$6M/Year Coffee Business... Started On the Side!?

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In this episode, we dive into the remarkable journey of Jake Paulson of Anchorhead Coffee who opened a coffee shop from his humble garage setup. Before venturing into the coffee business, Jake worked in the music industry-where he discovered that his favorite part of the day was that magic cup of joe. Ditching his career, Jake and his partner decided to start crafting cold brew in the garage. Thus, Anchorhead Coffee was born.
Join us as Jake recounts how he expanded Anchorhead Coffee to 300 retail stores in just two years. He opens up about navigating the complexities of business partnerships, and the critical decisions in choosing suppliers, and the art of marketing a niche product. And he shares the personal sacrifices and strategic moves that helped Anchorhead move into Seattle’s first bottled cold brew and America’s Best Espresso winner.
Discover the strategic insights and personal anecdotes from an entrepreneur who has made significant strides in the coffee industry by offering a combination of innovation and traditional flavors. Whether you’re a budding entrepreneur or a coffee aficionado, Jake’s story is a rich blend of inspiration and practical advice, revealing the essence of building a successful coffee company from the ground up.
Resources
anchorheadcoffee.com/
www.upflip.com/academy - Start, Build & Grow Your Business
www.upflip.com/courses/business - UpFlip Courses - Success Starts Here
www.upflip.com/podcast - The UpFlip Podcast - Biz Secrets Uncovered
www.upflip.com/blog - The UpFlip Blog - Read, Grow, Thrive
www.upflip.com/guest-request-... - Nominate a Guest for An UpFlip Interview
www.upflip.com/equipment-list - UpFlip's Premier Equipment List
Timestamps:
00:00 - Start
00:56 - Meeting Jake
02:54 - First location
04:31 - Lessons learned
05:47 - From coffee to bakery
08:06 - Revenue breakdown
09:38 - Startup costs
11:52 - Fan Blitz
13:51 - Myth to debunk
14:49 - Learning the industry
15:41 - Time management
16:44 - Rental costs
18:07 - Suppliers
20:21 - Getting investors early
22:02 - Secret to winning awards
23:56 - Getting into retail
25:58 - Selling vs. Retailing
27:34 - Marketing strategies
28:54 - Employee wages
29:26 - Top sellers
30:20 - Location advice
31:57 - Challenging times
34:21 - Success mindset
35:11 - Advice to viewers
35:58 - Outro
#coffeeshop #coffeebusiness #openingacoffeeshop

[@UpFlip]

If you own a business, try Melio and make your payment process easier! go.melio.com/upflip

[@clutterreductionjunkremoval]

This episode felt much more realistic vs your standard "success story". He's in a great spot but not thriving like most people assume business owners are. I really enjoyed this one!

[@Brodragon2225]

his main costs are workers and rent and electricity if we can make it cheap we are winners

[@KevinBroce]

I toured with Jake back in both our audio engineer days. This was living on a tour bus, working and an outside music festival 14+ hour days, something like 50 shows over 57 days, rain, shine, lighting, tornados, dust storms, in the middle of the summer. You can't fault his work ethic, passion or sense of humor. His business partner is cut from the same cloth. Just a couple solid dudes.

[@startingtech3900]

Beast no wonder they needed 4 coffees per day how did they sleep?

[@whymindsetmatters]

There's no such thing as failure when you've accomplished the thing you set out to do. Even if it shuts down tomorrow you can look back and say I did that, and then do it again!

[@UpFlip]

Absolutely! We definitely need more of that positive mindset spreading around! 🙏

[@AB-fq4mr]

Makes me really grateful to work on my own. You have to deal with 68 workers and only take home 150k each after everything. Sometimes its just better to work by yourself from home. Less stress, same salary. Oh and I can live in the middle of nowhere and buy a cheap mansion, I dont have to be in the middle of an expensive city.

[@jayrobelo9877]

To each their own, some find happiness in dealing with others and providing a livelihood for others. I believe it has to do with something more than just money/providing for a family at that point

[@honor9lite1337]

​For me, it's simply because I don't work for someone else. @@jayrobelo9877

[@Freewithtwoe]

What do you do

[@startingtech3900]

Thats starting dude, he has so much upside

[@jtcash44]

Having to not deal with people (staff) sounds like a dream. Dying to get out of my business. So over it.

