SmartBrief is talking directly with small and medium-sized businesses to discover their journeys, challenges and lessons. Today’s post is about Fresh Off The Roast and Qualia Coffee, a coffee roastery and coffee shop, respectively, in Washington, D.C.
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Qualia Coffee (map) has been in the Petworth neighborhood of Washington, D.C., for more than five years, near the Green Line of the Metro, the Park View neighborhood and a dizzying array of new construction and new residents. It was born out of Fresh Off The Roast, a roastery that eventually expanded with Qualia’s retail offering.
I live in this neighborhood, as well, and have long enjoyed the coffee there. I wanted to find out how someone decided to open a shop in what has been, relatively, a retail desert, the challenges of being both a roastery and a coffee shop, and what’s next amid a changing neighborhood, including the arrival of a Starbucks inside the Safeway supermarket just down the street.
I sat down recently with Joel Finkelstein, founder of Fresh Off The Roast and Qualia Coffee. Here are some lessons he shared about starting a business, being a neighborhood retailer, educating customers and the challenges of growth:
Businesses can take time to evolve.
“I actually was a reporter … and the last few years I was doing that, I was also on the side, I started Fresh Off The Roast. Mainly because I became interested in coffee and wasn’t really finding anything locally that satisfied my curiosity. So I started roasting at home, and I said, “It seems like there’s this market — if I didn’t roast at home I’d have to buy coffee somewhere else.” But it seemed like there was a market out there.”
Once you have a thesis, do your research.
“I built a commercial roaster, and I started going to farmers markets, which is actually kind of difficult in D.C. I went to a handful of farmers markets every weekend, did that for almost two years, just to get a sense of how many people out there were interested in this, what the market was. And it was interesting — I thought of myself as a roaster, right? So I felt like, I’m producing these beans, I’m going to take these beans out to the market, not going to grind it … so it’s just for the people who appreciate that quality in a coffee bean.”
Over a period of months, Finkelstein worked his day job most of the week, roasted beans on Fridays and then went to farmers markets on the weekends. Beyond the initial diehard crowd, he began to discover, there was a larger market of people who care about coffee quality.
“I would have these people come to me, and they’d be really interested in what I was doing, but they didn’t necessarily buy beans, and they would always be like, ‘Can I get a cup of coffee?’ So they’re dipping their toes in. Just from that experience, I realized, there’s a much wider market than selling beans.”
Define customer experiences — both the initial event and where you’d like them to be. Then, help them get there.
Finkelstein knew he could do more than just roast some beans to sell at coffee markets. He had found demand. But there are two main ways to satisfy that demand: wholesale and retail.
“What I wanted to do was high quality, lots of variety, and in order to do that in small quantities that would maintain the level of freshness that I thought highlighted the coffee the best, that retail really made the most sense. … And so the concept behind Qualia was, be a place where people can experience the coffee, and open that discussion to what coffee is really about. And then make that slow conversion from maybe from just buying a cup of coffee to grinding your beans at home, and making a fresh pot every morning, and sort of appreciating that single-origin aspect.”
Many people will just come in and want a cup of coffee. But others will be more curious if you give them reason to be, and give them a process. Qualia Coffee also offers tastings to show people how it’s done and what the finished product should taste like:
“For us, it’s the educational process, but at the same time, you can’t just show it down their throats … the point is, you need to give them the opportunity to become curious. And, for me, even if people came in and bought a bag of beans every week and never bought a brewed cup of coffee from us, there’s no way for me to know that they were brewing it properly, or that they were getting the actual flavors that we’re trying to do. By having brewed coffee here, we have the opportunity so that they can experience the way that it’s really supposed to taste.”
Also, he said, have a mechanism for receiving — and responding to — feedback. It doesn’t have to be Yelp, he said; it can be in-person comments, neighborhood listservs, or other means. Don’t dismiss or ignore criticism, even if not all of it can be addressed, but also don’t take it personally. And, Finkelstein added, make sure your employees know you have their back if a customer is particularly rude to them.
A developing neighborhood can mean changing your marketing and customer acquisition.
Petworth’s residential and commercial landscape has evolved, particularly in the most recent 6-8 months, Finkelstein said. This has brought local customers and walk-in traffic that was uncommon in the early years.
“We, up until a year and a half to two years ago, relied very much on destination traffic. So, if you’re in kind of a transitional neighborhood, you don’t have a real base — there’s not a lot of foot traffic here compared to other places. A coffee shop couldn’t generally live [here] on foot traffic. … So we always had to draw customers to us. Pretty much all the traffic the first three years was people seeking us out.”
Separately, Qualia and Fresh Off The Roast have never been about wholesale, though they do supply local restaurants. It’s not a big money-maker, but it does bring free marketing and potential new customers, Finkelstein says. He noted that supplying one local restaurant, Chez Billy, has led to their customers realizing there’s a coffee shop up the street. Qualia is also expanding to other parts of the city, as well as a partnership with the local 3 Stars Brewing Co.
The regulatory environment is always there, but some of it can only be learned by doing.
Every locale has its rules and regulations, and D.C. has a reputation for being particularly picky. Some things can be planned for, especially prior to opening, but some things will simply have to be dealt with as they come up.
“I feel fairly lucky in the sense that we were able to open in like six months. We were building a kitchen, really. This is not a complicated building. And the roaster is small enough where D.C. didn’t really raise a lot of flags about that. But, it’s never smooth, it’s capricious … there’s no way you can go into this and know everything that’s required.”
Even well-intentioned regulations, like recycling, add costs and inconvenience to the operation that would otherwise not occur.
“There’s just so many costs you never would have considered. D.C. requires you to recycle, so we’ve got to pay for recycling. We actually don’t sell any recyclable cups; one of my principles is, we don’t sell anything that’s disposable. We don’t sell plastic bottles, we don’t sell anything in any containers that’s disposable; everything is either compostable or reusable. But D.C. requires that we recycle.”
The good news, Finkelstein says, is that such bureaucracy, while annoying, can usually be overcome. It’s more about learning the rules as they come up and adapting as best you can.
What’s next? Size, scale and new markets.
Qualia, for its years of success, can be a difficult, grueling endeavor. And so, a sustainable business remains a challenge, and doing the same thing indefinitely is not an option. Expansion of production and retail is needed, as well as new places to quickly market beans, which must be sold within three days of roasting.
“Because coffee is sort of a low-end, a low-profit-margin item — it’s not like liquor — you need a certain level of scale to make it sustainable. So, ultimately, we will have to move up to a bigger roasting facility. And, hopefully, have multiple [retail] locations. And one of my objectives all along, which I feel like maybe we’re getting a little closer to, is getting into [more of] the farmers markets. That would make a huge difference for us. … It’s pretty clear that the only thing that is functional for us is to sell the coffee directly to customers. And so farmers markets, where it’s a very limited availability, we don’t have to worry, “Is the coffee too old,” because we’re only there for four or five hours. And it’s a very efficient way for me, because, if I have two employees there, they’re basically selling the whole time they’re there.”
Whatever growth brings, Finkelstein said, what will be constant are focuses on quality and the customer experience, particularly the interaction among the retail outlet, the roastery and the roasting process.
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