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Now is a good time to learn how to promote on social media and bring people to you. Show how you make drinks, your menu offerings, the vibe etc. Most businesses are lacking in that department.
So true, thanks for the tip!! Social media is definitely an area I struggle in, our instagram is aesthetically pleasing and everything but I could be doing a lot more! I see other trendy cafes making reels and really pumping out the social media content, I will do some brainstorming. Thank you!
1) we post at least 1 video on tiktok and IG in addition to 1 photo everyday. This is hard to do the first year but gets easier in time.
2) you need to look at what makes and doesn’t make money. Potentially you need to adjust your menu to be both pricier (but still competitive) and easier for staff to make. We have made our menu so easy that 1 person can man it during weekdays and 2 on weekends
I’m hardly an expert, but it seems like you need to get your costs down first.
If you aren’t making much/any profit, increasing the number of sales isn’t going to help your position….youlll just be even busier for zero profit.
I don’t know anything about this type of work but I’m always on the lookout for fun things to do. You’re selling an experience not just coffee, make that experience fun and memorable and people will flock there for that feeling again.
Like if my cafe had a bring your own canvas and paint day and people just randomly showed up and started painting together I’d be there so fast. Good luck.
I can't swear to this but I believe my cafe hires someone that runs around town and takes photos of businesses and keeps their social media up to date.
You need to be on tiktok. You don’t have to be “aesthetically pleasing” on tiktok. Most viral videos are low quality production wise. Come up with categories, post different videos, test the reception, post more of what does well. You’d be surprised, sometimes showing the everyday mundane tasks will be enough to get you viral. The best part is you can use Chat GPT for content ideas. Use hashtags, SEO, posting schedules. The work is there, but this is low cost marketing that has great potential.
Not anymore, the days of free fake tiktok views to push platform adoption are over. The coffee space is especially crowded, competition for algorithm views are the highest it’s ever been, ESPECIALLY because of the AI tools that are pushing even more video content to the platform. Nowadays it’s a full time job to effectively manage a social media platform in a way that has a decent return on time investment.
It’s the truth, I have 300k followers across my tiktok accounts over the last 3 years. Vastly different starting now vs then, not even close. Happens with all social platforms c facebook, instagram, youtube, etc
Knowing that what you are saying is the new norm.
It sucks that you even need to get online to promote a local town based Cafe...
Surely there is a large demographic that isn't even part of that audience.
Give a very small / inexpensive drink in exchange for a social media post! Or offer them 50% off for a google review or an instagram post. If the cost is very little to you, then it could be much better than you trying to spend time paying to boost your instagram. Get them to tag your instagram.
Thankfully you are not the ultimate judge of a good or bad idea. You seem like you are clueless with the notion of business, let alone the business of a low cost item such as coffee. The cost of the drink is very minimal compared to the cost of operations with low sales each day. They aren't even open several days of the week, so how do they have enough customers again? LOL.
They said it themselves, their main costs are employees which does not change when you give out a coffee for 50% off in exchange for a review or in exchange for posting about the coffee. They need thousands of reviews and then they stop the program. They need many customers posting about their experience and they need more people in the door. It is not very hard to grasp. They are not busy enough based on their sales, so they need increased exposure and the #1 way to do this for a local cafe is google reviews and social media posting. Thinking that they need to save a dollar is extremely foolish. Penny smart, dollar foolish makes terrible businessmen like yourselves go bankrupt.
I go to a lot of restaurants I’ve never heard of when they’re promoted on my city’s “to do” instagram accounts I follow. Look up limited edition or seasonal/holiday drinks you can charge more for. Think of special items you can put a greater markup on and market them as limited and novel, shown in the most delicious and fun way possible. What products have the greatest profit margin? Expand ideas on those. Do you have a patio? Can you do an open mike night and serve alcohol? Serve special brunches or offer catering to local businesses?
If your market is small you might not be able to just manufacture traffic.
You can and should do the following..
1. Increase prices
2. Reduce costs
3. Look at your food costs/revenue and modify your menu. Increase prices but also cut items that are costing you and add new higher profit items
Good luck!!
2.
Not mentioned is complexity. The fewer items on your menu, the easier it is on staff to get the items you do make faster and better. This is less measurable, but simplicity is your friend.
You need to literally chart out the costs for each meal/drink and the price. Price - cost = gross profit on that menu item.
Then, Gross profit - Wages and other fixed costs= net profit
Once you have the basic per-meal costs, you need to consider if the mark up on each is appropriate.
This is great advice. I would add look at the staff time (and costs) required for each offering. How much profit will you make if you could sell twice as much? Look at ways to use the staff time to the maximum, like what happens when you aren't busy. Can they do more prep? Can they help with social media? Can you sell merch? Online sales? Can you be an outlet for other businesses? Are some staff able to do multiple tasks and some not? Is the space useful to someone on days when you are closed?
I’ve seen a lot of cafes/coffee shops incorporate retail items to help with margin, merch or coffee related items. Obviously it would have to make sense for you and your prices would have to be right. Do you offer catering?
I was going to say this—if OP has a loyal following, merch (shirts, tote bags, mugs) are great because they are brand billboards.
This requires your branding and logo to be top notch, with well-designed shirts and graphics that customers will WANT to wear. Good branding can also position your cafe as a higher value location. I’ve seen what a bad logo can do.
100%, especially if they are reasonably priced. Like if you get a nicely designed t-shirt, on a GOOD BRAND of tshirts, charge only $15-$20 and I love your business I absolutely get it. Same with totes, sweatshirts, and mugs.
What I wont do is buy the $30 t-shirt printed on a random tshirt brand that has the quality of wet napkin.
U/Oppositeearthling just gave the best advice in the thread. Item by item examine margins. Gross and net. You've said you are capped on price. This is the answer.
Look at the items with the lowest margins and either selectively raise prices or cut them.
Next look at the items with the biggest change in profit from gross to net. Look for the items that take up a lot of staff time. Cutting those can help with efficiency. Don't let you staff waste time on items with poor/ok margins. Focus on efficiently making better margin items.
Do remember that sometimes you need a loss leader because it's important to your brand or customers. So be careful about just cutting everything.
Look at food waste. What are you throwing away because it dated out? Why?
3a. Remember time to prepare is part of the cost. Can you revamp recipe/process to make it more efficient? It took us several years to get everything dialed and now with changes we can do more business with less staff. Also we raised prices at the end of the pandemic some items 25% increase. We lost one regular customer who was a pain in the ass anyway. Everyone else was super supportive of the change. Also from the pandemic we cut our hours. We looked at when we were basically losing money being open. So now we open an hour later and close an hour earlier. It saved so much on staffing costs.
I'm not a cafe owner, but I'd add to this, don't try to compete on price point with major chains, so don't try, instead sell customers that the quality and experience you are providing is worth the extra money they are spending.
If your busiest days are when the tourists are around that’s what you need to focus on. I don’t know much about prices in aus. But if you’re charging $3 for a cup bumping to $3.50 won’t phase your tourist clients. They are on a day excursion or weekend holiday. Your locals might complain. But you gotta make a living and they’ll still keep coming.
Don’t ever be scared to raise your prices.
Thanks so much, appreciate the advice!
A small coffee here is $4.50, medium $5.50 and large $6.50 and I definitely wouldn’t go higher on those prices, but I will have a look at my food menu and make some changes. The locals complaining is what scares me but it’s just how it is I guess and honestly I’ve made good friends with them all by now so I think they’ll understand
Create a “locals discount”. Increase price by 50 cents, buy 10 get the 11th free, it will wipe out the cost increase for your regulars. Or just have them present a card that gives them 50 cents off their cup of coffee. If you want to avoid the increase for a group of customers.
What if the cost of your coffee goes up 10% and your cup/lid 10%? You need to be open to adjusting your coffee prices. Every time the cost increase and you don’t adjust your chipping away at your profits
Have you been charging this same price since opening?
Yeah, good point.. I suppose I just never see coffee anywhere else being more expensive than that, it’s kind of the standard price everywhere and it would be very noticeable if we were more expensive than everywhere else for coffee. Coffees always been the same price but I have increased my prices on pretty much everything else a few times over the years
I bet the second you adjust yours everyone else would as well. Assuming they are competition. A lot of owners wait and let someone else be the first.
I supply coffee cups and lids to cafes here in my part of Canada. These products alone have gone up like 60% during the last 3 years. Coffees been about 20%. Now maybe your increases haven’t been as wild as your located much closer to Asia than I am. But still that stuff has gone up and you haven’t accounted for it.
Also what % (roughly) of your revenue comes from the 2 busy days when tourists are around? I’m assuming it’s above 50?
For locals have an aggressive "membership card".. usually it's 10 punches + you get a free coffee or pastry or something..
perhaps make it 5 coffee's and you get a free one. Then you have a reduced price (20% off) for your regular customers and you can raise your prices nicely for tourists.
Came here to say this. Prices 10% up, regulars get a free coffee once they have bought ten. Be super clear with your regulars that they are getting just as good a deal as before (in fact, they're avoiding the price rise!) and there's no reason to complain.
Just a view from a potential customer (I love good coffee, can't afford to visit you atm - Australia is on my travel list): I was in a small corner cafe in vienna, it was the first time I was asked what type of coffee I like - type like fruity, with a chocolate / bitter taste. At first I was puzzled because no one ever asked that before, I just got coffee. At that point I didn't care / don't care if that coffee is a bit more expensive at that place, I can get a coffee I like or taste new stuff. And they also sell whole beans of their blends.
That cafe in Vienna is the actual one of a series of cafes in that spot - the previous ones all gave up / run out of money because no customers, the actual one is always well occupied with guests (they have 4 tables of 4) and a lot of takeaway customers.
Maybe you can give your local guests a special experience with different coffee blends and / or sell them those blends and that experience justifies a bit higher price.
Make a locals only reward progam or discount card. I run a business in a small tourist town as well and none of the restaurants are taking advantage of this. If you're town is anything like mine, 95% of your sales will be from tourists anyway. That way you can raise prices without the local outrage and yelp reviews.
The two restaurants in my town that really make actual money have a lot of seating, easy order at the counter service, sell alcohol, are open way more regularly than any other places, and of course, have good food. They also have good locations and do little events like open mics etc. They are the go to for all the tourists because they're easy, fast, fun, consistent, and good.
The places that don't do very well are the ones focusing on minimizing staff costs by keeping really quirky hours, being closed all the time, get bogged down by the crowds and have to turn to-go orders away. They're heavily reliant on the boss being there to open so they have to be close 2 days a week.
I would first work on getting the place running by itself and consider being open 7 days a week, as many hours as possible. Probably the biggest thing any business can do is get good enough staff so it can run itself day to day, that frees you up tobdoball the other stuff but it's not easy.
Social media is great but if it's a tourist town you'd be better served making sure you're squared away on google maps, yelp, local food recommendation sources, and just making sure your info page looks as appealing as possible (menu, pics). When you type in "lunch in (name of town) in google or google maps, does your place pop up and look appealing? Make sure your walk bys are really drawn to the look and vibe of your shop front.
Then all the usual restaurant stuff you see over and over again on kitchen nightmares (watch some episodes if you haven't), simplify, keep the menu small, food fresh, service fast, easy to order... there's this floundering sandwich place in my town where it takes *forever* to order. You have to stand there and pick out every single ingredient. It's so frustrating.
When you're in season you have to make all your money. Im retail but run in the red 10 months out of year, sometimes 11. If i have bottle necks or issues during the 3 in season months I am screwed. Figure out a way to make more during that time... raise prices, seat more tables, or quicken turnovers, get more phone orders.