[@rccpromotions]

Thank you so much for providing high quality interviews that look into detailed specifics and the mistakes that we can learn from. These are incredibly valuable 🤘

[@harambeexpress]

The other thing about bringing baking in house or at least not outsourcing to a big supplier is that as a consumer it makes me take the cafe more seriously (as they clearly care about quality). It also helps justify the relatively high cost of these items.

[@EcomCarl]

Jake's story at Anchorhead is a fantastic example of how agility and strategic cost management can fuel rapid business growth. It's a reminder that sometimes, the simplest cost-saving measures, like switching to a cheaper milk, can significantly boost the bottom line without compromising quality. ☕

[@UpFlip]

A friendly reminder not to overlook the little details!

[@UpFlip]

Join us for the long-awaited launch of UpFlip Academy, happening this month. Reserve your spot now: www.upflip.com/membership

[@riffpad]

Great advice. We are 6 months into a commercial venture from starting at home many years ago. It's tough, the first few months were hard but it's getting easier. I agree with the baseline of stress being a little higher, you learn how to take and avoid big hits as time goes on! Thank you

[@UpFlip]

You've made a great point! Tough beginnings often lay the groundwork for strong foundations.

[@riffpad]

@@UpFlip Thank you!

[@CHEFPKR]

I had anchorhead 5 times in 3 days over the weekend. Delicious coffee.

[@UpFlip]

Lucky guy! ☕

[@startingtech3900]

LETS GOO BROOO

[@beingemma]

Ive been in the food space for 7 years. Yes, restaurants, coffee shops, etc have a low profit margins. This is why you will see franchise models pop up to expand the brand, but make some money without as much headache since the daily operations fall onto someone else.

[@sutats]

Great spisode. So much insight. Just do it and keep trying.

[@surge337]

As a coffee shop owner as well, this guy is the truth! 👏

[@fvr12345]

Is it really a 5% profit margin?

[@ChalkboardMom]

I REALLY loved this one! So relatable, realistic, open, and packed with hope in this unstable economy. Thank you!

[@UpFlip]

Thanks for watching and supporting our channel! ☺️

[@downey416Toronto]

he's a really cool guy.... 5% profit margin is wild especially with the cost of living so high now days

[@UpFlip]

Absolutely! That's why they're branching out into different ventures, so it would be lighter one day.

[@aadams5864]

That was gold. Thank you for covering their story!

[@UpFlip]

Glad you enjoyed it!

[@iamanovercomer3253]

As someone who is starting a coffee business, 95% of people have no clue on the coffee they drink ❗️ You get what you pay for......coffee on store shelves is pure garbage. ( farmers are NOT getting paid fairly and coffee is NOT quality coffee) ......specialty coffee is true coffee ❗️

[@akemegbebu7807]

Where can I learn about coffee? I'm interested in importing and roasting and selling...

[@UpFlip]

Quality comes with a price, especially when you're paying for top-notch equipment like they use in coffee shops.

[@watsonlow22]

I really enjoyed this one,He's humble and very real about everything

[@ChonchoMiyantDaGr8]

Definitely Taking The Gems In This Vid💯🔥

[@thuvarakan2]

congrats on the 1 million subs, been here from the start :)

[@UpFlip]

Thank you! We truly appreciate your support! 🙏

[@BizBob2]

We love the start up videos. Ones like this are so inspiring.

[@UpFlip]

Glad to hear! Hope he inspired you to kickstart your own business venture! 🔥

[@shiftcrewcompany]

Congrats on 1mil 🔥

[@PauloMzima]

Great one, thanks for this..

[@SirLuLzDalot]

Great interview, thank you for sharing

[@RedCymbals]

Love this episode - so cool! Have you done one on a musical instrument manufacturer?

[@UpFlip]

Not yet, but that sounds like an amazing idea! Any recommendations?

