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Are you planning to open a coffee shop or have recently started your new venture?
Nowadays, competition in small local businesses is pretty high. Specially in the coffee shop realm. Some people may see that as a threat, but if you know how to work your own business it may be a good incentive to improve and differentiate yourself.
Well, here are 5 piece of really good advice that we have seen work not only for our clients, but for our own cafe businesses.
1. Offer High Quality Coffee and Produce
Sometimes, money gets tight and our first instinct is to start to cut costs. First, a couple of shifts during the week that you fill-in yourself. Then, shopping for price and changing suppliers. It is a fine line between cost-effective and cheap. You need to be careful with that.
With the great offer that we find in the coffee industry, customers these days really know between good and bad produce. Even more, if it is something they consume every day, such as brekkie and coffee. Also, people are willing to pay a fair price for high-quality products, so no need to worry about that.
If you decided to open a coffee shop, you know that coffee is your flagship product. Serving poor-quality beans can destroy your reputation amongst locals and get your customers to switch to your competition.
So make sure you have a good piece of equipment, a well-trained barista and you buy your coffee from a proper roasting company. Coffee shop owners, don’t want to be pushing bad quality coffee into your customer, do you?
2. Take advantage of coffee shop Incentives
Don’t be afraid of creating incentives for your customers. Get creative with loyalty cards, regular customer discounts, promotions, ads… You name it. Even the good old complimentary coffee shot or piece of baked good is a great way not only to attract new people to your coffee shop but to help you keep your actual customers happy.
When you open a coffee shop, it is your job to think of ways to bring people in and to create a good relationship with the local community around your business. A regular customer is priceless, get out of your way to keep them.
Be careful with lowering prices, though. From a consumer perspective, cheap discounted deals give the perception of a not-so-good business, which is struggling survive.
3. Limit the Menu
Think about it: you can have a varied menu, but you really don’t need more than 2 or 3 muffin flavours, or more than 3 or 4 types of sandwiches.
Of course, you want to have variety on your menu. But be careful not to fall into the trap of offering too many items, as this may cause indecision to your customers.
Also, plan your items strategically. More menu items don’t necessarily have to mean more material and ingredients. Make sure you create recipes to take advantage of materials, equipment, and ingredients so you can save on cost without compromising quality and variety.
4. good coffee shop owners are Smart With Pricing
There are 3 direct elements that will affect the margin in a business: product price, volume, and mix.
It means that you don’t need to apply the same margin to each and every product on your menu. Be smart with the pricing. Try to create products
But remember: good coffee shop owners will profit in every single sale. So keep that in mind for a healthy financial balance.
How many times have you seen a cafe selling Coffee + Bacon egg roll under $10? Years ago, it was a common practice, about 10-15 years ago when cafes had much lower operating costs.
Nowadays, “Cost of Goods” and “Operating Expenses” are very high, and not having the correct pricing strategy will directly harm the profit of the business. We are strong believers that if the product is great people will pay the price.
5. Target takeaway options
The most profitable coffee shops we serve always tell us that more than 50% of their daily coffee sales come from takeaway. Why is that? Because they come and go, and they leave space for the next customer. Different from the ones who sits for 2 to 3 hours, leeching off your Wi-Fi while consuming only one cup of coffee. That doesn’t sound so profitable, does it?
So, create a take-away friendly business. Make sure your coffee shop has accessibility for people to easily go in and out, order take-away and wait for their order. Go outside, put yourself in your customer’s shoes, walk around the café and ask yourself the following questions:
- Are there are tables on the way to counter?
- How quickly can you deliver the coffee and the food?
- Is your workflow adapted for takeaway?
- Where would you be waiting for your takeaway to be delivered?
- Is it easy and accessible when more people are waiting or it is hard and you have to move around obstacles?
All these details can be the difference between a successful takeaway operation and a total failure.