Passion vs Profit: When to Roast

Roasting coffee can be an alluring proposition. Many are drawn to the romance and craftsmanship behind it, while others are seduced by the idea of saving money or gaining greater control of their product. These are all valid reasons to consider roasting as part of your business. Over the years, many people have asked me when it is worth roasting or when I should become a roaster for the health of my businesses. Naturally, everyone wants a straightforward answer with a clear line that crossing indicates a threshold to begin roasting coffee. Unfortunately, it is not that easy, and it is never absolute.

In the following paragraphs, I will create the framework for making decisions based on your needs, setting and goals. There are various factors to consider, each of which holds a different weight depending on the business and your preferences as an owner.

Roasting coffee is a beautiful craft and tradition that has been ongoing for centuries. The act of alchemy when transforming an unusable hard seed into a brittle soluble bean with its maximum potential expressed and bound within is a very gratifying practice. I began my journey as a coffee roaster in 2009. I had already been a barista for years, had seen coffee being roasted a few times, and was fascinated by it. Working at La Colombe Coffee Roasters and spending time with JP Iberti, Co-Founder and master roaster, gave me an even greater reverence for the skill and craft of roasting. JP was part of a traditional lineage, having learned from the Bizzarri family in Perugia, Italy, at Torrefazione Italia. The Bizzarri family continue their legacy to the fourth generation today with Caffé Umbria in Seattle. I had always wanted to be part of a lineage and tradition much more profound and older than a computer. When I roasted my first batch with JP, I was hooked. The romance of roasting on a vintage small-batch Vittoria from Bologna, combined with the new sensory sensations of sight, smell, sound and touch, made it profound. This is why I got into roasting coffee.

I ended up buying my 5-kilo roaster and setting it up in my in-law’s basement and started roasting first to learn and shortly after to supply a local cafe down the street. It was such a wonderful time of exploration, trial and error and learning daily lessons. I was first taught how to roast by sight, smell and sound. Then I took some classes and learned a different analytical side to the processes: time and temp logging, bean probes, airflow, thermodynamics and organic chemistry. La Colombe was very protective of their recipes, so I had yet to learn what origins I was supposed to be using or the differences between them, so I had much work ahead of me. This discovery period was one of my favorite times in my coffee journey.

In any apprentice and journeyman phase, your first level of accomplishment is to imitate and reproduce what other masters have already done. Otherwise, it is hard to gauge your development.

Eventually, through trial and error and developing my pallet and roasting technique, I produced a La Colombe Nizza blend clone. I brought it to my local cafe customer, and we did blind taste tests between my blend and Nizza, which were indistinguishable. I felt accomplished. The next stage would be creating something of my own—a task I relished and could not wait to tackle.

The pursuit of roasting, cupping and mastering a craft was a true passion of mine, and it drove me beyond any limiting beliefs or obstacles that arose. At this time and era of retail, it requires passion to pursue roasting. It requires passion because arguments not to roast far exceed any rational dispute to roast. Therefore, the choice to roast must emerge using irrational thought, which can only be prompted and endorsed by passion.

Allow me to explain my reasoning. Imagine you are a retailer surviving off a coffee shop or multiple coffee shops, and you have already started your business off working with a wholesale roasting company. If you are doing well and considering roasting because you are growing, then you have already proven that your business can survive paying the current prices for coffee you have. If you are doing well and have multiple units, you may leverage the additional volume to reduce your cost without manufacturing. The more shops you open, the lower your expenses and higher your margins company-wide. This means you can increase your profitability without making a substantial investment in roasting and packaging equipment. You win!

Case in point – Ziggy’s Coffee in Colorado. They have over a hundred units in their coffee-focused franchise journey and have yet to roast one bean of it themselves. In no way has this hindered their business or held them back. Dunkin Donuts does not roast its coffee, either. They are working with multiple third-party roasters across the country and around the world to roast, package and ship their branded product to all locations. Dunkin’s still maintains a team of coffee experts overseeing their products’ quality and consistency; however, they do not feel the need to own and operate their facility.

In contrast, Café Nero, a retailer based in London, has over a thousand outlets across ten countries, and they still roast all the coffee company-wide in one location in England. This decision is based on passion and commitment to their brand values of creating a hand-crafted beverage and an authentic Italian-style espresso. The company was founded in 1997 when there were fewer roasters and less opportunity to create leverage for a small business.

If you are passionate about roasting and want to open a facility, it usually makes financial sense once you reach five to ten locations. This depends on the volume of your sites and how big you plan to grow.

Now imagine you started an online retail business and created a coffee brand. You were self-funded, so you needed more capital to invest in equipment, so you started with a third-party roaster to grow the brand online. It works, all your dreams come true, and the website is a hit! The product is excellent and consistent. People are buying it and are happy with their purchase. Why would you want to change a successful formula? It’s the same basic argument as the coffee shops. You have already proven you can survive on the price you currently pay, and as you succeed, you can renegotiate the price.

Building out your roasting facility will cost between $150k – $250k for a small to medium-scale roasting operation. Between the roasting equipment, green handling and storage gear, packaging equipment and space to house everything. This does not account for the cost of learning the trade and maintaining your desired quality and consistency. Nor does it account for the staff needed to operate and distribute your products. It is an entirely separate discipline and skill in itself. Suppose you are a skilled and focused retailer. In that case, avoid the distraction of learning a new business and taking on the responsibility of a manufacturer and the liability of additional staff and ageing inventory.
If you only have a handful of cafes, the roasting operation will not pay for itself for years. You may also discover all the ancillary benefits you were receiving from your coffee provider once they are gone, benefits like maintenance on your water filtration and technical service on brewing equipment. Perhaps you took for granted all the hours of barista training they provided or the ease of placing a last-minute order and having it appear at your doorstep. A vendor partnership allows you to pay on a net of 30 or 60 rather than having the roasting part of the business pay in advance for all your annual coffee commitments. It is a very different way of thinking about and financing your business.

Rationally, all these factors do not point to becoming a coffee roaster just for marketing or bragging rights. Nor is it rational to start roasting to shave a dollar off your price per pound. This is why it only truly makes sense to become a coffee roasting company if you are irrationally possessed to do so out of a passionate pursuit to discover something new within our beloved bean. This is why it is essential to know what your end goal is and why you are in this business in the first place. Coffee has driven me to a career of irrational pursuits, and I continue to search and discover every day. Roasting is a lineage of people more concerned with keeping the flame alive than any other monetary motivation.

by Jake Leonti

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