An interesting article and discussion on the merits of free Wifi in an Internet Cafe’ – they are concerned with how to move squatters along so real turnover of regular paying customers occurs. But is this really a problem lacking creative solutions? Free WiFi spawns cafe backlash and the discussion. Seems they want to charge for Wifi and offer free coffee? An argument for adding wifi is here.

Many coffee shops are owner operator affairs and are the ones that seem to struggle the most with this problem (Starbucks may be good for its own separate discussion). They attempt to generate more traffic by offering free internet access. During non-peak hours it’s good for the shop as the booths are filled. Customers doing work are usually looking for a get-away that is somewhat quiet fitting perfectly with off-peak hours – most are polite enough to vacate when tables and noise levels are filling the up the shop. Filled seats are visible from outside the store which encourages other people to flock into the store since people seem to equate store activity with food quality. The problems arise during peak hours when the store really wants to increase its “manufacturing inventory turns”.

An example middle of a block retail space in a nearby small upscale mid-western town I was looking into for a project was running at $40,000 per month or $20 per square foot per month rent (while four miles away an off-the-beaten path strip mall space was available at $3). Obviously, a corner location amongst a major retail center in New York, Los Angeles, or Chicago will be much higher, but so should the location’s sales. Doing the spreadsheet calculation thing with customer space consumption (small table+chair for laptop, backpack/briefcase, and of course a coffee cup at ten square feet available eighteen hours a day) results in a $0.40 per hour base cost to the store. That’s to cover just the lease space and doesn’t include the cost of the non-seating areas nor the other overhead items that the store owner must pay to remain a viable business. Many stores have seating in only half to two-thirds of the store. So a chair and small table for a lone Internet user rapidly approaches $1 per hour in cost. If the coffee shop owner or investor group hopes to get a return on their capital that is at risk (owning a business is much more risky since the business is less liquid to get out of than stocks or a bank deposit and subject to the whirlwind whims of land-lords, city taxes, and the cost of beans, water, electricity, and labor).

So what to do? I would recommend against charging for the Wifi access or making hourly purchase requirements and otherwise getting mean with customers. Rather than seeking to re-cut the existing pie into smaller portions, try making the pie larger.

Work with nearby stores to gang internet providing – ubiquitous availability means fewer squatters at anyone’s paying tables. A larger purchasing pool can negotiate better with an internet provider for a lower cost on faster access so everyone is better off.

Try advertising – canvass the local retail shops and work out arrangements for advertising on the main coffee shop wifi login screen. Create accounts for the advertisers to self-update their information so the coffee shop does not have to (the flower shop next door uploads their own graphics and announcements to not forget Mother’s day – timely and finely targeted for everyone involved).

Put a sign up that at peak hours (listed) request limiting Wifi use to make tables available for larger parties with a goal to ’shame’ those camping out – but do recognize that campers are useful in the non-peak hours to show ‘consumption’ to other potential customers.

Have only 25% of available tables marked as available for mixed use by regular parties or laptops/Internet users (paint the table rims gold and have power cord drops over them so it’s obvious which tables are to be used for long-term use). This will encourage Internet users to avoid the other tables. Also be aware that most coffee sales end up being consumed outside the retail store – the store seating does more of the muffins and cookie and sandwich meal sales – the coffee is the highest margin “sku”. So a comparison of the non-coffee sales should be done to evaluate the seating/squatter problem and the store sales mix. Maybe pairing some of the slower moving and low profit skus will be worth more management time than Wifi policing.

Ultimately free Wifi is good for these stores – charge for the coffee and creatively give away the Wifi.

Cheers!