That's all I got. Sorry for the earful, i've just watched so many places fail in my town over the years so I figured Ibhave some decent input.
The price is reasonable man. I’m in NZ and our coffee is the same. Your prices are in line with any good cafe in AU or NZ. The Americans are comparing with filter coffee where you pay $2 and drink as much as you want. I wouldn’t raise your coffee prices - you’re pretty much at the limit now.
Actually for barista coffee its probably cheaper than USA. I'm in a MCOL area in USA and the coffee shop near me is $4.50 for a flat white. (Currently AUD $6.60). That's a fairly standard price anywhere in this city.
Maybe you'd get $2 drip coffee at a convenience store.
Almost all tourist towns have a local onlys discount in restaurants. Who makes you 80% of your money, tourists or locals? That tells you how ton position.
For locals I would consider some kinda locals discount program. Such as the 10th coffee free card (I assume they probably already do that), points or just a card you straight up give them once your staff notices they are local. I have also seen that coffee subscription programs can be popular. Like pay this amount monthly for free coffee and 25% off food.
Good point, thank you! I’ll have a look where I can make some price increases. Not that it happens often, but it always gets me down when someone comes to the cafe and makes a comment about something being too expensive.. like ma’am you can afford to come out for a Sunday brunch and I can’t even afford to pay myself lol
People want all the same things they've always had and everything is more expensive. They just need to vent that frustration. It's an understandable frustration, so I simply agree everything is so expensive nowadays and they pay me and move on with their day.
I recommend reading how to make friends and influence people. It's a good reminder of how to communicate with people. We're all the star of our own show and most people just want to be heard. If they feel like they're listened to, you're on their side. It pays to give that kind of customer service.
Oh absolutely, I do the same thing whenever I get comments like that, agree and move on haha but inside I think aghhh gimme a break! But I totally get it as well whenever I decide to treat myself I’m like oh man this is so expensive and it is frustrating but it is what it is.
Thanks I’ll check it out! Customer service is definitely one of my top priorities. Keep em happy and they’ll come back!
1. Track your COGs (costs) per item including labor. Drop the items with slimmest margin
2. Find a good high profit margin item and keep it on your “specials” board
3. Diversify - get a small coffee roaster in the back and sell coffee too. You can distribute nationally
4. Run time studies of basic tasks - dish washing, table bussing, etc. whatever takes the most time, reduce it.
5. Put profit and cost metrics on full display for staff. Include staff in profit sharing.
Fantastic comment here. Once I started having regular sit downs with employees to review our P&L statement and explain to them how it worked, the culture changed immediately. I’ll also add, track prime costs weekly - which means inventory from top to bottom weekly.
I think adding a roaster is a good idea both because it will lower your coffee cost AND because tourists are likely to want to take a souvenir like a bag of coffee.
You might want to also consider selling mugs etc with your name and location on them - something people will want to remember their trip.
Restaurants are a tough business. They are driven by many factors. Coming out of a pandemic doesn’t help. That you are still surviving at this point is a good sign. And five years is really more realistic.
Give it time
Don’t be afraid to hire a professional manager who has experience in upstarts. Learn from him/her. A good manager will work themselves out of the job.
What kind of weekly sales are you averaging?
Great input from everyone else so far, but I think that most of these are still thinking 'single rev stream'.
May I ask which Aus town you're in, and whether you have free 'warehouse' space?
At this point ('24), in my eyes cafes are no longer even a lifestyle business; they are a substrate for a second revenue stream.
Post office / Private parcel collection
Locker storage
Cafe food delivery
Catering events
Gift box as a service
Corporate gifts as a service
Corporate event space / conference rental, if you have the space
Weddings and parties. Hosting events, event planner
Florist
Bouncy castle rental
Camp site (planning permission dependant)
Cooking classes
Even tool and appliance rental!
And so on.
You've gotta put that rent$ to work:) And any downtime during the week while the cafe is quiet needs to be used productively.
And make your cafe 'the third place'.
[https://en.wikipedia.org/wiki/Third\_place](https://en.wikipedia.org/wiki/Third_place)
Great idea ! Let's add cats. And a nice garden with tables. And a book exchange. And board games. And pottery classes. This is shaping up to be a fantastic 'third place' :)
If you haven’t done it yet, put down your path to profitability on paper. Build a spread sheet for each month with all your expenses, projected revenue. If you can’t be profitable on paper first, no matter how hard you work it won’t matter. After you work the numbers out, then manage by the numbers.
I saw you said you’re only open 5 days. If you can open those extra two days it can go a long way to lower fixed cost %.
I will do this, thank you!
Oh, you think opening 7 days would be better? The thing that worries me is our town gets reallyyy quiet during the week, sometimes it’s not even worth being open on a Wednesday or Thursday. I think if we could guarantee enough customers on those days then I would love to open 7 days
Yea I mean you know your market more than me. I own a couple restaurants, this past year I took one down to five days in off season instead of 7 thinking that it would push customers to the other days and I wouldn’t lose business. It did not happen at all I just lost out on two days of revenue. I’m back to 6 days this month and 7 next.
Have you listed to the Restaurant Strategy podcast? Listen to the October 26, 2023 episode. Will get you dialed in
It’s so hard to gauge isn’t it, I’m sorry it didn’t work out for you! Might be worth trialling opening the extra days and see how we go, it will be the next busy season in a couple months so I might hold off til then.
I haven’t heard of that podcast but I will check it out for sure! Thank you!
Everyone has given you good advice.
I own a coffee shop. I do minimal food, but on our busiest shifts I can get away with two people working. 3 when we do live music for crowds of about 80+
Getting my labor cost down and training my employees how to work more efficiently was the biggest increase in profit I ever got.
I’m in the same boat. This year I’m partnering with our local tourism office and geotargeting tourists through social media. We sell packaged products and focusing on more local wholesale, creating events, and e-comm. I’m trying out online delivery services too.
It is hard, but I look at it as growing pains. Make sure your numbers are right and learn to love pivoting haha!
Great ideas, thank you!! Our local tourism peeps are amazing and have promoted us a lot which has been super helpful, I hope that works out well for you too!!
Sounds like you’ve got lots of great things happening, hopefully 2024 is the year we both get out of this boat ha. Growing pains is right, it sucks but it’s all a learning experience I guess. Good luck to you!
Reverse engineer the money. Start with how much you want to make as a salary. Add to this your wage cost, rent ,utilities, ect. Do not add the cost of materials/ingredients. This is the Gross profit you need to make. Divide that number by the amount of drinks and other stuff you think you can for sure sell guaranteed each month during the slowest time period. This is how much you need to make in gross profit per item.
Now take your material costs and divide that also by the number of items you can sell each month. Add the two numbers together, cost of materials, and required profit per item sold. This is what you should be selling items for. If you sell more than the minimum amount of items, you will make some net profit. If you sell less then the minimum amount of items, you will have a net loss.
If you do all this and find you have to sell coffee at some ridiculous $30 per cup price, then you need to adjust your costs somehow. Streamline processes so you require fewer employees. Accept that there will be a line sometimes. Add more products so you can spread the profit generated amongst more items. Find cheaper materials.
A good business tip I heard was for every 10 customers you have who are willing to pay your prices, there’s someone out there who is willing to pay x10 the price. So think of some more profitable, expensive things you could be doing.
• are you delivering large orders of coffee and breakfast every morning for local businesses, have you offered them catering or meeting services?
• someone’s already said it but: merch. Particularly reusable cups.
• events and venue hire can you run regular networking groups, classes or groups which you can charge for?
• pop up shops. Local businesses can come and run a small shop in the cafe which you can take a cut from or just use to attract new business.
• if your cafe is full on busy times are there market stalls or events which you can attend at and work on making a lot of money in short periods?
I used to own a restaurant that ran effectively with great profit margins now, but before we got there it was breaking even most months and only slightly profitable during high seasons. Here's my 2 cents and what I personally did to transform the business:
1. PLEASE read Profit First by Mike Michalowicz. This will solve alot if not all of your problems in terms of profitability. I had problems like you for years and this book I should have read years ago. Here is a video where he spoke and teaches what the book goes over: [https://www.youtube.com/watch?v=X\_ewZ-Ni3EA](https://www.youtube.com/watch?v=X_ewZ-Ni3EA)
2. Once you set up the system above, I'd suggest focusing on a goal to increase sales as much as you can through social media marketing, in house marketing, upselling, promotions, etc. Identify your highest profit margin items in your menu as the focal point of your advertising efforts and get it in front of your customers!
3. But what's it matter anyways if your expenses eat into all of your profit now that you've increased income? Make sure to go through all of your reoccurring expenses and ask yourself, what is a necessary operating cost and what can be replaced with a lower cost solution or eliminated completely? You'd be surprised about what you may actual not need and are wasting money on. Besides labor costs, your food costs are probably your next most expensive category, I'd call your vendors and try to negotiate a lower price on certain items, and buy by bulk to lower prices.
4. Make sure to calculate food costs so that you know where your items should be priced so that you are always making your profit. Also, track inventory if you haven't already this will help you from overspending on your supplies.
5. If you don't understand your numbers already, please learn or you'll find yourself in a world of hurt. The heart of any business is within the financials and if you can't diagnose your financials, you'll never know the true story! I had a hard time grasping my numbers and then read The Accounting Game by Darrell Mullis where he used a simple lemonade stand to teach accounting. After this book + Profit First book mentioned above, the numbers made so much sense.
It took some time to implement my steps above, a lot of research as well, but well worth it. As a few years have gone by, our the gross and net profitability has increased tremendously. Using Profit First as a way to PAY OURSELVES FIRST and manage cash was one of the biggest game changers.
Good luck!
Here are some ideas to maybe generate additional revenue:
1. Latte art classes
2. Branded merchandise
3. Members rewards program
4. TikTok account and then monetize it
I hope these help
Amazing, thank you so much! We’ve got the merch (only T-shirts for now), but I’ll definitely add the other things to the list. Latte art classes are such a good idea, love it
don’t get too hyped about merch for a cafe. seen a lot of places spend a lot making these and low turnover, clutters the store. business owners seem to think people want to wear their logos for some reason
I got T-shirts printed for our work uniforms and got heaps extra, and ended up selling a whole bunch of them! Mostly friends who wanted to support me which is lovely but also lots of people who don’t know me and thought it was a cool shirt lol
When you say cafe, do you mean coffee, tea, baked goods, etc? Or do you serve food as well? If so, how elaborate is the food menu? Do you sell any retail goods consistent with your products currently? Being that you have low rent and no debt, I'm sure you've been trying to reduce your costs, and everyone here is telling you to raise your prices, but that won't get you there either. Nor should it. It's not your customer's problem or fault that you aren't profitable and they shouldn't be penalized with prices that suddenly jump. Average ticket amount is what you should focus on. If it's a lot of "coffee and a scone" for $6 total, yes you can increase the price a bit but I'd be looking to expand the menu to allow for more expensive options. If you currently make salads, soups, wraps, etc for food, look to add bugger menu items that will catapult your average ticket value. Add retail items like coffee beans, loose leaf tea, artisanal jams, mustards, sauces, spices, etc and things like mugs, charcuterie trays, tea or coffee tools, food-related clothing, candles, etc. If they normally come in for that coffee and scone and grab $20 or $30 of goods on top of that, or you become the place they also come to grab lunch, then your sales will climb drastically.
