upon the issue of staff. We were lucky to find some really good staff members from the outset. Emanuele, our manager, came on board long before we launched and despite the delays in launching he hung in there. He is as determined as I am to make this business a success. We’re already looking at our second site, and it’s good to know that I have someone like him on board. Totally reliable with a fantastic work ethic. Similarly, I have made Martina a second manager, with a view to promoting her to full manager when Emanuele moves onto the next site. She and Emanuele are like chalk and cheese, but that’s precisely why she’s important to the business. She brings a different perspective to the business and acts as our conscience, particularly in an environmental sense. I’ve made her ‘chief environmental officer!’ She also has a strong interest in the teas and I’m counting on her to spread her knowledge to others. Jonno brings a wealth of experience with youthful energy and ideas and is best at ensuring consistency in our products. I’ve put him in charge of making sure everyone makes the drinks correctly. Eliza has a strong interest in health, and I’m hoping to put her and Martina on a nutrition course, then they can both advise customers much better. Finally Carla brings a very strong work ethic and works very hard. She never stands still and always finds things to do. She plans to work in the care industry and is only working with us as she does her training in that field, so unfortunately we may not have her for long.

We’re getting there…
So all in all, it’s going well. We have a good team, lots of ideas and so far still lots of energy. There have been down periods, especially as everyone becomes disheartened when sales drop, and particularly when I had to cut back the staff hours to reduce our cash outflow. We’re still not breaking even, but with the new marketing company on board, and with all our new product ideas and menu rejigging, I think it will be fine. By March our sales will pick up anyway, so we just need to put lots of effort into marketing the hot products for the next few weeks, then start marketing detox plans in time for January, when most people will come with their new year resolutions to start being healthy!

Loads more to tell you, especially many of the issues we’ve grappled with, particularly regarding the products and direction that we take. For example, the issue of doing coffee created huge debate; as did the choice of decor, selling food products and many more things. Many people don’t realise the amount of thought and effort that goes into every aspect of a small business. I will never again take for granted any small retailer or independent business again!