one is none, two is one

Five years ago, in the middle of a busy Saturday shift, the espresso machine went down.  hard.   At 2pm I received a panicked call from the Shift Leader at the shop "Duncan - the espresso machine went down!   I have a line of 10 people waiting for their lattes, and the damn thing is leaking all over and wont make any espresso!".  

crap.

So much for my Saturday afternoon.  I hightailed it into the shop to find the place packed... and a line of people waiting around hoping that I could work my magic on this 300lb espresso burping monster.    I twidded this switch and toggled that knob.. turned it on and off... threatened it with a pipe-wrench.... nothing.  A few blinking red lights and the occasional steam-laden-ed sigh.

crap.

I turned to the crowd- "sorry folks, looks like ole bessy here is down for the count."   A groan settled over the crowd, and I watched in consternation as twelve disappointed customers walked out of the shop without having made a purchase.

crap.

This was my first *major* lesson in not being prepared.  When I bought the espresso machine, the guy I bought it from had tried to sell me a service contract with the machine.  I figured it was just some scam to extract additional cash from me.  Now I understood.

The numbers dont lie.  During peak times, we are making as many as a hundred drinks per hour on that machine.   Even at the slower rate of 50 drinks per hour,  at $3.50 per drink comes to $175 per hour in lost revenue.  

When your espresso machine dies, you lose money very quickly.  It is one of those 'mission critical' pieces of equipment that you need.  If it goes down, you need to have a system in place to QUICKLY fix or replace it.   (as an aside, dont skimp when you buy your espresso machine.  Spend the extra couple grand to get a good machine that wont crap out on you every other week.)

For those of you who have not heard this old Marine Corp gem (two is one, one is none), it means that you should always plan on having backup, because you cannot depend on the primary always working.

This lesson can be extended to many areas within the shop - equipment breaks down, people dont show up for shifts, employees quit, internet fails, vendors run out of product.... the list goes on and on. In short, things rarely go perfectly all the time.   You need to be prepared.

That said, not everything needs redundancy.  Some equipment is not critical to serving the customer - it is just convenient.

The goal of this section is to identify the areas of greatest threat to the smooth operations of the shop, and show how you can set up backup systems to ensure things keep moving along, even when there is a system breakdown.

I've broken this down into five different areas of preparedness - employees, equipment, suppliers, payment systems and power.

Employees:

I have my staff structured in a slightly different way from most places.  After a person has been working at Koffee? for 3-6 months, and is promoted to Shift Leader, I give them an additional management task (well, two actually).    (I'll write a post at a later date outlining why and how I do this - it is very effective way to keep your employees happy!!).      These tasks include such things as: processing daily sales sheets, bank deposits and getting change from the bank,  ordering supplies, tracking waste reports and configuring the bakery order for the next week, tech expert (fixing wifi, cash register etc. when go down), upkeep on facebook, website, creating ad posters (and posting them up),    devise new and interesting drinks every day, ordering and tracking the beer & wine, entering bills into QB and cutting checks,  reconciling bank statements, etc etc.

After a person has been around for 3-6 months, I get a pretty good idea of what type of person they are, what they are good and and what they enjoy doing.  From this I give them one primary responsibility and one secondary responsibility.   So, say employee A has ordering supplies as their primary and waste tracking reports as their secondary.     Employee B has waste tracking as their primary and is the secondary tech expert.   If Employee B takes a week off, then Employee A will order supplies AND do waste tracking.   Likewise, if Employee B leaves for any reason, then Employee A will take over the waste tracking until a new employee can be identified who can take over that responsibility... then Employee A will teach Employee C how to do waste tracking reports.   This way, I always have back up for every function and responsibility in the shop - and I'm rarely caught short.

When I get a couple new employees at the same time, I will take that opportunity to shake things up - give employees new primary and secondary responsibilities.