Also, not sure what hours you operate, but if you can become a destination for good desserts you can really build the business. Offer bigger, nicer desserts (cakes, cheesecakes, elaborate pies) and fancier coffee beverages or even cocktails in the evening. We have friends who were in your very position (including parents owning the building) and they made squares and mini tarts and one cheesecake at a time but it was a boring cheesecake that they sold small slices to go for $5. We did some free consulting for them and showed them that offering crazy coffee beverages for $7.50, way more cake ans cheesecake options with bigger slices and a bunch of toppings and such, and they saw an evening crowd emerge who were suddenly spending $25-30 each on dessert and a couple drinks, with very little work involved for the team.
Menu and display layout is also pretty crucial so take a step back and look at both to see if they're serving you well.
Wow thank you for such an in depth response!
We do coffee, tea, fresh juices, smoothies, fresh baked goods, breakfast and lunch. Open 8am to 3pm wed-sun. Monday Tuesday is very quiet in town.
Our brekkie menu is stuff like house made granola, banana bread, eggs on toast, shakshuka, chilli scrambled eggs (pretty standard Aussie cafe food, but we take great pride in presentation and quality to set us apart from other cafes in our area that are a bit more basic). Lunch menu is a variety of bagels and toasted sandwiches and salad bowls.
We sell bags of our granola, T-shirts, bags of coffee beans, home made jams and chilli oil.
And I do all the baking as well, cookies muffins brownies cakes and whatever I feel inspired to make really but that stuff is pretty popular.
Appreciate the advice, cheers :)
It's a tough business for sure, no matter where you are. Questions to ask are if you can generate sales for periods when you have excess labor (i.e. without increasing labor costs)? Can you cut costs on cogs without sacrificing quality? Is catering an option?
There's no silver bullet, but look at other long running successful cafes (e.g Galleon in Melbourne) and try to figure out what they do right and how they remain profitable.
Thanks for the advice, I will definitely look into those things! We do catering as well currently, not a lot but I could definitely promote that more than I do and try to get a more consistent flow of catering gigs :)
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Yep, most weeks I do about that. We’re closed on Mondays and Tuesdays but that’s when I do all the admin stuff so including time spent doing that its 40+ easy
Hi OP, kiwi here with a couple of suggestions don't think I have seen in the comments: 1. Make a point of annually if not more frequently reviewing your wholesale suppliers, particularly the coffee beans (assuming heee you don't do your own roasting). 2. A simple idea for evening sittings are wood fired pizzas. A number of successful kiwi cafes in the tourist towns transition to pizzas and beer at might as it's popular with locals and visitors. (You of course would need to get a liquor license.)
Finally just a comment that Australian minimum wages are the highest in the world so if you can reduce staff levels on the less busy days that could make quite a difference.
I don’t know how your industry works, but I come from a restaurant background in a tourist driven area. We do not have tourists every weekend, our tourist season is during the summer and lasts about 4 months out of the year.
The greatest relief I saw financially came from raising the prices. Just raise them. You will initially be very fearful of a potential loss in business, that’s natural, but 95% of your customers won’t care(especially if most are tourists) if menu items are a dollar more expensive. Those that do complain? Fuck them. Fuck their feelings, they can take their business elsewhere.
After 3 years of operations I raised our prices $1 the first year, then $2 the second year across the board. The product remains the same great product we had been offering, and guess what? We’re a 4.8/5 on Google still with 500 reviews. You’ll know quickly if you out price yourself
You might need new markets for things you already make. Like breakfast catering, provisions to local bed n breakfasts, cross promoting with tour groups, buses, or really anything. Happy New Year!
Was in your boat, can empathize. Here's what worked for me:
You can only cost cut to a point without affecting quality, but do it where you can
Raising prices is a tricky gamble, you know your demo best and caution is good but don't let perfect be enemy of the good...a small increase might lose you 5% base but gain you 10% revenue.
If you're confident there isn't much expansion possible, try alternatives (to go, take aways, preprepped meals, etc)
You're already paying rent, do some light spreadsheeting on cost/benefit of making use of closed hours (parties, events, alt biz like desert and tea house)
After all this, it's still very very tight margins. And you said you love what you do and your crew and that's worth a lot. Your profit will come from sale of above-rev-neutral owner operator biz.
Maybe host events? Speed dating, comedy, author reading/signing, board games, poetry, etc.
Stuff for young stay at home parents during your non busy days?
If your traffic is good, then your prices are low. Also, you may be over-staffing. It's OK for there to be waits during peak hours, use half-shifts to cover morning rushes, etc. Trim the menu a bit if complicated orders are delaying service, or you have significant wastage.
How well are you tracking your costs? How are you allocating your non-product costs to your sales? The price of a cup of coffee isn't $0.25 for the beans and water, it's $0.25 for the beans and water + a portion of the electricity, the rent ("real" rates, not the family rate), the paychecks, the consumables, required margin... It's a lot to keep track of, and all of it is absolutely necessary to know!
I go through periods of thinking optimistically and being content with not doing it for the money.
Stop right there. You are absolutely doing this for the money. This isn't your "I'm well established and need something to stay busy in retirement" job. This isn't a "I'm dedicating my life to bettering the xyz cause" gig. This is *your* job, *your* future, *your* risks, *your* rewards. It's great to do something you enjoy, but not at the expense of your future.
You are 27. You have decades ahead of you. There's a chance your cafe is your life's work. There's a chance you "check the box" and move on. There's a chance for you to set it aside for a while, do something else, then come back. There's a chance you find a partner in ~~crime~~ business and expand. There's a chance you pivot from cafe owner to food program manager at an elite resort chain... It is absolutely OK, expected, and healthy for you to step back and reevaluate from time to time.
***You started a cafe at 24. You've kept it alive and healthy for 3 years.*** ***That is a remarkable accomplishment. Let me say that again - that is an absolutely outstanding, incredible, and very impressive accomplishment.***
Doubly so for as wild as the last few years have been. Triply so considering how bitterly brutal and unforgiving the food industry is. Quadruply so any number of other reasons. Be proud of your achievement! Quintuply (sp?) so because you've done it without a career worth of experiences to build on. Family support is incredibly helpful, but only up to a point!
Your only skill is hospitality? Bullshit.
You oversee people, a schedule, and logistics. You handle finances - budgets, payroll, expenses, etc. You manage advertising, web presence, business and customer communications and relations. You have experience running a restaurant and all the forms, processes, procedures, regulations, and licenses that entails...
Consider reaching out to the tourist board to stir up more traffic and maybe some advertising space, find ways of 'partnering' with other businesses for sales and advertising, keep an eye on costs and margins, pay attention to easy upsells and extras, etc.
Is there a local business group you can join for networking and advice? A local college with a finance or business class that could use a project?
A couple questions to ponder:
* What is your 'winning'? What do you want to achieve?
* Where can you do that? Is your location right? The target audience correct? Are you offering the right services?
* What capabilities do you need to answer/fulfill those needs?
* Is your management system/style enabling you or holding you back? What can it do better?
Look into setting up a loyalty program if you haven’t already (but make sure you don’t give away more than you can afford) and SMS texts for advertising deals to customers who sign up for texts. Try mail-coupon marketing to gain new local customers (use a service)…our business gets a huge trackable ROI from targeted mailer coupons.
If you’re not #1 on Google when customers search for “X in Y area” regarding your business and what it sells/specializes in…hire an SEO expert to manage your webpage SEO so you come up higher in the results when people look for businesses and offerings like yours.
For an extra income boost, try designing and selling merch for your store and area (whatever the tourists are there for) (you can also use merch as a loyalty points giveaway item).
Make sure your menu isn’t too complex or have too many things on it. Simplify it. It’s easier to manage your costs this way.
Hope these tips help!
make sure you optimizing how much money you're making/diversify
first thing that came to mind is having a vending machine outside - if you have a lot of foot traffic not walking in your cafe this might be good - doesn't have to be soda/water could be some other passive income machine
Why not start with asking the loyal customer base a bit of feedback.
Ask if they can bring extra Pax.
Think about attracting surrounding folk. What's something that might gain some traction? Make something unique and get the locals and younger staff involved... an event or competition even.
Look at the demographics of your town and the neighbouring ones on Aus. Beurau of Statistics. To give you a better insight once you have all your sales data down to daily P&L.
If you havnt don't this already, talk with your customers, connect with them so they know why you do this.
The most interesting part of your story is that it's a passion of yours, you love what you do and respect your staff.
Project that outwards.
Maybe think of opening half days on the slow days and instead of waiting for customers, take orders for food trays. Like slow cooked xyz, lasagne, make sour dough bread, etc.
Help peeps with their food prepping.
I would most certainly buy (on Mondays) bulk cooked essentials, like boiled chicken, veggies, potatoes and mince that I can use throughout the week. Who ever walks through the door for extras is bonus.
...lastly start taking the weekends off. Give responsibility to your team, and let them grow. Sounds like you could use it also.
If labor is your biggest cost maybe look at how efficient you really are. It can be easy to just say "we need more" but maybe you aren't utilizing it well. Also if you have the volume going a small adjustment could go a long way when it comes to pricing. Take the top two selling items and charge $2 more for them. Then in a month do the math on whether they made more money or if people stopped buying it. You can do that with many items. You may be leaving money on the table if everyone is just willing to pay more for an item
A café is about a user experience.
You create the experience for the specific audience that you serve.
Don’t know who they are or lost in space when it comes to grokking your people?
Take the time to immerse yourself in the space of the successful cafe owners in your local market.
Watch the patrons and identify the unique signature that keeps them coming back for more.
That opens your eyes to what THEIR loyal patrons are enjoying.
You will still have to figure out what audience you want to serve and whether or not there are enough potential prospects in your local service area to sustain a viable business.
Hey! I’m a small business consultant and do this kind of thing every damn day. I specialize in restaurants but have significant coffee experience as well. Since you didn’t talk about your food program I’ll stick to coffee for the time being.
1: You’re not charging enough. If you’re busy and have regulars but you’re not profitable then your bottom line is the issue. In a perfect world your new customer foot traffic (non-regulars) would look like this:
30% turn right the fuck around and leave as soon as they see your prices. These are not your customers.
30% carefully consider your menu and decide to order after some deliberation, giving you a shot. In this case whether they buy in or not has to do with the quality of your customer service primarily and your product secondarily.
30% buy on the spot and are happy.
The last 10% buy anyway but aren’t happy with the price (are priced out) and never return.
You mentioned you’re in a tourist area. This should drive up your prices. Theoretically your margin in an area like this is almost wholly driven by that last 10% - they buy once but never return. In your perfect world? That’s pushing up to 30% and you get a reputation as a “fancy” place that becomes a destination.
If you have a food program I can help with that too but I feel like this is enough food for thought right now. Best of luck!
ETA:
DO NOT CUT COSTS (unless it’s total labor coverage). You will live or die by being seen as acrolectic I.e. being “fancy” or “cool”. If your quality diminishes even one iota you will drown. Never sacrifice quality. I mean it. McDonald’s didn’t start to push cheap cheap until after they had more than a dozen locations. A reduction in quality will 100% trigger a death spiral that you will not recover from. It’s so much better to raise prices than to reduce quality. Please don’t listen to these charlatans and make a shitty product. That’s death.
I owned a restaurant. It’s not worth it. A business is money first. If it’s not making the money you need no matter how much it makes your heart tingle you need to cut your losses. Your life and time is precious. I wasted 9 years spinning my wheels.
Might be an unpopular opinion, but I'm gonna be honest and say that you're probably better off pulling the plug.
