The Importance of our 3rd places
The 3rd place. A community space, a shop, a cafe… a place to linger and chat.
I have worked with a number of businesses who are the third place in their community. There is an indirect impact in a community when you know the staff and they know you.
We are here to make money and build incredible businesses that benefit human thriving so… does it make good business sense to run a 3rd place business?
Does it make good business sense to run a 3rd place business?
Yes, it can make good business sense. A welcoming “third place” can give people a reason to return, build loyalty, and connect your business to the community. The key is making the gathering place support a dependable source of revenue.
It tends to work best when it combines a few things:
A clear reason to come back: regular events, classes, coworking, food or drink, or useful services.
A reliable way to earn revenue: memberships, purchases, bookings, rentals, or paid programs.
A space that earns its keep: more than one use across the day or week.
A manageable level of hosting: community takes time and attention, so staffing and programming need to be part of the budget.
The main risk is that people may love the space but spend too little to cover rent, labor, and programming. Before committing to a lease or major buildout, test the idea with recurring pop-ups or events. Track how many people return, what they pay for, and how much it costs to host each gathering.
Given your interest in community-based business models, this could fit your instincts. I’d start by defining what people would reliably pay for and then design the community experience around that.
Take feedback with a grain of salt. I don’t know how many times I’ve heard, “Well people said that they’d buy it, but since I launched, it’s been dead.”
Trust, but verify. Always check city data, larger industry trends, and the advice of people who understand that space in the market.
the statistics:
There’s repeat-visit potential: In a 2020 national survey of 5,058 U.S. adults, 56% said they had a local place they visited regularly. Of those with a regular spot, 51% went at least weekly. Coffee shops and cafés, and restaurants and bars, were the most common spots. (Source)
Familiar faces seem to matter: In that same survey, 68% of people who recognized others at their local spot felt connected to their community, compared with 41% of people who had a regular spot but didn’t recognize others there. (Source)
There’s evidence of a wider economic effect: A study using business registration data from all 50 states found that when Starbucks opened in neighborhoods with no coffee shops, startup formation increased by 2.3% to 11.8%—an average of 0.8 to 4.1 additional firms per year over the following seven years. The effect wasn’t found where similar gathering places already existed. (Source)
Ultimately, it doesn’t take a research project to understand that we are social creatures no matter how popular social media is. We are always going to find places to gather. It’s about creating product-market fit and paying attention to the consumer’s needs and wants.