[@RedCymbals]

Vertical Drum Co in Eugene Oregon are a drum maker that we work with and admire for their incredible drums as well as growth and tenacity. Josh started making drums during COVID when his professional photography work stopped. We are also a cymbal brand based in Melbourne Australia. We make cymbals in Istanbul Turkey and sell them worldwide. Our mission is to use cymbals to promote positive mental health by running drumming events and encourage people to play the drums together to gain confidence and overcome mental health concerns such as anxiety and depression. We be in Oregon in May doing a drummer’s hangout with Vertical Drum Co.

[@CanalOtro]

Awesome story, very cool brand. Was shocked by those margins though.

[@plokkum]

With a 5% margin, this really has to be your biggest -hobby- passion. Good for him, though! Thanks for the grounded insights.

[@UpFlip]

When starting out, it's crucial not to be solely driven by money. Passion should always come first!

[@fvr12345]

@@UpFlipHow many plumbers, janitors, window washers, etc…. had passion?

[@topcoffeebar]

Fantastic story!

[@chronicmango]

JAKE! Love Anchorhead.

[@UpFlip]

Glad to see an OG!

[@GregStenson]

I love Anchorhead. Every time I visit Seattle I always book a hotel near their downtown location purposely so I can stop by for a daily cup or two

[@user-yq7dq2ht4e]

I love your videos so much

[@UpFlip]

Thank you! That's music to our ears! 🎶

[@user-yq7dq2ht4e]

Soon I'll be on this show!@@UpFlip

[@g0ttesh4nd]

Pure gold!

[@UpFlip]

Hope he inspired you to kickstart your own business venture!

[@-pagebooklipraly8352]

thank you for this perfect chanel

[@blackhistoryonsteroids8196]

Love how he accepted his failures.

[@UpFlip]

Taking that first step is always the most important! 🙏

[@grischawillrich590]

What brewing machine is it for the V60 at minute 3:24?

[@dannywelbeck8800]

This whole ep is so awesome and wholesome, love it. Imma start my own coffee shop in 2025

[@UpFlip]

That's fantastic news! We wish you nothing but the best! 💪

[@dannywelbeck8800]

@@UpFlip many thanks! And thank you too for what you do ❤️

[@Avatar711Wizard]

'Cause everyone should get into hospo and coffee roasting right now. Rents are cheap, cost of goods are cheap. Margins are great. Plenty of skilled staff around that don't cost that much. Not many bakery's around either. Everyone should go for it.

[@balance3201]

Most people would have given up on the work involved. Kudos to these guys.

[@UpFlip]

That's why starting a business that aligns with your passion is crucial. It helps ensure that challenges like these won't deter you from moving forward. 🔥

[@RJG86X]

Summary, pioneered the retail sale of cold brew coffee.

[@BlackWidowRazors]

JUST GET UP AND DO IT - THATS THE TRUTH

[@thestig560]

Fine, I'll subscribe

[@UpFlip]

Thank you, it means a lot 🙏

[@BonganiMojakhomo]

Thank you for this epidose ❤

[@Mathewmartialart]

or just buy the cups unprinted, buy a printing machine, and save a lot of money

[@UpFlip]

That's certainly one approach!

[@RogueCylon]

“Is it milk?” Owner - “I’m not going to tell you” then laughs Me - not a chance I will try your coffee drinks

[@domainsshop]

22.27 WOW

[@NarutoUzumaki-fy6fo]

KZbin show me more channels like this

[@Melinda_Ross]

Nice video

[@UpFlip]

Thanks for watching and supporting our channel! ☺️

[@Wideolink]

$50,000 profit approximate per location. not too shabby.

[@JetsentJ]

Interviewer always has backhanded comments “it’s not that big” Last video : “you aren’t a millionaire yet”

[@sortamaybe946]

2 minutes in and I know the secret, BE THE FIRST IN YOUR MARKET and dominate, stay consistent and soak up all the luck you can!

[@UpFlip]

Don't forget to stick around till the end-there are more golden nuggets waiting for you! 😉

[@LarryGipson96]

5%. Man that’s rough. I haven’t been to one of their shops. Spent 13 years in seattle. Love it. Hard to believe what it’s become with the homelessness.