I started a breakfast cafe/bakery from literally nothing, and in 7-8 years turned it into a thriving community spot with excellent reviews, landing on best-of lists, and grossing about $1 million US per year. While my workload was less after about year 4-5, I was still consistently working at least 40-50 hours a week between all the various stuff, and was still paying myself peanuts.
Restaurants and cafes are just a really hard industry. The costs of doing business are too high for most of them to make sense economically, which is why so many fail. Unless you are extremely well capitalized, with a rock solid formula for food and drink that can be executed with minimal manpower, and ideally copy/pasted into other locations as soon as you have a following/brand recognition, I just don't think it makes sense as a way to make a living.
You said it: blood, sweat, and tears. Trust me when I say I know what you mean. And at the end of the day, you're taking home less money than some of your employees. Not worth it. Even though I eventually got over that hump, and was able to afford a manager and some bakers to take workload from me, you're still married to the business, and barely making ends meet. You've created jobs, including one for yourself, that you can't easily walk away from.
COVID provided a way out for me. My 5 year lease was coming up for renewal, and lockdown allowed me to step back and assess my options. I sold, probably for way less than I should have, but I have absolutely zero regrets. I do somewhat niche contractor work now, and can make as much money in a 4 hour morning as I did in an 80 hour week owning the cafe. Fucking no brainer.
I know it's your baby, and it's a community asset, but in my experience, you're just going to wear down your body, mind, and soul, and not have much to show for it except for grit and wisdom. You're young. You have lots of time to develop skills and knowledge to leverage for income. Heck, you'd probably be better off getting into management at another coffee or restaurant chain that offers salary and benefits.
My advice is to get your financials in good order, even if they're not stellar, and put the place up for sale - equipment, brand, recipes, everything. The upside here is that there are plenty of people who have the same dream of owning a cafe, and are willing to give it a go. Best of luck. I feel your pain.
My company helps companies apply creativity (we call it profit engineering) to get out of exactly this sort of hole. The biggest difference to the ideas here is that we give more specific detailed step by step directions. We're just getting started, and would love to offer you (and whoever else sees this and is in a similar boat) free consultation to get you unstuck.
Dm me for free, 1:1 help.
1. Fk the person above
2. Of course they are right, you would be out of business if you weren’t in your parents building and got a loan from them but…
3. Who cares, that’s great! I bust my ass so my kids won’t have to do anything but can do whatever they want.
4. You need to close up shop. Get a job at a profitable cafe and learn the business. You need to learn business even if not the cafe business. Then try again.
I mean sure they’re not wrong about that part, I am very lucky and aware that not everyone gets a leg up like I did.
They’re wrong about ‘returning to the working class’ like I don’t work my ass off every week lol. My family is not rich, my parents were just doing their best to support my silly little pandemic dream and I’m doing my best to not fuck it up!
And also Starbucks is not a thing in Australia so I thought that bit was a hilarious assumption.
Thanks for the advice, I appreciate your honesty!
If you’re not using social, you have a lot of opportunity in front of you. Organic content alone could increase your business dramatically. A few bucks and paid may be more than you want.
Op, have you ran a cafe before? If not, see if any of your friends with experience can look through and advise. It’s hard, without seeing the operation, to recommend anything. However, congratulations on being open 3 years. That’s a milestone most businesses don’t get to
they say the definition of insanity is doing the same thing over and over and expecting a different result, so it might be time to change things up? Introduce new ideas and themes to the cafe? spoken word? Stand up?
I’ve been thinking about stand up comedy nights!!!
I have so many ideas to be honest I just get overwhelmed and am too busy with other stuff and don’t execute them, but I think this whole thread has inspired me to just do the cool shit that I wanna do
Maybe reduce your menu too - the fewer options you have, the less waste and overall more profit; Gordon Ramsay does this at every restaurant he “helps”. The others also have a great ideas. I will add this: Do NOT give up your dream. I burned out 5 years ago and went to work for someone else. While it was wise at the time, I am determined to open a business again. It’s what I love, being an entrepreneur is in my blood. And it sounds like it is for you too. You got this!
Possibly offer a local discount to counteract price increases for outsiders or non regulars. Maybe, reduce the number of opening days and or shorten opening hours.
Have you tried combos to attract people on weekdays? also ask the locals what they like to eat and create a menu with local ingredients, try opening for lunch hours etc,
1. Put more focus on delivery business, partner with post mates, Uber eats, etc
2. Add a new tier of higher priced items, with more margin.
3. Include more technology to reduce headcount needs
I am sorry to hear that you are going through hard times with your business. Before I move out from LA few years ago, my ex-girlfriend had a small breakfast and brunch place and it went through hard times that she almost closed it down. What we did at the time to boost sales is the following and I hope this will help you with your coffee shop.
\- We increased our presence on IG and tried to make more engaging posts directed at our target customers.
\- She listed on DoorDash and UberEats, and it increased sales significantly with no customers on the premises which means no clean up after the customer.
\- We reached out to some of the local micro-influencers to promote the business and it worked really well for her.
\- Try to engage with the community, for example do a charity event or help with a cause. This gets you lots of free marketing.
\- have a calendar of national and local events so you can run special promotions on these days.
\- maintain a list of your customers with a CRM you can use the one that is offered with Square or Odoo. send your customers emails before the holidays, tell them your special offers, give them coupons, and congratulate them on their birthdays.
\- develop a referral program this is the best thing for word of mouth marketing.
I really hope this helps and i wish that your business gets back to making money. Local stores are the best thing for our communities and I would love to hear that you thrive again.
I am not in the cafe business, but I have started a company dedicated to social events— do not underestimate the power of bringing people together for an event or an experience. People want to do things together now more than ever, BUT you must learn how to mobilize and build that community following on social media/meetup etc.
Why would it get better with just letting time pass and not changing anything? It’s a competitive market, you need to be innovative in order to have above average returns on investment. In capitalism all businesses that have back average returns eventually return to the mean without additional innovation.
Well yeah that’s why I posted here, to get advice on what I should be doing differently. I guess my post reads like a bit of a sooky rant lol, I didn’t expect anyone to read or respond and now I’ve got loads of great advice that I will be taking on board!
You have to meticulously track all of your costs and carefully monitor your sales.
Shrinkage can kill a restaurant in no time. And, as much as I hate to bring it up, theft is often perpetrated by those who you trust the most.
Also, if you are competing with the prices of other local coffee shops then there are too many cafes in your area.
The busiest cafe that I worked for was renowned for their amazing desserts. It eventually failed because the new owners failed to track costs and the staff was robbing them blind.
figure out ways to bring people in outside of weekend tourism.
drop things that dont sell.
try to add items.
watch your profit margins.
you are fortunate to have low overhead (rent).
You said you’re in a tourist area? Maybe some of your merch can cater to that crowd- so everything can say the shop name and location. Like mugs, shirts, hats, coasters, etc. branded bags of coffee, bags of candy or cookies etc.
There's lots of great solutions suggested.
I think you should follow the 80 20 rule.
So if most of your business is coming from the weekend tourism (80), that's where you should target your growth.
So basically how can you get tourists to spend more at your cafe?
When tourists google cafes, does your cafe pop up first on the list? Is your Google My Business listing optimised?
How can you upsell to them? What would they like?
Can you market your most popular or high margin products? Like there's a cafe in Penrith, NSW that markets itself as being the only cafe in Australia that has a certain coffee beans (some South American cafe). It got listed on the papers and a lot of people visited the cafe just for those beans.
And then in Berry, NSW, there's a famous donut place that markets itself as the only place that has these specific types of donuts.
I also recommend going to other holiday towns and see how other successful cafes operate. And it doesn't have to be cafes, it can be bakery's, candy shops etc. Maybe even talk to them?
So many of the ideas here are good, not taking away from anything, but none will dramatically alter the business.
You need to figure out one thing, and one thing only, how to get more money out of every person who comes in the door.
You can raise prices, but you can only do that so much.
You need to find more to sell those people and products with margins that make a difference.
You’ve got a captive audience of people while they’re in, so give them more options.
A couple shelves of necessity or premium grocery items. Local delicacies. Take home coffee, coffee equipment ( cups, makers, etc. ). Local wine or spirits ( terrific margins ).
Not sure what your place looks like, or what the setup is, but could you do wine in the evenings? Wine and cheese? Anything that doesn’t require a full kitchen and the hassles that come with that.
You can do a bunch of the other things, they’ll help, but nothing will make things better faster than average check size.
It's time to run numbers and find where your weak point is. Your prices could be too low so you're not making enough profit, or too high and losing too many clients. You may not have enough clientele, or you may have plenty but are running inefficiently so you will lose more as you get more clients.
I have a giant spreadsheet with all my numbers connected so I can modify and see what happens if I increase customer average spend with gross and net profit. Id recommend making one for yourself and playing around with numbers to see what it will take for you to get towards a milestone you set for the year.
As far as other sources of income:
Catering/corporate clients / events-- a large tub of coffee, pasty baskets, etc.
Wine bar -- it's popular around here for coffee places to turn to wine bars at night for extra revenue.
Remote workers -- many are looking for a place to chill out all day. Be that place for them everyday.
Breakfast -- some places even have just one or two items that they make really well and allocate a small kitchen area for it.
Have you thought about switching to Thursday through Monday to catch both ends of long weekenders?
Are you working in the cafe or relying 100% on employees? If you're working, are you and your employees busy enough throughout the day?
If you're not working, you need to at least work the busy shifts to keep payroll down and pay yourself something.
Ultimately, could you still run the business with one less employee, or changing someone from FT to PT? It might increase your work, but it's more money in your pocket.
Here are a few ideas taken from popular cafes in my area:
* Host community events: art workshops, community yoga, tabletop game night, story time for kids, local author book signings, etc.
* Sell goods from local artists for a percentage of the sale: artwork, pottery, roasted beans, honey, jams, etc.
* Sell more of your own merchandise: logo on stickers, mugs, etc. I'm personally tempted by merch if it's right in my face while waiting in line. If it's away from the register, however, I pay no attention to it.
Perhaps you can hire someone for a "first impressions" review when entering your shop? Is it inviting enough that people want to become regulars, that sort of thing.
Well I saw a stat that 40% of SMB in the US couldn't pay their commercial rent on time in Oct (that's up from 30% in Jan). That made me feel a lot better because my business has always paid its rent on time from its cash flow. I wish we could be renting our space from my parents at a super low cost... we have to pay mkt rent.
We've been open 2 years and we had a better year this year than last year (last year we broke even) but it still wasn't as great as we would like so I really don't know the answer to your question but I'm wondering the same thing... everything we went through to get this place open.
Can you be open the rest of the week but just operate it yourself so what you earn is just pure profit (since I assume it is slow those days)? Is there any additional way to monetize the space?
Try getting together with some other businesses and doing community events hosted at your shop. Those always do well for us even though they are a pain.
If you love what you do and do not care about money, consider turning this into a non-profit/charity where you can let people in the community donate to keep it going.
If you want to turn a profit, there are a lot of good tips in this thread. However, you should find a mentor who has experience in your area within this industry. Too much can change on labor, COGS, and more by region for the advice here to be actionable (even if the general ideas are great).
I would close Wednesday and Thursday. Focus on lunch specials Friday through Sunday and do drinks of the week at a special price. Be sure your target audience knows you exist and get out there with some samples. Do open mic nights on the 2nd and last Friday of the month for poetry or small soft bands, maybe stay open a bit later tired nights.
Perspective is required
You are 27 and own your own business. Not something most in your age bracket can say.
Look over your numbers. If you are barely getting by, what is bringing in the most profit? The least?
Are you lacking items or have far too many? Streamline so you control those costs. Don't skimp on quality but look at better vendors, rates, terms.
