Business Advice - Confectionery

dodge08

Hello all,

I am currently looking into the possibility of opening a sweet shop in a popular market town in Dorset, as a typical town that suffers from fairly quiet Winter traffic and an increased seasonal holiday traffic, I am hyper-aware of the risks.

I don't want to go down the American candy route since I think this concept is done SO much and you only have to look at threads / articles about promising new sweet shops opening, click on the website link and see that the domain dropped 3 years ago because they clearly couldn't stay open!

I was thinking about focusing on chocolate, becoming somewhat chocolate specialists - buying in all the normal high street chocolate brands like Thorntons retail packs, Cadburys, Galaxy, etc. But also a focus on the more specialist chocolates such as the conveniently located "House of Dorchester" brand and other unique options.

With a heavy focus on gifting as well (would aim to be ready by December this year) in the form of "GrazeBox" style letterbox friendly gift boxes and the ability for us to deliver within the town as a sort of "chocolate takeaway" service in the evenings as well.

The biggest challenges are confirming the viability of the idea and of course sourcing funding - since I don't own a house, and can't match half the required amount of capital, my chances of success are tiny, no?

Any advice is hugely appreciated. ~ Adam

paddyrg

This past 5 years, I've watched sweet shops come and go in nearby shop units. The margins are surprisingly thin on branded chocolate, and you have to shift a load each day just to stand still. If your 'opening the doors' cost is say £200/day, that might be 2000 bars of branded chocolate (you'll likely pay more per bar wholesale than poundland sell for retail), and that seems like a huge amount. You also have to keep it cool (nobody wants warm chocolate in summer), and you'll be a shoplifting kids magnet. What's the product line you'll make the money on?

But as you say, probably moot if you can't afford a shop and stock to get started.

gingerdad

how about something like this http://www.thecocoabeancompany.com/tag/hawkshead/

there seems to be a glut of the mr simms type shops about. you need to think of your usp/s.

as for american candy my kids get their fix from poundland and b&m bargains amazing how many times they have various types in

dodge08

Yeah this is absolutely true, I think the problem is the margins are brutal! And the resurgence of American candy and in fact sweets in general in Poundland and other budget stores demolish any indie concept. I can't be competitive enough and even then most consumers will just naturally/subconsciously gravitate towards Poundland anyway since in theory you'll always be getting a deal.

I guess my logic was to provide a more premium gift option, Dorchester is pretty affluent and people will tend to spend fairly recklessly here around Christmas. But even then January-March will be stone cold. A pop up shop would be a lovely idea if it didn't cost a lot to make it look good for such a short space of time

lincroft1710

1. If paddyrg is correct (I'm certainly not doubting him!) then 2,000 chocolate bars per day equals 1 per 15 secs assuming you're open for 9 hours a day.

2. Tesco/Poundland etc. can undercut you on the popular brands.

3. Can't see a chocolate delivery service taking off. Will you have anytime off in the evening?

4. You could try sourcing via crowdfunding, but I regret to say you don't appear investable.

5. Have you carried out any market research in Dorchester?

Just read your post so would add

6. A pop up shop needs advertising to attract people in. Also if you're selling up market brands this needs to be done from an established business, a pop up shop wouldn't inspire confidence in buying.

gingerdad

We have a very successful chocolate shop in our town. But they make it all on site sell loads and at a great premium. But no high street brands. Very unique and successful.

graham73

As above, I'd have thought it would be better to make your own than buy bars in. Do that too, but you'll need a USP and making your own would solve that.

spadoosh

Your not really talking huge money to open a shop. But if you want the majority of it to be borrowed youre going to need a pretty solid finance plan. You need to be super conservative when looking at cash flow, there will be plenty that you can not and will not anticipate.

The USP is a bit wishy washy. Sweet shops have been around for a long time, people sell/buy sweets. Keep an open mind where you can make money but concentrating on one to try and keep you 'unique' will mean missed opportunities.

Weve just had 2 sweet shops open locally. One that has taken the USP approach (store looks empty and a few made up bunches of sweets and display looking) the other offers a vast array of sweets (old school tubs of sweets). There is a massive difference in custom levels. The one that offers everything (american candy, locally produce chocs, branded chocs, every flavour lolly, bouqets, etc etc) is by far the busier. The busy one offers reasonable prices, the USP one is going for the expensive and fewer option. Ill be amazed if the other one last 6 months.

paddyrg

lincroft1710 wrote: »

1. If paddyrg is correct (I'm certainly not doubting him!) then 2,000 chocolate bars per day ...

Well there's your first error! ;-)

I'm just using for instance pricing, the markup on confectionery bars is often pretty slim. For instance a 68p Flake may be 10p of markup (allowing for VAT etc) based on a purchase of £26.78(inc)/box.

Owain_Moneysaver

The true cost of an employee on minimum wage is more than £11 an hour. (That assumes you don't employ someone who gets pregnant and then claims maternity leave.)

So your till person has to sell 2 Flakes every minute of the working day just to pay their own way.

If you can't get volume sales you must get higher value high markup products.

firefox1956

I spent 32 years in the niche market food business........
You have no chance at all with this I am sorry to say.
Most of the posts above have covered what I would say & the only bit of sound advice I could give is this.
Go & work in an independent sweet / food / etc shop for a month or two.
You will see the problems first hand !!
HTH