[@xrayded5037]

That’s crazy small margins.. I did 2 mill last year I net more than him and have way less going on… life is short man make as much as you want and pick your customers…

[@ErnDogg209]

Sounds like i need to get a building and charge a business rent.

[@UpFlip]

That's just one of many strategies out there! 😉

[@UpFlip]

That's just one of many strategies out there! 😉

[@yonasmisghina8261]

Is 6M gross or net ?

[@dxk2466]

Is it milk..and he didn't answered..theirs something to hide or why someone can't tell if it's milk or not?

[@Wheelztotheworld]

💯

[@UpFlip]

We hope you enjoyed the video - thank you for watching! ☺️

[@SergeiSudakov]

5% only? How come. profit margin on a cup of coffee is generally estimated to be around 60% to 70%.

[@UpFlip]

We'd love to learn about the regions where a cup of coffee generates 60-70% profit margin!

[@Mr321098]

❤

[@UpFlip]

We appreciate you tuning in! ☺️

[@ibrarali3974]

Is it milk? I'm not gonna tell you😂😂

[@TalesOfTrillions]

Who knew milk could be the unsung hero of a multi-million dollar business? 😄

[@studiolut]

His advide was the best. Just do and if it fails is not gonna be the end of the world

[@UpFlip]

When fear of failure doesn't hold you back, you're ready to conquer the world!

[@wendyshoowaiching4161]

Best Milk For Coffee is Nestle Everyday (Full Cream Milk Powder). Any hot beverages adding desire amount according to individual's preferences

[@RogueCylon]

It’s why I would never ever buy coffee from a shop that doesn’t use proper fresh milk. I’ve made my own with organic milk and sometimes a half and half mix. Never ever powder.

[@user-ci5eq1fr2s]

Idk which one is best video quality or shop design😅

[@UpFlip]

Their shop design is absolutely dope!

[@user-ci5eq1fr2s]

@@UpFlip absolutely

[@DoctorOfProduct]

Great video. Can I ask why your profit margins are so low despite doing so much in-house? Common industry benchmark suggests coffee shops aim for a profit margin of 15% to 25% on their sales, and 4%-6.8% on the lower end. I'd like to see you beat the industry average 🙂Do you have a very high CAC or cost of goods? I'd like to know what you've tried to increase your margins. End-of-day pricing on baked goods, "coffee flight" tastings, 6 and 12-pack pastries, etc.?

[@UpFlip]

That's an interesting question. We're curious too-could you share which countries are included in the data? Here in the US, industry margins typically hover around 10%, so reaching 12% is considered higher than usual.

[@javamochafrap]

whats their NET?

[@UpFlip]

Be sure to watch the whole video so you don't miss any info! 😉

[@SheraliErmatov-dj9yj]

Ok

[@freedomring3022]

he can make 6 mil a year on coffee because millenials and gen z'ers are freaking terrible with money. They spend $5 to $6 a day on coffee. They should be banking that money in an index fund so that when they get older their older self can retire early. With that said, kudos to this guy for creating a successful business. I hope he doubles it to $12mil per year.

[@Economics70]

$2000 a month on rent is a much greater burden than coffee.

[@BudandBloomWithBlossom]

Gen z'ers?? There are a lot of other people who make good money, and that includes some retirees.

[@freedomring3022]

@@Economics70 this response is so profoundly stupid my head hurts from reading it

[@bushidonation7835]

okay Dave Ramsey shut up

[@PizzaMike]

Wish I could grow my hair out like that.

[@UpFlip]

Isn't it just gorgeous?

[@brasilsoccer0]

5% profit margin that’s it wow that’s a whole Lotta work and liability and labor and headache for just 5%😮😮😮

[@600DoubleRR]

So let me get this straight, your profit margins are 5% on 5.6 million a year roughly, so you're netting around 280k, split between you and your partner that's 140k each, which isn't bad but holy shit this seems like a ton of risk and work and hassle. Hope it works for this guy but not sure this is a business I would want to get into unless you're able to scale it into the 100s of millions in gross rev. Really seems like a headache. Again not knocking this guy at all, it's cool regardless, Im sure if he scales it it'll make it all worth it.