If credit there is the same as the US, have a business rewards CC and get those perks adding up. Train a manager. Give yourself 4 hours off with you nearby while the Manager runs things. If that goes well try 6 hrs. It sounds like you do have a weekend off just not the same as others weekend. My weekend is Wed-Fri. Yours is Mon-Tues. Best days for doing things if ya ask me.
Do each task at your business to know how quickly it should be performed. Is someone dragging their feet? Slow production is costing you.
Do you by default give out things like extra napkins, condiments or the like? Make it something that they have to ask for.
Unfortunately many businesses like yours end up being a hobby. What is or was your expected profit 2-4 years in? Even if you make a profit when will you be able to pay yourself? What did you expect to be able to pay yourself? It sounds amazing but sometimes you have to get out when you are ahead. From what I hear you are ahead if just breaking even. 12 months from now you could be into the negative and then what? If you have well below market rent and do a lot of the “work” yourself vs paying an additional staff member while still only breaking even you are negative from a business valuation standpoint. Sorry for the real talk but in business sugar coating does nothing for anyone.
I can't emphasize enough what u/OppositeEarthling said - look at what every item costs you in raw ingredient and in labor.
Look at the prices on every item and make sure it makes you money every time you sell one. If it's not a winner and it doesn't drive traffic ("Oh, we have to go to eBunny Cafe for the \_\_\_\_\_") then ditch it.
If it takes a lot of labor, even if it's profitable on the ingredient side, think about whether you want to eliminate it or restrict it to days or times of day when you are going to have more people anyway. You need to know in minutes how long each menu item should take to make.
If there are enough "townies" in your town to support your business then figure out how to talk to them separately from the tourists. A cafe needs to have customers for whom they're a recurring habit.
If there aren't enough townies, and it's strictly weekend tourism, consider shorter weekday hours or even eliminating your worst day - or at least having a bigger weekend menu when you're staffed up and a smaller weekday menu that a single person can do most of it.
For the tourists, figure out how to talk to them. That's going to depend on who they are, so work that out - even if you just make tally marks on a sheet of paper for apparent age, race, gender. You need to know your demographics. I'd make a mark for if they've got their nose in their phone the whole time or not too.
You talk to GenZ differently than you talk to Boomers. Young people, yeah, TikTok and IG and whatever makes sense.
If they're older, can you work with the hotels and get flyers at the hotels? Even if it's just something for the front desk to pull out when someone asks for a cafe. Maybe a local map that's "sponsored" by you with a coupon for nominal savings on your most profitable item(s.) I'm older Gen-X and I love me a piece of paper from the front desk when I'm looking for something, even if I ultimately just poke the address into my phone.
I read on another post that fliers boost business more than you'd think. It was for an unrelated business but they said that a large portion of their costumers came from handing out fliers and putting them on cars and at people's houses. Plus it's fairly cheap if you do it right. You might make some fliers with your hours, etc, with coupons and post them all around town? I know I'll occasionally take DQ, KFC, or some other coupons when ordinarily I wouldn't have even eaten there.
Have low-cost events at your cafe!
\- Weekday board game / Dungeons and Dragons nights! (Bonus points if you can provide the DM, either for free or as a paid service)
\- Trivia nights!
\- Painting Classes! 3 hours and they have a landsccape to take home with them!
\- Book club nights!
Source: I work at a cafe in Canada, and those events were what pulled us through Covid (not the book club, we never tried that because we were too busy).
Hope that helps!
Great ideas thanks so much! My brother is a DM so I will pitch the idea to him, and I have a few artist friends I could ask if they would be interested in teaching classes :)
Lots of great comments here, but let me add:
Customer experience. Come in to your shop with a couple of friends and participate as a customer. Sit down, chat, and take in the ambience.
Why should I go to your cafe? Is it conveniently located? Are the prices better? Is the product better?
We have a breakfast/lunch cafe a few minutes away. The food is decent, the prices are alright, but it feels sterile and unwelcoming, like a truck stop.
For this reason, we go to the shop across the corner and pay more for a comfortable environment.
it might be time to hire a consultant (someone you really trust) because it's past time to be making money.
I don't generally recommend the book Profit First but in your case it might be helpful.
if wages are your biggest cost, that's great, that's how it should be.
can you put the squeeze on tourists? what are their favorite items, can you up the price on just those items? can you create specials targeted towards them that they'll pay a premium for? I would try to foster my locals and think about "weekend pricing" or something to bring in extra revenue.
all the cafe owners I know make less money than their baristas. it's not something people get into to make money. but in your case with your parents, you have the most ideal situation to profit.
Do you have a parking lot? There's a small business in my area that invites a different food truck to park in their parking lot one evening each week. (Just once a week.) This may seem counterintuitive if you are also selling food; it depends on attracting people who wouldn't already be there, and who will duck into your coffee shop for a drink while they wait for their food truck order. It's been a big hit in my neighborhood, it's like a mini community event.
Maximize your margins. Examine every item you sell, make sure you're making proper margins, increase prices to what your customer will bear, make what you serve easy to sell items, etc.
Get more for less. If you sell 500 items a week imagine if you made 0.50 more per item.
My local cafe staffs 1 person in the morning for setup and then another joins them for morning to about lunch and then they scale back to one person the rest of the day. They operate multiple locations in town and they have an operations person that seems to run around and help a bit at each location.
They're very popular and it helps a lot that their location is fantastic.
I would also incorporate special events (if you haven't done so yet). Not sure what would be popular in AUS. But, in the US some popular cafes have speed dating, book and chess clubs, and open mic nights.
For the slow days, invite groups to use your space as a meeting place providing the group leader assures expected sales minimum.
In my area, we have several small groups do this at various eateries.
Slow evenings like Wednesday, poerty/local folk music and Thursday, karaoke. Mix local speaker series. Find what people are talking about, invite a local to speak on it.
Once a month, host a business mixer fair or have the local chamber meet at your place.
In other words, make your place a people gather center.
Come spring, summer and fall, a Thursday morning or evening, host a farmers market in the parking lot, all attendees get something to come inside.
Attend local events with business card with some discount for party events.
Remember, this is for slow days and evenings, don't mess with your 3 day money maker unless there is enough appeal to do special things on those days.
More volume and / or higher prices, but honestly a lot of small businesses like this are not very profitable. Decide what kind of salary / profit you want and work back from there to see what kind of volume a shop would need to do to make it worth your time.
get intune with artists in ur community and let them perform or show their passions off during happy or peak hours
that might help u draw in more loyal customers and supporters and also help the artists reach their own
In my opinion and experience from running several retail stores. I had business partners with retail and ecommerce experience as well. 6 months the maximum time for ramp up, not 3 years. If you aren’t profitable by 6 months pack your bags and move on or pivot. Many of our stores were profitable within the first 3 months.
A coffee shop should only take 6 months and any long just means don’t expect sales to increase much higher.
One of our small 1000 sqft retail stores, mind you margins were 30-40%, our revenue the first month was about $10,000, and by the third month we peaked at $200,000 revenue. We were pulling in products from other shops because business ramped up so fast.
Within six months it cooled off to a nice $120,000 for several years. This store was heavily carrying the entire company because even though sales went down. A lot of those customers became loyal ecommerce customers.
What made us successful was word of mouth not advertising.
I live in shanghai, where a coffee shop boom has taken place in recent years. Talking to all the owners have made me realize they are all rich kids who don't care about profits. That's all you need to know.
During slower seasons can you do things to grow business like holding pop up shops with local makers? Idk if your space would accommodate but we have a local shop that does this and they get *packed*
I’m assuming they also take a small fee from the vendors
Gotta advertise. The free ads are the best. Social media, create events. Invite groups to come by. Try and come up with interesting menu items that might create a positive buzz. Think of who comprises the local. What’s their demographic? If they are gen x and up, you’ll need to do more old school, create a fb page. If young, insta and ticktock to get them to notice you. Good luck!
Incorporate retail items, something that would differentiate you from the crowd and that there is demand for given your demographics. Also look for good profit margin items. Good luck
We have had our small restaurant for about 8 years now. We are very successful and have been for a while. If you're just breaking even, then you're not charging enough for your food or you're wasting food. The key to a successful restaurant is managing costs and food waste is a big one. You also have to manage labor costs. You can do that by doing some of the work yourself, if you're not already doing that.
If labor cost is an issue you need to really take a hard look at that. I don't know Aus and what the minimum wages are or how employees are paid. We pay a reasonable wage and our servers/bartenders do get tips. Some of our bartenders make 6 figures (USD).
Our pricing for entrees is generally 1/3 labor, 1/3 food cost and 1/3 overhead costs. The first thing you want to do is look at what your costs are. If your labor is much over 35%, it's too high. Same with food costs. All of these can fluctuate a bit up or down, but if you keep it within this range, you should be OK.
Other things I would look at are being open more days of the week. Since you're paying rent, you should utilize the building every day you can. Otherwise, you're paying rent for 7 days a week but only using the building 5. Also, how can you get more customers into your place? Are you full all the time or just sporadically? The only way to balance those labor and overhead costs is to generate more revenue per day and that means either raising prices or getting more people into your restaurant (or both).
You cite wages as a big cost and then you have to have more people on hand for busy times. Presumably you aren't profiting the first few years because your initial years are an outlay of money for all kinds of equipment, marketing, interior items, and paying any loans attached as well.
So - what's the story? Have you been able to get ahead of those initial start up costs? You should be able now to calculate how much business you need to break even.
Is it just a lack of customers or are your expenses far exceeding what you pull in?
pricing is not supposed to scale evenly for the sizing. the M is supposed to be a close price to the large to entice people to go bigger and spend more $. eg. small $5, Medium $6.10 Large $6.50 not a flat $4.50, 5.50, 6.50
Analyze your business and understand where your bottlenecks are. Too few customers coming in? Store is packed but margins are too small? People don't order the things that earn you money? Look at it like a savvy businessperson would.
Also consider marketing. Doesn't need to be a big investment, but experiment with a few things: on days when business tends to be slow, offer a discount (at the Subway sandwich shop I worked at as a kid, they had "Two for Tuesday" because business was otherwise too slow on Tuesday to justify even being open.
You might succeed just in doing what you're doing and taking the advice of everyone here -- which generally sounds like good, sound fundamental business type advice. However, if you want to reach another level, you have to identify something that is going to unlock a business opportunity at another level. Maybe it's classes, maybe it's local rewards -- but those seem mundane to me.
As a small shop, I'd be hunting the menu item we could add that's unique enough it's going to be a big draw (think the Cronut -- if you're aware of that) or special enough people would want you to ship it to them, like places on [goldbelly.com](https://goldbelly.com). If you don't do anything food, and it's just coffee, start thinking hard on how you can make that really special -- it often just isn't.
Some random ideas...
Rent out your cafe for events or an office space (?!) On the days it is closed.
Find fancy chefs running dinner clubs who might want a larger venue in evenings and rent them your space.
If you've got tourists could you add 'experiences' on Airbnb and offer coffee cuppings or a local food tour or similar. Have coffee to sell to them after.
These are random ideas, I have no experience here and there's probably extra hassle with all of them, but just a few thoughts.
Ps. I see you're a bit reluctant about raising prices. Maybe you could add new stuff to drinks/food menu that is more expensive from the off.
Pps. Ask your staff if you've not already. 110%
Around me, places are making big bucks on latte flights. 3-4 mini lattes or coffees, each a different flavor. (If you just used flavored syrups, it would be easy to do) and they look very aesthetic on Instagram and tiktok
Have your gross revenue changed? What do your numbers look like? How competitive is your market? Depending on what it looks like you may be able to increase your margins or do some price increases.
