26 February 2019 Feb/Mar 2019

Working out Workshop

Workshop Coffee was a complex operation from the get-go: a cafe, coffee roaster and wholesaler all in one. Founder James Dickson explains how he firmed up the business plan.

Workshop Coffee provides one of London’s best examples of how to build a coffee empire. The company has five cafes across the capital, its own roastery and a thriving wholesale business. It’s a complex operation – and it took some serious planning to get it off the ground.

Founder James Dickson began scoping out his coffee business in 2009, after being made redundant by the estate agency Knight Frank. It would be two years before he would open the first Workshop site. 

Two-in-one business

The big idea was to create a vertically integrated coffee offering, where Workshop could take care of everything needed to make a cup of coffee, from sourcing to roasting to brewing.

Many budding entrepreneurs would most likely consider a cafe and a coffee roaster as separate entities; for Dickson, it meant leaning on his property industry expertise in order to wangle a flexible enough lease.

 Most coffee shops in the UK operate under what’s called an A1 license, which allows them to sell food and coffee so long as the majority of its customers are takeaway. Setting up a roasting facility, however, requires a B2 license for industrial activities. Dickson also wanted to do a brunch service – requiring an A3 eating-in license. 

‘Finding the right site and structuring the right retail leasing deal was always going to be really important for Workshop,’ Dickson says. ‘My background in surveying was really useful for that.’

Bean counting

The next question was whether these different parts of the business should be housed separately (meaning each element could have a site perfectly tailored to it), or together. 

‘I was focused on occupancy cost [and] conscious not to take on too much overhead,’ Dickson explains. After crunching the numbers, he reckoned that even though it would require some compromises, it would be more affordable to run all of the elements of Workshop in one location. After all, it’s cheaper to pay rent and business rates on one large building than it is on several smaller, separate units. In the end, Dickson settled on a single 4,000 sq ft site in Clerkenwell which aready had all the necessary licenses in place.

‘It was pretty big,’ he admits. ‘We had a thriving roastery at the back of the site, at the front we had a coffee bar, and then on the first floor we had [the] brunch trade.’ The site was kitted out using cash from early investors, and the coffee shop opened to the public in April 2011.

Dickson’s careful planning clearly paid off: around four months later, Workshop opened a second location in Marylebone and was already roasting enough coffee to sell to independent cafes on a wholesale basis. ‘From day one, it was very quickly an omni-channel business.’ 

More business ideas

This didn’t mean the job was done. Workshop has continued to evolve its business model as revenues and circumstances have changed.

As well as going on to open new cafes in Old Street, Holborn and Fitzrovia, Workshop now also offers coffee masterclasses and workshops to professional baristas and hobbyists. A coffee subscription service, where packs of coffee are posted through doors on a flexible, regular basis, has also been added.

Dickson says one unexpected revenue stream has come in the form of selling machinery – he says the business now sells hundreds of thousands of pounds of coffee machines, grinders and other equipment to coffee shop owners. ‘Often what happens is, if someone wants to have Workshop coffee in their restaurants, they’ll buy a machine for their restaurant,’ Dickson explains.

Wholesale has emerged as the biggest revenue driver for the company – and, as a result, the original Clerkenwell site has closed to make way for a dedicated coffee roasting site in Bethnal Green, where you’ll soon be able to get a cup of coffee too. 

‘All the revenue streams work in tandem with each other,’ Dickson says. ‘Wholesale needs retail and retail needs wholesale.’