[@UpFlip]

They're very conscious of their margins, which is why they're scaling up. It's clear they're not just in it for the money; they genuinely love what they do. 😉

[@600DoubleRR]

@@UpFlip Yeah no thats cool. Again not knocking them at all. This is a really interesting one regardless.

[@whatwhat9004]

If 40% of that $5.6 million is going to their investors then their take home pay is probably a bit lower than that.

[@600DoubleRR]

@@whatwhat9004 Yea thats a good point. Business ain't easy.

[@alexforget]

5% meaning you would need 2 000 000$ to get a 100K return per year? You churn a lot stuff, money, salaries and hassle for that!

[@iamanovercomer3253]

If you love what you do, it's not work.....life has its challenges no matter what.....so if you got to work to live, it's better to have your own business than working a job ( Just Over Broke) ❗️

[@gnome2024]

Seriously. I make far more than that with passive high yield dividends and a simple sector rotation strategy that does 5% profit a month. Hell no way Im working my ass off to deal with dozens of low IQ employees and government bureaucracy.

[@fvr12345]

@@iamanovercomer3253For $100k you’re better off with a 9 to 5. You have benefits, a regular schedule, and aren’t responsible to all of your employees

[@SolowSports]

We should do a video together :)) We are quite one of a kind and would be different that the businesses you show currently 😀

[@alex98b627]

$360,000 to build a cafe is sooo cheap!!

[@terancelee6715]

First comment 🔥🔥

[@UpFlip]

Awesome! 🙌

[@craigfuqua4519]

5% profit margin on coffee? Hmmm…

[@PaulShively]

5% on five million... I guess if you're paying yourself a couple of hundred thousand a year, before you count profit, that's worth doing. Otherwise variations could mean losing money and going out of business. If 5% is real, that needs fixed. Super cool business though

[@UpFlip]

In this industry, loving what you do comes before anything else. Without that passion, it's hard to truly justify its worth, especially when it comes to the money aspect.

[@PaulShively]

@@UpFlip I agree, but that's a frightening margin. Personally, I don't think I could love being there. They definitely should lean into whatever is most profitable.

[@eci1907]

its a good business model but i wonder why our how you guys convince your investors with such low profit margins ??

[@UpFlip]

That's the power of a solid business plan! 😉

[@EmilyGloeggler7984]

He basically said he won’t tell what’s in his products - that’s shady.

[@LogoBallers]

Because he wants to protect his uniqueness factor?

[@javiercoronel1169]

You're like 20 yrs old ? Lol

[@RogueCylon]

Totally agree. Customer have a right to know how something is made.

[@Destroythekyle]

Audio engineer: high IQ. Not surprised he is successful.

[@UpFlip]

He's incredibly smart, yet so down-to-earth!

[@MirjalolOrazimbetov-mj5wx]

.

[@kris4897]

Margin is low.

[@600DoubleRR]

Yea agreed. Maybe they should try to find another verticle within the space to sell to their customers. Merch? To me this doesn't look far off from Starbucks. You gotta think, what would someone spending $7 on a coffee buy, aside from baked goods? Thats the thing that's lacking here honestly.

[@kris4897]

@@600DoubleRR They should hire a good cost controller and see if sth can be done in this area. Margin is too low, it doesn't make sense.

[@yapaul6226]

Fucking terrible profit margin. I make 3-5% as a broker

[@UpFlip]

Well, that's good for you! ☺️

[@majinboo6377]

6M a year ? stop bullshitting people my man. lol. all these youtubers with their damn lies both in thumbnail and the videos are hillarious.

[@UpFlip]

Hope you watched until the end to understand why it's 6M 😉

[@studiolut]

Greetings from Brazil. I alway watch all the episodes. Be sure you guys are making difference in my life. I have a videomaker business in BR and thinking about get into coffee world. There`s a great opportunity in my city and this episode definately cleared my mind. Thank you @UpFlip You do a great work

[@UpFlip]

Thank you for being a valued member of the UpFlip family! Wishing you the very best of luck on your coffee endeavor! ☕