The SME Series - The Clueless Goat

17/08/2017 By Piers Lee

Location! Location! Location!

With 6,700 Food & Beverage (F&B) establishments in a city state of about 5½ million residents, anyone looking to open a new F&B outlet needs to be acutely aware of the competition – and the fact that over 500 outlets in Singapore close down each year.

BVA BDRC Asia has studied F&B consumer habits in Singapore over several years. The challenges facing F&B operators are many – not just getting the required licenses, but finding staff, and most importantly attracting customers in a market already dominated by branded F&B outlets. Part of BVA BDRC Asia’s research into the F&B industry involves talking to proprietors of F&B outlets to establish their success factors in creating their business in such a crowded market.

Located just near our office in Novena, we interviewed Demelza and Zak, co-founders of ‘The Clueless Goat’, an independent café in the popular speciality coffee house category. Today celebrating a year in business, they now employ 10 staff and attend to almost a full house of customers, six days a week, for breakfast, lunch, and afternoon tea. Demelza, who studied Hospitality & Tourism, used theory from college and her practical experience of working in F&B to find a gap in the market for a new type of coffeehouse. This gap was to introduce a more personalised, neighbourhood type of coffeehouse, at a price point that would make it attractive to both local and expatriate patrons. Zak applied some of his prior creative skills as an artist in developing the concept further.

But it was actually good planning and a lot of research that determined some of the success of their business. F&B operators know a lot about the importance of location, but the founders of ‘The Clueless Goat’ took at least a year of searching for the right location, assessing traffic flow, catchment areas, and target clientele. Here, observational research (literally just seeing what type of customers visit similar outlets), and assessing the traffic helped to determine both an optimum location and what to offer customers. Some best practice also informed their business planning, e.g. looking at other successful independent outlets in the same category. Notably, both observational research and analysis of best practice tend to be under-utilised in the professional market research industry, but they work extremely well for start-ups and SMEs with limited research budgets.

But planning alone only helps a business so far – ultimately, ‘The Clueless Goat’ needed to deliver on their idea. What motivates two young Singaporeans to start their own business and work up to 70 hours a week? Like many entrepreneurs, it is the motivation of accomplishment and just being able to do it for yourself.

Demelza says, “It was scary to go into this when the market is so saturated. I didn’t want to settle for a location [too early or without enough thought]; just because we wanted to do it”. With Starbucks just 100 metres away, Zak comments: “The presence [within the neighbourhood] of Starbucks meant that people in the area were accepting of premium coffee, but we saw a market for a more affordable café. Some outlets are developing fancier menus in the $20–30 range, but we felt that there was a market in the $10–20 range that would also make for a more sustainable business”. The choice of outlet also involved their careful consideration of space – having an outlet that was neither too big nor too small meant that they could provide the right level of personalised service with the right number of staff to make it commercially viable.

The options for market research among SMEs are limited by budget, but the managers of ‘The Clueless Goat’ use customer input for developing their menus and hold brainstorming sessions with their own staff that are not unlike insight workshops. They have actually attracted far more regular customers than they anticipated, and with it ‘the regulars’ can co-create the future of the business through their own little ‘insight community’ – something larger organisations would struggle to do without quite a significant investment in online proprietary panels. They also conduct ‘mini-market tests’, e.g. introducing new menus to see if they take off, and experiment with extended opening hours to see if there is any demand for additional parts of the day, such as dinner.

And finally, why name a coffee shop ‘The Clueless Goat’? It was inspired by an ancient story of a goat-herder in Ethiopia, where one of his herd accidentally consumed coffee berries instead of grass. The herder thought he might also experiment and discovered the ‘buzz’ of coffee from this ‘clueless discovery’. With it, they got a name that was unique and memorable, and a great conversation starter with patrons – one way of developing personal service!

BVA BDRC works with quick service restaurants undertaking surveys of customers including menu concept testing, taste testing, and evaluation of store design.  BVA BDRC can also facilitate staff workshops, for example in the dissemination and application of consumer insight. To find out more email, we'd be happy to hear from you.