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Opening for business in the Corona Universe

Written by Litsa on March 29, 2020, six days before Dear Diary Coffeehouse opened for business.

I have a childhood memory of passing houses with two-car garages and wondering what people did to earn that lifestyle. Once I heard a story of a husband and wife who were homeless while they saved up for a donut shop. After they finally had the money, they worked day and night until their little shop became a big success. When I was in high school, I learned of a college student who bought a house and used the rent money she collected from roommates to pay off her mortgage.

My attraction to the American Dream was strong, and it kept me going as I played the long game toward achieving my dream of becoming a shopkeeper. I bought my first house in 2008 with FHA loans, and paid it off with roommate money. I bought a second house in 2014, remodeled it, and sold it in 2017 to purchase a small commercial unit in an affordable housing development. My plan, at that point, was to work 3–5 more years to save up capital for the next step. I’d own a coffee shop by the time I was 40 and my nieces were old enough to work in it. Instead, I dove head-first into an ocean of debt.

Last Spring, my friend, Joshua Adrian was talking off-handedly about buying a house to convert into a coffee shop—like Spider House. After years of looking for this in-road myself, I shared with him how Austin zoning forces the little guys to lease from property management companies. I got lucky when I found a small unit in shell-condition for roughly the cost of a house. Why not join forces?

Joshua and I formed Dear Diary LLC. My capital contribution was a year of free rent, plus cash. I also took out a loan to build A/C, electrical, plumbing, and a bathroom. In total, I had sunk almost a half million dollars into the dream at this point. I felt good about it though. This was the closest I had ever been to reaching my life goal, and I never expected it to make me rich. On the contrary, my low cost of living would enable me to “retire” into small business ownership.

Construction was underway in winter of 2019. We imagined a busy SxSW launch. In February, my employer granted me a two-month, unpaid personal leave to prepare for the arrival of my “business baby.” This came as a relief to Joshua who was juggling freelance work and Dear Diary oversight.

Our first big scare came in late February. We were naive, and thought construction and inspections—which were already a month delayed—would be complete any day now. Surely we’d be able to launch March 16th? We hired a small staff of baristas around this goal, and then, as SxSW drew nearer, we panicked. What if we were delayed an additional week? Two weeks? We were prepared to create work for the baristas; we should have never put them at risk. I was mad at us at the time, but I could not have anticipated the larger threat to come.

In March, Corona obliterated the ground beneath us; where we saw green fields, we now saw nothing. Before Corona, we thought our greatest risk was not being ready for launch. We were purchasing equipment and inventory, paying contractors, paying for advertising… Spending, spending, spending our way to that goal. And then, very suddenly, the launch went away. There would be no events, no meetups, no foot traffic, no neighborhood regulars. We thought we were spending our way up, but the world flipped over, and we realized we had dug ourselves into a hole.

We held onto our manager, but let the baristas go. Even so, we’d need to sell the equivalent of 1,177 drip coffees our first week to simply not dig ourselves deeper; never mind loan repayment or any of that. I had anticipated putting effort into earning our place amongst Austin’s beloved vegan and coffee establishments. But could we survive as a newcomer in a world where those very establishments were shutting down and asking for donations (see example)?

That brings us to today. We live in the Corona Universe now; this is the new normal. China is four months in, and they aren’t done yet. There’s no reason to believe the US will be different. Hopefully consumers will warm up to the idea of coffee takeout and delivery. If they don’t, we’ll have to keep adapting until we figure out what works.

I go back to my full time office job April 6th. Soon, I will have precious little time to focus on my baby business. The best thing I can do now is trust and support my business partner, Joshua and my store manager, Claire. I’m thankful I’m not in this alone, and I feel lucky to be partnered with people I trust.

Like other East Side coffee shops, we’ve altered our products to be more to-go friendly: six packs of beer, gallons of tea, growlers of cold brew, etc. Dear Diary’s online ordering webpage is set up for takeout and delivery. We’d like to offer free delivery in the neighborhood, and hire back one of our baristas to be a driver, if possible.

But why would anyone order take-out or delivery from Dear Diary Coffeehouse?

Moreover, how much is the market for coffee take-out and delivery inflated by people’s charitable desires to support the establishments they used to frequent before Corona? Dear Diary never had the opportunity to develop a loyal customer base, so for us, this non-zero number—whatever it is—is already faded.

In other words, when the charitable consumerism is gone, the coffee shops who relied on it might have to pivot yet again. We might already be there; Bennu is now selling fresh produce (see post). The underlying question is what products, through their own merits, attract take-out and delivery customers? And, coming at it from the other side, how do we influence consumers to discover these products and adopt new buying habits?

Tech companies and marketing agencies can absolutely come to the rescue by stepping up and becoming the architects of our new economy. We don’t have a strong consumer culture of buying small things from small local businesses online.

For example, perhaps monthly cappuccino subscriptions attract take-out and delivery customers more effectively than growlers of cold brew on GrubHub. If so, how do we enable that with technology? And how do we market and commoditize a service like that?

I know that so many local Austin businesses are touched by the overwhelming support and charity of individuals out there (see example). However, technologists can shape this Corona Universe at a macro level, making it easier for locals to adapt to the changes and thrive.