Are Third Wave Coffee Shops In Danger?

I think hospitality in general has been suffering hard for a while, probably since Covid.

My completely uneducated take is that it’s more of a correction than a complete wipeout. Certainly in the coffee space, SO many places jumped on the bandwagon and whilst you can ride the wave for a while, ultimately you need a decent differentiator to stay solvent. In some cases that’s as simple as being in an incredibly high traffic area next to a station or something but if you’re not on a busy thoroughfare then you need a reason to keep customers coming through the door.

Quality coffee alone is never going to be profitable enough because the sale price is low and the audience is (relatively) small. Food is where the profits are but then to do anything more than sandwiches or pastries you need a kitchen, waiting staff, chefs etc. It’s a whole different business.

A slightly controversial take is that I find the quality in a lot of establishments has nosedived. We don’t go out for food or coffee anywhere near as often these days and it’s not because of affordability, just because we’re usually disappointed. I don’t want to go and spend £100 on a meal for two if we can cook something tastier at home and the service is awful. Same goes for coffee, if your barista can’t make a decent cup for £3.20 then I’m going to make it at home.

Staff turnover is super high in hospitality, and it’s a low paying industry. Is an 18 year old student on minimum wage likely to take utmost care of a proper espresso extraction? Sadly probably not. I find the paradox of fine dining served by minimum wage staff interesting. Long gone are the days where everyone puts in the care attention to detail to customer service. But again, can you blame them when they’re probably doing a minimum wage job as a stop-gap. It’s a tough conundrum to solve.

I find the best places are the very small owner-run takeaway coffee shops where someone with a genuine passion for it has kept overheads low and can be in control of the product.

One of the best restaurants we’ve been to in recent years was a husband and wife who did a small set menu each night for about 8 tables. The husband was the chef and the wife ran front of house. Everything was fantastic, the food and the service.

They closed down after 18 months despite being fully booked every night citing ‘needing a break’. Go figure!

HarveyMushman My completely uneducated take is that it’s more of a correction than a complete wipeout. Certainly in the coffee space, SO many places jumped on the bandwagon and whilst you can ride the wave for a while, ultimately you need a decent differentiator to stay solvent. In some cases that’s as simple as being in an incredibly high traffic area next to a station or something but if you’re not on a busy thoroughfare then you need a reason to keep customers coming through the door.

The big problem is Coffee shops started in city centres as they had to, this caught the passing trade with people going shopping and needing a break and some lunch, or a snack. Then councils started to manage things badly, get greedy with parking and rates and forgot what they were really there for…which was not to become businesses and speculators (as happened in our council and many others).

This destroyed town centre shopping, which in turn had a dramatic effect on coffee shops (normally open during the day). Many of the town centres near me have become fast food outlets, nightclubs and evening/night time entertainment hubs. Coffee shops won’t/can’t thrive in this environment. As our town centres die, they will have more offices, flats and simple become evening entertainment hubs, councils trying to make up the shortfall in revenue from increased council tax (flats) and evening parking charges (probably killing off the evening trade as well).

So the coffee shops moved out of town and will continue to do so.

HarveyMushman Quality coffee alone is never going to be profitable enough because the sale price is low and the audience is (relatively) small. Food is where the profits are but then to do anything more than sandwiches or pastries you need a kitchen, waiting staff, chefs etc. It’s a whole different business.

Very true, this is why they cater to the day time trade

HarveyMushman Staff turnover is super high in hospitality, and it’s a low paying industry. Is an 18 year old student on minimum wage likely to take utmost care of a proper espresso extraction? Sadly probably not. I find the paradox of fine dining served by minimum wage staff interesting. Long gone are the days where everyone puts in the care attention to detail to customer service. But again, can you blame them when they’re probably doing a minimum wage job as a stop-gap. It’s a tough conundrum to solve.

It is, but to be honest, if VAT was removed or reduced on food served at restaurants, perhaps a proper tipping culture would come back and the businesses could survive? You hear of many going to the wall and more will follow after the budget.

Dusk A lot of people aren’t bothered about quality.

Very true.

Same goes for concerts, art galleries, restaurants… these days people just want to take a photo for their Instagram / TikTok than appreciate something for themselves.

There’s a handful of trendy places near us that serve truly mediocre food and drink but are always full with queues outside.