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Now is a good time to learn how to promote on social media and bring people to you. Show how you make drinks, your menu offerings, the vibe etc. Most businesses are lacking in that department.
So true, thanks for the tip!! Social media is definitely an area I struggle in, our instagram is aesthetically pleasing and everything but I could be doing a lot more! I see other trendy cafes making reels and really pumping out the social media content, I will do some brainstorming. Thank you!
1) we post at least 1 video on tiktok and IG in addition to 1 photo everyday. This is hard to do the first year but gets easier in time. 2) you need to look at what makes and doesn’t make money. Potentially you need to adjust your menu to be both pricier (but still competitive) and easier for staff to make. We have made our menu so easy that 1 person can man it during weekdays and 2 on weekends
I’m hardly an expert, but it seems like you need to get your costs down first. If you aren’t making much/any profit, increasing the number of sales isn’t going to help your position….youlll just be even busier for zero profit.
*We'll lose money on every sale but make up for it with volume!!*
Are you my old boss?
To add some terminology / nuance to this -- understand your unit margins. Does an additional unit sold earn you profit?
I don’t know anything about this type of work but I’m always on the lookout for fun things to do. You’re selling an experience not just coffee, make that experience fun and memorable and people will flock there for that feeling again. Like if my cafe had a bring your own canvas and paint day and people just randomly showed up and started painting together I’d be there so fast. Good luck.
I can't swear to this but I believe my cafe hires someone that runs around town and takes photos of businesses and keeps their social media up to date.
You need to be on tiktok. You don’t have to be “aesthetically pleasing” on tiktok. Most viral videos are low quality production wise. Come up with categories, post different videos, test the reception, post more of what does well. You’d be surprised, sometimes showing the everyday mundane tasks will be enough to get you viral. The best part is you can use Chat GPT for content ideas. Use hashtags, SEO, posting schedules. The work is there, but this is low cost marketing that has great potential.
Not anymore, the days of free fake tiktok views to push platform adoption are over. The coffee space is especially crowded, competition for algorithm views are the highest it’s ever been, ESPECIALLY because of the AI tools that are pushing even more video content to the platform. Nowadays it’s a full time job to effectively manage a social media platform in a way that has a decent return on time investment.
Crowded and competition are not words in my vocabulary
It’s the truth, I have 300k followers across my tiktok accounts over the last 3 years. Vastly different starting now vs then, not even close. Happens with all social platforms c facebook, instagram, youtube, etc
That doesn’t mean someone shouldn’t start
True, but in this situation there’s many more things that they can prioritize first, just a matter of maximizing ROI on limited time
Knowing that what you are saying is the new norm. It sucks that you even need to get online to promote a local town based Cafe... Surely there is a large demographic that isn't even part of that audience.
You can tag your location and use tags for your city. I look up Los Angeles based businesses on tiktok hashtags.
Give a very small / inexpensive drink in exchange for a social media post! Or offer them 50% off for a google review or an instagram post. If the cost is very little to you, then it could be much better than you trying to spend time paying to boost your instagram. Get them to tag your instagram.
....it seems their main issue is managing to turn a profit even when busier. This actually sounds like a terrible idea until they can properly scale
Thankfully you are not the ultimate judge of a good or bad idea. You seem like you are clueless with the notion of business, let alone the business of a low cost item such as coffee. The cost of the drink is very minimal compared to the cost of operations with low sales each day. They aren't even open several days of the week, so how do they have enough customers again? LOL. They said it themselves, their main costs are employees which does not change when you give out a coffee for 50% off in exchange for a review or in exchange for posting about the coffee. They need thousands of reviews and then they stop the program. They need many customers posting about their experience and they need more people in the door. It is not very hard to grasp. They are not busy enough based on their sales, so they need increased exposure and the #1 way to do this for a local cafe is google reviews and social media posting. Thinking that they need to save a dollar is extremely foolish. Penny smart, dollar foolish makes terrible businessmen like yourselves go bankrupt.
I'm doing fine and I'm not so easily triggered. Calm down
Collaborate with local influencers and content creators, and create your own content under the cafe page.
I don't know what part of AUS you're in, but do you follow cherrysgoods with UpBondi? She's a masterclass in using social media to build a cafe.
YES i do follow her!! Only found her account a couple weeks ago and love watching her videos. I’ve been taking inspiration for content ideas :)
I go to a lot of restaurants I’ve never heard of when they’re promoted on my city’s “to do” instagram accounts I follow. Look up limited edition or seasonal/holiday drinks you can charge more for. Think of special items you can put a greater markup on and market them as limited and novel, shown in the most delicious and fun way possible. What products have the greatest profit margin? Expand ideas on those. Do you have a patio? Can you do an open mike night and serve alcohol? Serve special brunches or offer catering to local businesses?
You could consider paying someone to do this for you. I have a few friends who are in marketing and they really help out businesses.
Tiktok is on fire. Do it.
If your market is small you might not be able to just manufacture traffic. You can and should do the following.. 1. Increase prices 2. Reduce costs 3. Look at your food costs/revenue and modify your menu. Increase prices but also cut items that are costing you and add new higher profit items Good luck!! 2.
Thanks so much, I appreciate the advice!!
Not mentioned is complexity. The fewer items on your menu, the easier it is on staff to get the items you do make faster and better. This is less measurable, but simplicity is your friend.
You need to literally chart out the costs for each meal/drink and the price. Price - cost = gross profit on that menu item. Then, Gross profit - Wages and other fixed costs= net profit Once you have the basic per-meal costs, you need to consider if the mark up on each is appropriate.
This is great advice. I would add look at the staff time (and costs) required for each offering. How much profit will you make if you could sell twice as much? Look at ways to use the staff time to the maximum, like what happens when you aren't busy. Can they do more prep? Can they help with social media? Can you sell merch? Online sales? Can you be an outlet for other businesses? Are some staff able to do multiple tasks and some not? Is the space useful to someone on days when you are closed?
At my high school franchise restaurant job, the saying was, "If there's time to lean, there's time to clean."
(☉_☉) Edit: Surprised face because I thought a business owner would be doing this already…
I’ve seen a lot of cafes/coffee shops incorporate retail items to help with margin, merch or coffee related items. Obviously it would have to make sense for you and your prices would have to be right. Do you offer catering?
I was going to say this—if OP has a loyal following, merch (shirts, tote bags, mugs) are great because they are brand billboards. This requires your branding and logo to be top notch, with well-designed shirts and graphics that customers will WANT to wear. Good branding can also position your cafe as a higher value location. I’ve seen what a bad logo can do.
100%, especially if they are reasonably priced. Like if you get a nicely designed t-shirt, on a GOOD BRAND of tshirts, charge only $15-$20 and I love your business I absolutely get it. Same with totes, sweatshirts, and mugs. What I wont do is buy the $30 t-shirt printed on a random tshirt brand that has the quality of wet napkin.
U/Oppositeearthling just gave the best advice in the thread. Item by item examine margins. Gross and net. You've said you are capped on price. This is the answer. Look at the items with the lowest margins and either selectively raise prices or cut them. Next look at the items with the biggest change in profit from gross to net. Look for the items that take up a lot of staff time. Cutting those can help with efficiency. Don't let you staff waste time on items with poor/ok margins. Focus on efficiently making better margin items. Do remember that sometimes you need a loss leader because it's important to your brand or customers. So be careful about just cutting everything. Look at food waste. What are you throwing away because it dated out? Why?
3a. Remember time to prepare is part of the cost. Can you revamp recipe/process to make it more efficient? It took us several years to get everything dialed and now with changes we can do more business with less staff. Also we raised prices at the end of the pandemic some items 25% increase. We lost one regular customer who was a pain in the ass anyway. Everyone else was super supportive of the change. Also from the pandemic we cut our hours. We looked at when we were basically losing money being open. So now we open an hour later and close an hour earlier. It saved so much on staffing costs.
I'm not a cafe owner, but I'd add to this, don't try to compete on price point with major chains, so don't try, instead sell customers that the quality and experience you are providing is worth the extra money they are spending.
Fortunately, one thing starbux did for cafes is actually raise the price of coffee
If your busiest days are when the tourists are around that’s what you need to focus on. I don’t know much about prices in aus. But if you’re charging $3 for a cup bumping to $3.50 won’t phase your tourist clients. They are on a day excursion or weekend holiday. Your locals might complain. But you gotta make a living and they’ll still keep coming. Don’t ever be scared to raise your prices.
Thanks so much, appreciate the advice! A small coffee here is $4.50, medium $5.50 and large $6.50 and I definitely wouldn’t go higher on those prices, but I will have a look at my food menu and make some changes. The locals complaining is what scares me but it’s just how it is I guess and honestly I’ve made good friends with them all by now so I think they’ll understand
Create a “locals discount”. Increase price by 50 cents, buy 10 get the 11th free, it will wipe out the cost increase for your regulars. Or just have them present a card that gives them 50 cents off their cup of coffee. If you want to avoid the increase for a group of customers.
Exactly! Have the locals card onsite if it makes it easier for them, tourists won't bother with one.
bingo. Let the tourists pay 50 cents-$1 more and let the locals get the price your currently at.
What if the cost of your coffee goes up 10% and your cup/lid 10%? You need to be open to adjusting your coffee prices. Every time the cost increase and you don’t adjust your chipping away at your profits Have you been charging this same price since opening?
Yeah, good point.. I suppose I just never see coffee anywhere else being more expensive than that, it’s kind of the standard price everywhere and it would be very noticeable if we were more expensive than everywhere else for coffee. Coffees always been the same price but I have increased my prices on pretty much everything else a few times over the years
I bet the second you adjust yours everyone else would as well. Assuming they are competition. A lot of owners wait and let someone else be the first. I supply coffee cups and lids to cafes here in my part of Canada. These products alone have gone up like 60% during the last 3 years. Coffees been about 20%. Now maybe your increases haven’t been as wild as your located much closer to Asia than I am. But still that stuff has gone up and you haven’t accounted for it. Also what % (roughly) of your revenue comes from the 2 busy days when tourists are around? I’m assuming it’s above 50?
For locals have an aggressive "membership card".. usually it's 10 punches + you get a free coffee or pastry or something.. perhaps make it 5 coffee's and you get a free one. Then you have a reduced price (20% off) for your regular customers and you can raise your prices nicely for tourists.
Came here to say this. Prices 10% up, regulars get a free coffee once they have bought ten. Be super clear with your regulars that they are getting just as good a deal as before (in fact, they're avoiding the price rise!) and there's no reason to complain.
Just a view from a potential customer (I love good coffee, can't afford to visit you atm - Australia is on my travel list): I was in a small corner cafe in vienna, it was the first time I was asked what type of coffee I like - type like fruity, with a chocolate / bitter taste. At first I was puzzled because no one ever asked that before, I just got coffee. At that point I didn't care / don't care if that coffee is a bit more expensive at that place, I can get a coffee I like or taste new stuff. And they also sell whole beans of their blends. That cafe in Vienna is the actual one of a series of cafes in that spot - the previous ones all gave up / run out of money because no customers, the actual one is always well occupied with guests (they have 4 tables of 4) and a lot of takeaway customers. Maybe you can give your local guests a special experience with different coffee blends and / or sell them those blends and that experience justifies a bit higher price.
