Coffee Shop ROI: Making It Happen

There is no one set of secrets to making it in the foodservice business. Most success comes down to hard work, extensive experience or luck. 

But there are things you can do to be financially stable, increase your coffee shop ROI, and give yourself the best shot at long-term success. Heck, these fundamentals could give you the momentum you need to open a second or third location.

Serve good coffee. Forgive this obvious point, but espresso is one of those rare products where consistent quality matters. T-shirts? Sandwiches? Not so much. So buy the best espresso machine you can, install it with a water purification system, use a conical grinder, build a relationship with a great roaster, and make sure every cup is made by a trained barista who seeks the “god shot.” Sure, you can build some loyalty or walk-by traffic with decent coffee, but the better it tastes the more people will go out of their way to get it. Same goes for smoothies, gelato, etc. If these are your specialty, make them irresistible.

Don’t act like you’re in the coffee business. While the coffee has to be good, when you’re in retail, you’re in the people business. Know your role as a place where people can escape the daily grind, build a relationship, get some work done, or find a friendly conversation in your employees.

Use loyalty cards. They really do work. They communicate that you want people to come back, not that you expect them to. Use this trick to increase their value: stamp a few extra boxes so that on a customers next purchase they get a free one. Easiest customer acquisition ever.

Merchandise your margins. Price your items line by line according to customer expectations and what the market will bear, not according to accounting determined markups. For some well known items you will need to be at (coffee) or even below market price (can of soda), and this loss should be made up with high margins on other items that are exclusive to your shop, or in the “don’t-care or addictive” category in the minds of customers.

Pre-make as much food as possible. In a coffee shop context, pre-make food items and leave the custom orders to coffee. Custom food is a high-cost endeavor because you can’t get the economies of scale that you do with coffee, and it limits your turnover in peak periods where you should be pumping out the sales quickly, not making custom orders.

Hire good people. See our article on hiring right, so you can do it less, and a follow-up article on reducing turnover.

Advertise. If you don’t have a built-in, steady supply of regular traffic, your number one job is to remind people that you exist and entice them to pay you a visit. If you don’t, your café is likely in peril.  Don’t say, “I can’t afford it,” “No one goes out of their way to come here,” “We’ll be OK if we get a catering gig,” etc. Put out some affordable ads and learn to use free Web tools (Facebook, Instagram, Twitter, Yelp, etc.) to your advantage.