Equipment:

As I outlined above, equipment fails.  It is not a matter of if, rather a matter of when.   Usually at the most inopportune moment.  In this section I'll go through the main pieces of equipment you have, and outline the backup I have put in place to deal with equipment failure.

Espresso Machine - I now have a fast-response contract with my coffee roaster.  If the espresso machine (or brewer) goes down,  he can be there in 30 min to an hour.   He does a quick check over the phone to get some rough understanding of what is wrong with the machine, and if he thinks it is going to take more than 20 minutes to fix, he will bring a replacement machine and simply swaps them.  While this costs me a bit more to have, it is ABSOLUTELY worth it.  When we are selling $1200 a day in espresso drinks,  all it takes is being without an espresso machine for ONE DAY for that contract to be worth while.    The same applies for our coffee brewer.

Internet - Most modern payment systems (gift card verification, credit card acceptance, ATM) all use internet rather than phone lines.  (if you are still using phone lines - you REALLY need to switch to internet - it is alot faster.)   When my internet goes down, it is not just irritating to my customers who are trying to surf the net or download the most recent Kesha hit - it absolutely cripples my business.    Without the ability to use credit cards, gift cards or get cash from an ATM, it is very difficult to accept payment!!    Solution: two internet providers.   Both Comcast and AT&T Uverse high-speed internet service my area.  I have BOTH.  So, I have two internet modems, two wireless routers etc.  This way, if one goes down, we can just switch to the other.

 

 

If you dont have two fast internet suppliers in your area, then I'd do one fast internet and one dial-up modem - anything to have a back up.  It will save you alot of grief!!

Phone - I would not worry too much about this.  Everyone has their own cell phone these days, so having a phone for the shop is redundant.    The only exception is for the catering business - for this you definitely need a reliable phone.     I got a Google Voice number for my catering line, and just forward it to one of my employees cell phone.  If I wanted a phone line for the shop, I'd probably get a VOIP (Voice over Internet Protocol) phone - you can buy the hardware for pretty cheap and the service is free.

Refrigeration - This one is a bit tougher.  We have one walk in cooler, two small under counter cooler, one 3-door undercouner coolers, one large milk cooler and two upright refrigerators.  This gives us enough refrigeration that if one goes out, we can always transfer the food into the other ones.   The downside to this is that all these compressors in each refrigeration unit uses alot of electricity (it is much more efficient to have fewer, larger units.   Were I to start afresh, I'd have two separate walk-in coolers, so they could act as back ups for each other.     At the same time,  I'd also cultivate a reliable relationship with a good refrigeration guy who can get to you quickly if something goes out.

Credit Card Machine - people use their credit cards for just about everything these days.  10 years ago, people would only use them for transactions over $15-20... but now they want to use it for everything.  It would not surprise me if we became a cashless society in the not too distant future (I've even thought at times about eliminating cash from my systems altogether, and JUST using gift cards and credit cards - but I'll get into that in a future posting).  I use the 'square' system - the plug in unit that goes into an ipad (or similar tablet) .      It is pretty important to have backup for credit cards - so requested an additional square plug in unit (free!) and I keep a spare itouch (old) at the shop with the software already downloaded on it.  Thus, if the current square/ipad stops working, my employees can just grab the backup square/itouch, turn it on and immediately start using it.

Gift Card Machine - I have a gift card machine that is separate from a credit card machine.  These days, many credit card machines / processors also try to grab your gift card business.  Dont do it.  Set up a separate vendor for your gift card processing.  This is for two reasons:  first, you want two separate systems, so that way if one goes down, you still have the other one to fall back on.   If both your credit card processing and gift card processing went through the same machine, and it went down, you'd be screwed.  Whereas, if just your gift card machine stopped working, you could still lean on your credit card processor without much difficulty while you were trying to fix the gift card machine.   Likewise, you dont want to get yourself in a situation where you are *stuck* with a certain vendor.  Gift cards are one of those things that you can get stuck on.  After you've been using gift cards for a while, you could have thousands of dollars in outstanding cards... if you try to switch, you still need to figure out how to keep those cards valid.  A real pain in the backside.  If both of your gift cards and credit cards were run through a single system, you'd be prone

Ice Machine - I'm not too worried about having a solid back up for an ice machine,because I can always go to the local convenience store and buy 100lbs of ice, and throw it in the ice machine hopper until the refrigeration tech could get to me.