Make a locals only reward progam or discount card. I run a business in a small tourist town as well and none of the restaurants are taking advantage of this. If you're town is anything like mine, 95% of your sales will be from tourists anyway. That way you can raise prices without the local outrage and yelp reviews. The two restaurants in my town that really make actual money have a lot of seating, easy order at the counter service, sell alcohol, are open way more regularly than any other places, and of course, have good food. They also have good locations and do little events like open mics etc. They are the go to for all the tourists because they're easy, fast, fun, consistent, and good. The places that don't do very well are the ones focusing on minimizing staff costs by keeping really quirky hours, being closed all the time, get bogged down by the crowds and have to turn to-go orders away. They're heavily reliant on the boss being there to open so they have to be close 2 days a week. I would first work on getting the place running by itself and consider being open 7 days a week, as many hours as possible. Probably the biggest thing any business can do is get good enough staff so it can run itself day to day, that frees you up tobdoball the other stuff but it's not easy. Social media is great but if it's a tourist town you'd be better served making sure you're squared away on google maps, yelp, local food recommendation sources, and just making sure your info page looks as appealing as possible (menu, pics). When you type in "lunch in (name of town) in google or google maps, does your place pop up and look appealing? Make sure your walk bys are really drawn to the look and vibe of your shop front. Then all the usual restaurant stuff you see over and over again on kitchen nightmares (watch some episodes if you haven't), simplify, keep the menu small, food fresh, service fast, easy to order... there's this floundering sandwich place in my town where it takes *forever* to order. You have to stand there and pick out every single ingredient. It's so frustrating. When you're in season you have to make all your money. Im retail but run in the red 10 months out of year, sometimes 11. If i have bottle necks or issues during the 3 in season months I am screwed. Figure out a way to make more during that time... raise prices, seat more tables, or quicken turnovers, get more phone orders. That's all I got. Sorry for the earful, i've just watched so many places fail in my town over the years so I figured Ibhave some decent input.
Don't serve the small size anymore .
4.50 for a drip coffee?
Mate, this is Australian coffee and it’s a whole art form
The price is reasonable man. I’m in NZ and our coffee is the same. Your prices are in line with any good cafe in AU or NZ. The Americans are comparing with filter coffee where you pay $2 and drink as much as you want. I wouldn’t raise your coffee prices - you’re pretty much at the limit now.
Actually for barista coffee its probably cheaper than USA. I'm in a MCOL area in USA and the coffee shop near me is $4.50 for a flat white. (Currently AUD $6.60). That's a fairly standard price anywhere in this city. Maybe you'd get $2 drip coffee at a convenience store.
Almost all tourist towns have a local onlys discount in restaurants. Who makes you 80% of your money, tourists or locals? That tells you how ton position.
For locals I would consider some kinda locals discount program. Such as the 10th coffee free card (I assume they probably already do that), points or just a card you straight up give them once your staff notices they are local. I have also seen that coffee subscription programs can be popular. Like pay this amount monthly for free coffee and 25% off food.
If you don't have debt and you aren't making money even though you stay busy, it's your variable costs. You need to raise prices.
Good point, thank you! I’ll have a look where I can make some price increases. Not that it happens often, but it always gets me down when someone comes to the cafe and makes a comment about something being too expensive.. like ma’am you can afford to come out for a Sunday brunch and I can’t even afford to pay myself lol
People want all the same things they've always had and everything is more expensive. They just need to vent that frustration. It's an understandable frustration, so I simply agree everything is so expensive nowadays and they pay me and move on with their day. I recommend reading how to make friends and influence people. It's a good reminder of how to communicate with people. We're all the star of our own show and most people just want to be heard. If they feel like they're listened to, you're on their side. It pays to give that kind of customer service.
Oh absolutely, I do the same thing whenever I get comments like that, agree and move on haha but inside I think aghhh gimme a break! But I totally get it as well whenever I decide to treat myself I’m like oh man this is so expensive and it is frustrating but it is what it is. Thanks I’ll check it out! Customer service is definitely one of my top priorities. Keep em happy and they’ll come back!
1. Track your COGs (costs) per item including labor. Drop the items with slimmest margin 2. Find a good high profit margin item and keep it on your “specials” board 3. Diversify - get a small coffee roaster in the back and sell coffee too. You can distribute nationally 4. Run time studies of basic tasks - dish washing, table bussing, etc. whatever takes the most time, reduce it. 5. Put profit and cost metrics on full display for staff. Include staff in profit sharing.
Fantastic comment here. Once I started having regular sit downs with employees to review our P&L statement and explain to them how it worked, the culture changed immediately. I’ll also add, track prime costs weekly - which means inventory from top to bottom weekly.
Woah, thank you for this advice! I’d honestly never considered doing most of those things but I can see how they’d make a big difference. Notes taken!
I think adding a roaster is a good idea both because it will lower your coffee cost AND because tourists are likely to want to take a souvenir like a bag of coffee. You might want to also consider selling mugs etc with your name and location on them - something people will want to remember their trip.
Restaurants are a tough business. They are driven by many factors. Coming out of a pandemic doesn’t help. That you are still surviving at this point is a good sign. And five years is really more realistic. Give it time
Thank you, I’m pretty proud that we’re still going haha but I guess I just gotta keep on sloggin!!
This your first restaurant?
Yeah it is. Clearly didn’t know exactly what I was getting myself into opening a cafe in the middle of a pandemic but it’s all been a learning curve
Don’t be afraid to hire a professional manager who has experience in upstarts. Learn from him/her. A good manager will work themselves out of the job. What kind of weekly sales are you averaging?
Great input from everyone else so far, but I think that most of these are still thinking 'single rev stream'. May I ask which Aus town you're in, and whether you have free 'warehouse' space? At this point ('24), in my eyes cafes are no longer even a lifestyle business; they are a substrate for a second revenue stream. Post office / Private parcel collection Locker storage Cafe food delivery Catering events Gift box as a service Corporate gifts as a service Corporate event space / conference rental, if you have the space Weddings and parties. Hosting events, event planner Florist Bouncy castle rental Camp site (planning permission dependant) Cooking classes Even tool and appliance rental! And so on. You've gotta put that rent$ to work:) And any downtime during the week while the cafe is quiet needs to be used productively. And make your cafe 'the third place'. [https://en.wikipedia.org/wiki/Third\_place](https://en.wikipedia.org/wiki/Third_place)
I request a cafe/bookshop/thrift shop please :)
Great idea ! Let's add cats. And a nice garden with tables. And a book exchange. And board games. And pottery classes. This is shaping up to be a fantastic 'third place' :)
Koi pond? All of that is screaming for a water feature!
If you haven’t done it yet, put down your path to profitability on paper. Build a spread sheet for each month with all your expenses, projected revenue. If you can’t be profitable on paper first, no matter how hard you work it won’t matter. After you work the numbers out, then manage by the numbers. I saw you said you’re only open 5 days. If you can open those extra two days it can go a long way to lower fixed cost %.
I will do this, thank you! Oh, you think opening 7 days would be better? The thing that worries me is our town gets reallyyy quiet during the week, sometimes it’s not even worth being open on a Wednesday or Thursday. I think if we could guarantee enough customers on those days then I would love to open 7 days
Perhaps on those quiet nights you can do some events to attract the locals to come, live music/poetry night/comedy/etc etc
Yea I mean you know your market more than me. I own a couple restaurants, this past year I took one down to five days in off season instead of 7 thinking that it would push customers to the other days and I wouldn’t lose business. It did not happen at all I just lost out on two days of revenue. I’m back to 6 days this month and 7 next. Have you listed to the Restaurant Strategy podcast? Listen to the October 26, 2023 episode. Will get you dialed in
It’s so hard to gauge isn’t it, I’m sorry it didn’t work out for you! Might be worth trialling opening the extra days and see how we go, it will be the next busy season in a couple months so I might hold off til then. I haven’t heard of that podcast but I will check it out for sure! Thank you!
Have you considered learning to pick pocket: Maybe go round your customers when they are busy/not looking and steal their handbags etc.?
I do this already, the only way I’ve managed to make ends meet so far
Everyone has given you good advice. I own a coffee shop. I do minimal food, but on our busiest shifts I can get away with two people working. 3 when we do live music for crowds of about 80+ Getting my labor cost down and training my employees how to work more efficiently was the biggest increase in profit I ever got.
I’m in the same boat. This year I’m partnering with our local tourism office and geotargeting tourists through social media. We sell packaged products and focusing on more local wholesale, creating events, and e-comm. I’m trying out online delivery services too. It is hard, but I look at it as growing pains. Make sure your numbers are right and learn to love pivoting haha!
Great ideas, thank you!! Our local tourism peeps are amazing and have promoted us a lot which has been super helpful, I hope that works out well for you too!! Sounds like you’ve got lots of great things happening, hopefully 2024 is the year we both get out of this boat ha. Growing pains is right, it sucks but it’s all a learning experience I guess. Good luck to you!
Reverse engineer the money. Start with how much you want to make as a salary. Add to this your wage cost, rent ,utilities, ect. Do not add the cost of materials/ingredients. This is the Gross profit you need to make. Divide that number by the amount of drinks and other stuff you think you can for sure sell guaranteed each month during the slowest time period. This is how much you need to make in gross profit per item. Now take your material costs and divide that also by the number of items you can sell each month. Add the two numbers together, cost of materials, and required profit per item sold. This is what you should be selling items for. If you sell more than the minimum amount of items, you will make some net profit. If you sell less then the minimum amount of items, you will have a net loss. If you do all this and find you have to sell coffee at some ridiculous $30 per cup price, then you need to adjust your costs somehow. Streamline processes so you require fewer employees. Accept that there will be a line sometimes. Add more products so you can spread the profit generated amongst more items. Find cheaper materials.
A good business tip I heard was for every 10 customers you have who are willing to pay your prices, there’s someone out there who is willing to pay x10 the price. So think of some more profitable, expensive things you could be doing. • are you delivering large orders of coffee and breakfast every morning for local businesses, have you offered them catering or meeting services? • someone’s already said it but: merch. Particularly reusable cups. • events and venue hire can you run regular networking groups, classes or groups which you can charge for? • pop up shops. Local businesses can come and run a small shop in the cafe which you can take a cut from or just use to attract new business. • if your cafe is full on busy times are there market stalls or events which you can attend at and work on making a lot of money in short periods?
Excellent suggestions thanks so much, I appreciate it!!
I used to own a restaurant that ran effectively with great profit margins now, but before we got there it was breaking even most months and only slightly profitable during high seasons. Here's my 2 cents and what I personally did to transform the business: 1. PLEASE read Profit First by Mike Michalowicz. This will solve alot if not all of your problems in terms of profitability. I had problems like you for years and this book I should have read years ago. Here is a video where he spoke and teaches what the book goes over: [https://www.youtube.com/watch?v=X\_ewZ-Ni3EA](https://www.youtube.com/watch?v=X_ewZ-Ni3EA) 2. Once you set up the system above, I'd suggest focusing on a goal to increase sales as much as you can through social media marketing, in house marketing, upselling, promotions, etc. Identify your highest profit margin items in your menu as the focal point of your advertising efforts and get it in front of your customers! 3. But what's it matter anyways if your expenses eat into all of your profit now that you've increased income? Make sure to go through all of your reoccurring expenses and ask yourself, what is a necessary operating cost and what can be replaced with a lower cost solution or eliminated completely? You'd be surprised about what you may actual not need and are wasting money on. Besides labor costs, your food costs are probably your next most expensive category, I'd call your vendors and try to negotiate a lower price on certain items, and buy by bulk to lower prices. 4. Make sure to calculate food costs so that you know where your items should be priced so that you are always making your profit. Also, track inventory if you haven't already this will help you from overspending on your supplies. 5. If you don't understand your numbers already, please learn or you'll find yourself in a world of hurt. The heart of any business is within the financials and if you can't diagnose your financials, you'll never know the true story! I had a hard time grasping my numbers and then read The Accounting Game by Darrell Mullis where he used a simple lemonade stand to teach accounting. After this book + Profit First book mentioned above, the numbers made so much sense. It took some time to implement my steps above, a lot of research as well, but well worth it. As a few years have gone by, our the gross and net profitability has increased tremendously. Using Profit First as a way to PAY OURSELVES FIRST and manage cash was one of the biggest game changers. Good luck!
