Even in challenging economic times, there can be positive outcomes and opportunities. All of us in business for ourselves can use some housecleaning once in a while, and this is a good time to look over inventory, sales numbers and cost structure. For coffee shop owners, this means looking over the menu, making sure you are actually selling the items on it, and maximizing every menu item.
Don’t assume that offering an encyclopedia of items will result in you making more money. Simplifying menu offerings will minimize customer decision-making time, staff training, consistency problems and product inventory. This can also be a good time to evaluate the real costs related to the products you are serving and adjust your menu and pricing. It may also be a great time to review recipes and upgrade the quality and presentation of every item.
Knowing that your customers can now pull through a McDonalds drive-thru and order a Mocha (or a smoothie) is all the more reason for an independent coffee shop to make sure that they have not only a noticeably better product than a fast food chain, but also the most consistent drink and best presentation. This means reviewing everything from the cup to the customer service. When pressed to upgrade the quality of products being used, we often hear customers say, “But my customers love my drinks.” This may be true based on feedback you get from vocal regulars, but not for the customers that may not come back because they had one or two bad experiences.
Customer retention is a good reason not to change things up too much, but if you’re not getting the volume of customers to make it all worth while, quality improvements can be the perfect solution. The changes you make will help you gain more market share and also tells your customers that you care enough to keep improving the drinks they love so much. The most important thing is to take a fresh, open-minded and factual approach to reviewing your menu and selections. Taste drinks at known successful competitors and see if they’re doing things better. Ask yourself: can I do better?
Having a higher quality drink is half the battle. Continuing to offer this drink every day for every customer is crucial. When a customer stops at your shop on the way to work for a vanilla latte, that latte should taste the same as it does when the same customer brings their family on Saturday afternoon. Time after time, we hear owners tell us that customers won’t order a drink unless the owner or manager is there to make it. This is not a compliment! You need every member of your staff to make exceptional drinks, using the same recipe.
Often, there are upgrades that will both save money and improve profit. Sometimes you need to look deeper than the actual cost of an item. For example, we sell three syrup lines. Our highest volume seller costs the least per bottle; however, it has the highest cost per serving. Our most expensive bottle of syrup has exceptional taste, quality AND the lowest serving cost. This is often true with products.
The illusion also exists that making more profit per drink is the most important factor. This is only true if you develop enough sales volume for that item. You may make $3 on every Supreme Deluxe Low Cost Smoothie (yes, we’re making this brand up!) that you sell. However, because the quality isn’t there, you’ll only sell 10 smoothies per day, resulting in $30 of profit. If you upgrade to a better smoothie base and make $2.50 per drink, you may sell 30 per day, resulting in $75 of profit. Remember, profit margin is relative to volume, and you gain volume when you sell premium drinks customers can not buy anywhere else.
While we encourage you to keep your menu simple, don’t be afraid to offer new items or run seasonal specials. Look over your product lines and consider adding special or select items within a category. We offer free samples of products and would be happy to send you some to compare with your current product lines or just to add something new and fresh to your menu.
Overall, be honest with yourself and make sure that you’re offering the best drinks that you can. When the next fast food chain begins to offer specialty coffee drinks, it will be the independents who are continuously evaluating quality, consistency and costs that are sure to survive the storm and prosper when the economy picks up.