Commercial Dish Washer / Toaster / Microwave / Stereo  - most of the rest of this stuff is not mission critical.  When they go out, business is not going to stop cold.  It is mainly an inconvenience.  I dont think it is worth setting up back up systems to immediately replace them if they go down.   Instead, keep an eye on Craigslist, and if you saw one of these for sale at a good price, you could snap it up and keep it in your garage in case of emergency.

Suppliers

It is always a good idea to have multiple places where you can get supplies from.  First, this means that if one vendor runs out of something, you can find it from another place.  Second, if your vendors know you have alternative suppliers for their products, they are less likely to jack up their prices.

I have addressed this issue by using specialized vendors and one large generalist.  I have a dairy vendor, a produce vendor, a paper vendor, a cleaner vendor and a few other specialist types.  THEN I have one generalist (Perkins) who could supply me with any/all of those items.  The generalist provider tends to be a bit more expensive than the specialist, but the mere fact that I have a generalist means the specialists wont mess with the prices.    A couple times a year, I will notice that a supplier has bumped up their prices on something (with the exception of dairy and produce, which fluctuate alot).  I will ask the big generalist vendor their price on that item.  If it is lower, I will contact the specialist that increased their price and ask why the price has increased - then explain that their competitor has kept the price at the lower level.  The specialist will usually drop their price back down.

This method not only makes sure you have the supplies you need from redundant suppliers, but it also ensures that you keep your costs of goods down.  (this is important because suppliers LOVE surreptitiously bumping up your prices when you are not looking).

Back Up Power

Over the last five years, I've begun to notice more extreme weather events around the world.  Here in the Northeast over the past couple years, we've gotten hit by a couple hurricanes (such as Sandy), a couple serious windstorms and two huge snowstorms.  Each of these storms shut down the grid for a couple days.    I think we are going to be seeing more of these types of extreme weather events as time progresses.

When these things happen, people go where there is power.  One of these storms knocked out the power to the surrounding neighborhoods, but my shop still had power.  We had a HUGE day of business - people were coming in from all over to grab some hot coffee and charge their cell phones (we set up a charging station for customers).    Not only did we have a banner sales day, but we garnered much goodwill from the surrounding neighborhoods for giving people a warm place to charge their cell phones etc.

This got me thinking.

My shop makes a couple grand a day in revenue.  If the power goes off, I cant open the shop, and lose that revenue for the day (cant open the shop if I cant make coffee).

You can purchase a standby generator like this one, that runs on natural gas or propane.  Keep a 100gal propane tank and hook it up to the natural gas hookup (these rarely stop working - in all the extreme weather events of late, gas has continued to flow).   You have the propane tank onhand in case the gas also goes out.   These generators are awesome - they sense when the power grid goes down and immediately kick in to provide uninterrupted power.

To buy this generator, a 100gal tank and have it installed costs in the range of $5000.  When you consider that it takes only 2-3 days of sales to pay for it... it is pretty clear that this system will pay for itself in just a couple years.  This does not even take into consideration the supplies you will save.  I have between $1500-2000 worth of refrigerated supplies in the shop at any given time.  If power goes down for more than two days, I'll have to throw everything away - what a waste!  Furthermore, the basement of my shop lies below the drain level - so we use a sump pump to keep the water out.  If I lose power, then glub glub... my basement quickly fills up with water.  I'd lose tens of thousands of dollars of equipment and supplies if that happened!!

Remember - one is none, two is one.   The better prepared you are for breakdown, the less business interruption you will experience, the less pain in the butt  you'll have and the more money you make.

good luck!