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Coffee Roasting Side Hustle

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Beard N Bones:
I love my coffee.  I love drinking coffee.  I love the smell of coffee.  I love the taste of coffee.  I enjoy roasting coffee and brewing coffee.  Thus far it has been just for personal/family consumption.
Recently, I've learned that a very good chef will be opening a restaurant up in the area by Nov 2018.  He has had some of my roasted coffee and really enjoys it - and in fact, he came by one day when he knew I was roasting coffee to see what it was all about.  Looks like he is seriously interested in getting high quality coffee for his restaurant.  Nobody within 275km (170miles) roasts their own beans commercially.  So in trying to figure out the business side of roasting coffee for this chef, I crunched some numbers to see how much this caffeine habit costs my wife and I.  This is what I found:

Cost of green beans:  $6.60/lb
Cost to roast (propane/NG/electricity): 10%  ($6.60 X 1.10 = $7.26)
Moisture/weight loss in roasting: 15%
Cost of roasted beans: ($7.26 / 0.85 = $8.54)  $8.54/lb
26 grams (0.0573 lb) per French Press (2 large cups of coffee). 
1 pound of coffee produces 17 French Presses (1lb/0.0573 = 17.4)
Each French Press gives 2 large cups of coffee. (17 French Press X 2cups = 34 cups of coffee).
34 cups of coffee made per pound of coffee.
$8.54 lb/34 cups = $0.2512
Each cup of (my favorite Guatemalan Antigua) coffee has a cost of $0.25/cup! 

A few additional notes on this:
- I am Canadian and the numbers I am using relate to the Canadian Dollar. 
- Currently I am using a home roaster, the Behmor 1600.  I have no idea how much electricity this sucker uses to roast the beans.
- I am most comfortable roasting 3/4 of a pound with this roaster.  To roast enough coffee beans to supply this chef's restaurant, I would have to spend way too much time in front of the roaster - which isn't worth it.
-  I am considering a proposal to this chef:  if he buys me a small (3lb max batch sizes - max 15lb roasted per hour), that would be sufficient payment for supplying him as many beans as he would like at cost for two (2) years.  The cost of the roaster, shipping included is approximately $5600USD ($7300CAD) + taxes + duty. 
-  I calculated that this would be the equivalent of him using $15/lb off-the-shelf coffee over a 3 year period.

Thoughts?  Feedback?

bwall:
Have you ever tried roasting coffee in a skillet on the stove? Cast-iron skillet costs $40 and you're done in 20 minutes. Batch size would be about 3 lbs.

After three years, you will be guaranteed to earn $5560 USD!

Beard N Bones:

--- Quote from: bwall on March 13, 2018, 11:52:30 AM ---Have you ever tried roasting coffee in a skillet on the stove? Cast-iron skillet costs $40 and you're done in 20 minutes. Batch size would be about 3 lbs.

After three years, you will be guaranteed to earn $5560 USD!

--- End quote ---

I've been roasting since 2008.  I've never used a skillet on the stove.  I have used a cookie sheet in the oven however.
I've also used a FreshRoast SR500, and am currently using a Behmor 1600.

My biggest problem in using the stove, oven, or a small home-roaster (which I highly recommend the Behmor 1600 for), are two-fold: 1.  the challenge it is to have consistent roasts and 2. the amount of time it would take to roast enough coffee for this restaurant.  (I could roast about 2 lbs of coffee in an hour with my Behmor.  A small commercial roaster can do 12-15lbs in an hour.)

SC93:
Don't get excited and jump ahead of yourself. I don't like this long term deal since you have never done anything like this before. Do this the RIGHT way. First, charge what you need to charge in order to make a good profit. If your price is too high, that means this business is not for you. Second, if you want/need the $5600 machine YOU need to figure out how to get it. Do NOT make this part of the deal.

But here is another option..... bring this guy in as a SILENT <<<<< that means he needs to shut the hell up after he buys the machine.... partner. He buys the machine, you make the coffee, he tells others about you because now he owns part of the 'business' and he makes money from his own restaurant AND he makes a small % of any other place in town that sells the coffee. AND he makes a small % from his own restaurant every time the coffee company sells to his restaurant. DO NOT make his percentage over 7%. In the long run you can not make it if he gets over 7% PROFIT. If you choose you can make it so after he is paid back in full that either.... his % drops a little or you can buy his % from him.

This is your thing to play with.... make up your own rules and have fun with it. Write it all down how YOU want it to end up as and don't let it stress you one bit. If need be, work it backwards to make sure it all fits in to place.

Smokystache:
IMHO, you are narrowing your options too quickly. Right now, it sounds like you've set it up as:
a) need to have a $5000 roaster, or
b) can't get into this business

What about some other options?
1) Sounds like you've got your current roasting technique down to a science. Why not buy 1,2,3 more of those models and have them running simultaneously until you've built up enough profit to invest in a larger commercial roaster? I found one of your current models on ebay (and it ships to Canada) for $528. Even if you buy two, that's about $4000 less than your current option, but you've tripled your capacity.
https://www.ebay.com/itm/Behmor-1600-Plus-Drum-Coffee-Roaster/152938119407?hash=item239bd280ef:g:ARoAAOSwDqlaonVJ

2) Take at least a month and look on your local versions of craigslist and ebay for other options. It looks like there are a wide range of prices/sizes of coffee roasters out there. What could you do with $1000? $2000?

3) If you're the only person roasting in that radius, then there are other customers waiting for fresh, local coffee. Other restaurants, non-chain coffee shops, up-scale stores that want prepackaged coffee on the shelves (higher-end gift shops, etc.), people who create local gift baskets/boxes, subscription services, local people who really value fresh coffee, etc.

I love the math and looking very specifically at costs, (and I understand this was just an example to see how much your own habit costs), but calculate the costs to create a lb of coffee that you'd package and sell to the restaurant. Determine what your time is worth (and then add some more profit in) and see if the restaurant will pay that price. Personally, I would avoid taking on any partners or funding and just consider bootstrapping this. It would be well worth an investment of $500 and then add machines as you get more regular, recurring customers. The worst case scenario is that you buy one or two extra machines, find that there is no demand or you don't like being in the commercial roasting business, but then you sell your extra machines for 80-90% of what you bought them and you're out $100-$200 and some time. Best case scenario is that you are the first to market for awesome coffee in your local area and you can turn your hobby into a sweet money-making gig.

Best of luck.

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