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If you are reading this post, I’m sure it is because you are in the search for tools and strategies to improve your coffee shop’s profit. So let’s cut the fuzz and go straight to the point:
Opening a new coffee shop is a big venture. But actually keeping the business running is the real challenge: on average, 50% – 74% of independent coffee shops fail within the first five years. This happens due to numerous reasons, such as poor location, lack of working capital, lack of ownership preparation, lack of a custom brand/overall experience. But the reason that strikes the most of our attention is the burnout/loss of interest from the owner. According to our experience, this happens precisely when the cafe’s profitability is so small that the owner has to operate the business 7 days a week to be able to make ends meet.
So in order to help with the mission of keeping Australian coffee businesses alive, we’ve put together a list of tools and strategies to increase profitability in a coffee shop. We have also uploaded a post before on 4 ways to improve your profit, so you might want to check that. But this one is special, of course, because it has a special focus on our favorite strategy: upselling.
Strategies for increasing your coffee shop’s profit
Invest 30 minutes a day to plan daily specials before you open the shop. Serving higher quantities of the same item means lower cost, less waste, and consequently, higher margins. Yey!
Not only your cafe’s profitability will grow but also your business will have a fresh menu every day. From the client’s perspective, that is a sign that you care enough to innovate and create special items just for them.
Communicate the specials using a dedicated menu, front of store sign, or the good old chalkboard. Also, instruct your staff to offer the Daily Special every time they serve a client. This is a guaranteed success.
In most cafés and restaurants, cold beverages are the most high-margin items on their mix.
One effective way to upsell these kinds of items is by offering still or sparkling water with every coffee. By doing so, you will make a coffee purchase that would be $4.50 become $7.50 or $8.00.
Another way is to create demand by displaying juice or cold brew coffee in a bucket full of ice by the counter. Make it readily available to the customer. You will be taken aback by the wonders this quick trick can do on a summer day.
You can create more sales opportunities and increase your cafe’s profitability by offering specialties for your customers to consume at home. Loyal customers usually love their favorite coffee shop’s products so much that they will find the opportunity to have some of that experience at home amazing!
During COVID-19 we have helped several of our clients to set up their cafes as a retail outlet. It is a great way to create new revenue streams and increase the overall store’s ticket. Some examples of products that can be displayed on a retail shelf are:
- Coffee Beans Retail packs;
- Tea Retail Packs;
- Coffee appliances such as small coffee makers;
- Coffee Capsules;
- Vegan milks not available in supermarkets, milk options such as MilkLab, BonSoy, some specific Oats Milks;
- Reusable Coffee Cups;
- Chocolate and Chai Powders in retail packages.
We have witnessed some of our clients even selling other types of exotic products such as high-end olive oil, fresh bread, locally made honey, and jams. Make sure you display quality products that are not available in regular supermarkets, it will be an easy sale.
Leverage your cafe’s profitability with Takeaway options
We can’t stress this enough. According to our experience, amongst our clients here in Sydney, around 45 – 50% of all coffees ordered are for takeaway. That is huge!
One way you can boost this potential and help with your coffee shop’s profit is by making your store takeaway friendly. Make sure you create accessibility for people to easily order takeaway. Go outside, put yourself in your customer’s shoes, walk around the cafe, and ask yourself the following questions:
- Are there tables on the way to the 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.
Another thing that is a huge advantage is putting in place a series of takeaway/beat the queue/delivery apps. This will help you drive more sales and increase even more your cafe’s profit. The main apps in the Australian market are DoorDash, Deliveroo, UberEats, MenuLog.