Mobile franchises have been on the rise in the recent years thanks to their numerous perceived benefits. Low startup costs, flexible hours and increased exposure are just a few of the reasons that opportunity is rapidly growing in this sector of franchising. However, I would personally recommend a significant amount of research before even considering investing in an emerging concept like this. One example of such a franchise is BikeCaffe, a mobile coffee shop that serves espresso-based drinks to people. BikeCaffe began in England and is now making its way through North America. Its Canadian entry point appears to be the Vancouver market, where mobility through biking is sustainable and viable for almost the entire calendar year, other than the occasional snow day. This business model seemingly offers plenty of benefits when compared to other popular coffee shops such as Tim Horton’s and Starbucks, but one has to thoroughly understand how to compete against such giants.
With a product like coffee, you can be sure that you will have demand for your product right off the bat. Coffee shops and coffee cafes have been growing in popularity in the recent years, with 2.25 billion cups of coffee consumed around the world daily! Despite the promise of this demand, it does not guarantee that you will be able to attract and retain customers, especially if you can’t guarantee that you’ll be at the same place at the same time every day. Furthermore, the David and Goliath story simply will not duplicate here, as the market giants are here to stay. Consider that Tim Horton’s is reported to serve 8 out of every 10 cups of coffee in Canada; then you have Starbucks, McCafé, Second Cup and numerous other national and regional brands competing over the remaining market share. You really have to understand how to differentiate sufficiently so that you can get and keep enough customers to be able to create a stable and viable business.
BikeCaffe is just one of the numerous mobile coffee shop franchises that is attempting to launch in this market, with other franchises such as Coffee-Bike also making ripples. What sets BikeCaffe apart from the competition is their commitment to only using fair trade organic beans and eco-friendly business practices. While these are things that are becoming increasingly desired by consumers, I don’t know that it’s a sufficient enough differentiator.
One of the biggest initial attractions of mobile franchises such as BikeCaffe is the fact that the nature of the business is advertising in and of itself. These franchises can travel anywhere they want to find potential customers and the mobile unit is always advertising your product wherever it is. This is perfect for events, parades and other large events where you can take advantage of the numerous opportunities to find new customers. Essentially, YOU have the ability to go out and find your customers instead of waiting for them to come to you.
Perceived Benefits of Mobile Franchises
- Easy advertising
- Lower start-up costs
- Low overhead
- Flexible hours
With little to no employees to manage and train, owning a mobile franchise means that YOU ARE THE WORKFORCE. Not only does this decrease the money you would be spending on training and paying your employees, you can focus your energy more on connecting with customers and maintaining your relationships with them. Furthermore, you can work whatever hours and schedules you want, giving you plenty of freedom and flexibility.
While these elements are attractive, you will also want to understand the risks of mobile franchises, including the impact of you being the primary workforce. This means that when you are sick or take days off, you have an immediate drop in revenue. Some other risks include the following:
- Difficult to scale up – how many bikes do you have to buy and how many staff can you train?
- Territorial protection – in high-density urban areas, how do you monitor “your turf”?
- Many cities have food vending license requirements, so this is one of the first things you will want to check out, as in some cases there are only so many licenses that get issued
- Territorial definition – you want to make sure you can get enough territory to justify the investment level and scalability opportunity
With average initial investments under $100,000, mobile franchises such as BikeCaffe have created a whole new sector of franchises, in some cases classified as “micro-franchising”. As with many types of micro-franchising, if you are highly independent and can’t afford to invest in a location-based franchise but you are still looking for a novel and flexible way of getting into a business where you are directly interacting with your customer base, mobile coffee shops are one possible choice. However, you must be certain that you fully understand what it takes to create the level of income you desire as these type of businesses often require more work than initially perceived to create a strong, viable and sustainable business.