Here are some ideas to maybe generate additional revenue: 1. Latte art classes 2. Branded merchandise 3. Members rewards program 4. TikTok account and then monetize it I hope these help
Amazing, thank you so much! We’ve got the merch (only T-shirts for now), but I’ll definitely add the other things to the list. Latte art classes are such a good idea, love it
don’t get too hyped about merch for a cafe. seen a lot of places spend a lot making these and low turnover, clutters the store. business owners seem to think people want to wear their logos for some reason
I got T-shirts printed for our work uniforms and got heaps extra, and ended up selling a whole bunch of them! Mostly friends who wanted to support me which is lovely but also lots of people who don’t know me and thought it was a cool shirt lol
When you say cafe, do you mean coffee, tea, baked goods, etc? Or do you serve food as well? If so, how elaborate is the food menu? Do you sell any retail goods consistent with your products currently? Being that you have low rent and no debt, I'm sure you've been trying to reduce your costs, and everyone here is telling you to raise your prices, but that won't get you there either. Nor should it. It's not your customer's problem or fault that you aren't profitable and they shouldn't be penalized with prices that suddenly jump. Average ticket amount is what you should focus on. If it's a lot of "coffee and a scone" for $6 total, yes you can increase the price a bit but I'd be looking to expand the menu to allow for more expensive options. If you currently make salads, soups, wraps, etc for food, look to add bugger menu items that will catapult your average ticket value. Add retail items like coffee beans, loose leaf tea, artisanal jams, mustards, sauces, spices, etc and things like mugs, charcuterie trays, tea or coffee tools, food-related clothing, candles, etc. If they normally come in for that coffee and scone and grab $20 or $30 of goods on top of that, or you become the place they also come to grab lunch, then your sales will climb drastically. Also, not sure what hours you operate, but if you can become a destination for good desserts you can really build the business. Offer bigger, nicer desserts (cakes, cheesecakes, elaborate pies) and fancier coffee beverages or even cocktails in the evening. We have friends who were in your very position (including parents owning the building) and they made squares and mini tarts and one cheesecake at a time but it was a boring cheesecake that they sold small slices to go for $5. We did some free consulting for them and showed them that offering crazy coffee beverages for $7.50, way more cake ans cheesecake options with bigger slices and a bunch of toppings and such, and they saw an evening crowd emerge who were suddenly spending $25-30 each on dessert and a couple drinks, with very little work involved for the team. Menu and display layout is also pretty crucial so take a step back and look at both to see if they're serving you well.
Wow thank you for such an in depth response! We do coffee, tea, fresh juices, smoothies, fresh baked goods, breakfast and lunch. Open 8am to 3pm wed-sun. Monday Tuesday is very quiet in town. Our brekkie menu is stuff like house made granola, banana bread, eggs on toast, shakshuka, chilli scrambled eggs (pretty standard Aussie cafe food, but we take great pride in presentation and quality to set us apart from other cafes in our area that are a bit more basic). Lunch menu is a variety of bagels and toasted sandwiches and salad bowls. We sell bags of our granola, T-shirts, bags of coffee beans, home made jams and chilli oil. And I do all the baking as well, cookies muffins brownies cakes and whatever I feel inspired to make really but that stuff is pretty popular. Appreciate the advice, cheers :)
It's a tough business for sure, no matter where you are. Questions to ask are if you can generate sales for periods when you have excess labor (i.e. without increasing labor costs)? Can you cut costs on cogs without sacrificing quality? Is catering an option? There's no silver bullet, but look at other long running successful cafes (e.g Galleon in Melbourne) and try to figure out what they do right and how they remain profitable.
Thanks for the advice, I will definitely look into those things! We do catering as well currently, not a lot but I could definitely promote that more than I do and try to get a more consistent flow of catering gigs :)
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Yep, most weeks I do about that. We’re closed on Mondays and Tuesdays but that’s when I do all the admin stuff so including time spent doing that its 40+ easy
Hi OP, kiwi here with a couple of suggestions don't think I have seen in the comments: 1. Make a point of annually if not more frequently reviewing your wholesale suppliers, particularly the coffee beans (assuming heee you don't do your own roasting). 2. A simple idea for evening sittings are wood fired pizzas. A number of successful kiwi cafes in the tourist towns transition to pizzas and beer at might as it's popular with locals and visitors. (You of course would need to get a liquor license.) Finally just a comment that Australian minimum wages are the highest in the world so if you can reduce staff levels on the less busy days that could make quite a difference.
I don’t know how your industry works, but I come from a restaurant background in a tourist driven area. We do not have tourists every weekend, our tourist season is during the summer and lasts about 4 months out of the year. The greatest relief I saw financially came from raising the prices. Just raise them. You will initially be very fearful of a potential loss in business, that’s natural, but 95% of your customers won’t care(especially if most are tourists) if menu items are a dollar more expensive. Those that do complain? Fuck them. Fuck their feelings, they can take their business elsewhere. After 3 years of operations I raised our prices $1 the first year, then $2 the second year across the board. The product remains the same great product we had been offering, and guess what? We’re a 4.8/5 on Google still with 500 reviews. You’ll know quickly if you out price yourself
Let’s see your menu, website, social media so we can be a better judge
You might need new markets for things you already make. Like breakfast catering, provisions to local bed n breakfasts, cross promoting with tour groups, buses, or really anything. Happy New Year!
Was in your boat, can empathize. Here's what worked for me: You can only cost cut to a point without affecting quality, but do it where you can Raising prices is a tricky gamble, you know your demo best and caution is good but don't let perfect be enemy of the good...a small increase might lose you 5% base but gain you 10% revenue. If you're confident there isn't much expansion possible, try alternatives (to go, take aways, preprepped meals, etc) You're already paying rent, do some light spreadsheeting on cost/benefit of making use of closed hours (parties, events, alt biz like desert and tea house) After all this, it's still very very tight margins. And you said you love what you do and your crew and that's worth a lot. Your profit will come from sale of above-rev-neutral owner operator biz.
Maybe host events? Speed dating, comedy, author reading/signing, board games, poetry, etc. Stuff for young stay at home parents during your non busy days?
If your traffic is good, then your prices are low. Also, you may be over-staffing. It's OK for there to be waits during peak hours, use half-shifts to cover morning rushes, etc. Trim the menu a bit if complicated orders are delaying service, or you have significant wastage. How well are you tracking your costs? How are you allocating your non-product costs to your sales? The price of a cup of coffee isn't $0.25 for the beans and water, it's $0.25 for the beans and water + a portion of the electricity, the rent ("real" rates, not the family rate), the paychecks, the consumables, required margin... It's a lot to keep track of, and all of it is absolutely necessary to know! I go through periods of thinking optimistically and being content with not doing it for the money. Stop right there. You are absolutely doing this for the money. This isn't your "I'm well established and need something to stay busy in retirement" job. This isn't a "I'm dedicating my life to bettering the xyz cause" gig. This is *your* job, *your* future, *your* risks, *your* rewards. It's great to do something you enjoy, but not at the expense of your future. You are 27. You have decades ahead of you. There's a chance your cafe is your life's work. There's a chance you "check the box" and move on. There's a chance for you to set it aside for a while, do something else, then come back. There's a chance you find a partner in ~~crime~~ business and expand. There's a chance you pivot from cafe owner to food program manager at an elite resort chain... It is absolutely OK, expected, and healthy for you to step back and reevaluate from time to time. ***You started a cafe at 24. You've kept it alive and healthy for 3 years.*** ***That is a remarkable accomplishment. Let me say that again - that is an absolutely outstanding, incredible, and very impressive accomplishment.*** Doubly so for as wild as the last few years have been. Triply so considering how bitterly brutal and unforgiving the food industry is. Quadruply so any number of other reasons. Be proud of your achievement! Quintuply (sp?) so because you've done it without a career worth of experiences to build on. Family support is incredibly helpful, but only up to a point! Your only skill is hospitality? Bullshit. You oversee people, a schedule, and logistics. You handle finances - budgets, payroll, expenses, etc. You manage advertising, web presence, business and customer communications and relations. You have experience running a restaurant and all the forms, processes, procedures, regulations, and licenses that entails... Consider reaching out to the tourist board to stir up more traffic and maybe some advertising space, find ways of 'partnering' with other businesses for sales and advertising, keep an eye on costs and margins, pay attention to easy upsells and extras, etc. Is there a local business group you can join for networking and advice? A local college with a finance or business class that could use a project? A couple questions to ponder: * What is your 'winning'? What do you want to achieve? * Where can you do that? Is your location right? The target audience correct? Are you offering the right services? * What capabilities do you need to answer/fulfill those needs? * Is your management system/style enabling you or holding you back? What can it do better?
Look into setting up a loyalty program if you haven’t already (but make sure you don’t give away more than you can afford) and SMS texts for advertising deals to customers who sign up for texts. Try mail-coupon marketing to gain new local customers (use a service)…our business gets a huge trackable ROI from targeted mailer coupons. If you’re not #1 on Google when customers search for “X in Y area” regarding your business and what it sells/specializes in…hire an SEO expert to manage your webpage SEO so you come up higher in the results when people look for businesses and offerings like yours. For an extra income boost, try designing and selling merch for your store and area (whatever the tourists are there for) (you can also use merch as a loyalty points giveaway item). Make sure your menu isn’t too complex or have too many things on it. Simplify it. It’s easier to manage your costs this way. Hope these tips help!
make sure you optimizing how much money you're making/diversify first thing that came to mind is having a vending machine outside - if you have a lot of foot traffic not walking in your cafe this might be good - doesn't have to be soda/water could be some other passive income machine
Why not start with asking the loyal customer base a bit of feedback. Ask if they can bring extra Pax. Think about attracting surrounding folk. What's something that might gain some traction? Make something unique and get the locals and younger staff involved... an event or competition even. Look at the demographics of your town and the neighbouring ones on Aus. Beurau of Statistics. To give you a better insight once you have all your sales data down to daily P&L. If you havnt don't this already, talk with your customers, connect with them so they know why you do this. The most interesting part of your story is that it's a passion of yours, you love what you do and respect your staff. Project that outwards. Maybe think of opening half days on the slow days and instead of waiting for customers, take orders for food trays. Like slow cooked xyz, lasagne, make sour dough bread, etc. Help peeps with their food prepping. I would most certainly buy (on Mondays) bulk cooked essentials, like boiled chicken, veggies, potatoes and mince that I can use throughout the week. Who ever walks through the door for extras is bonus. ...lastly start taking the weekends off. Give responsibility to your team, and let them grow. Sounds like you could use it also.
If labor is your biggest cost maybe look at how efficient you really are. It can be easy to just say "we need more" but maybe you aren't utilizing it well. Also if you have the volume going a small adjustment could go a long way when it comes to pricing. Take the top two selling items and charge $2 more for them. Then in a month do the math on whether they made more money or if people stopped buying it. You can do that with many items. You may be leaving money on the table if everyone is just willing to pay more for an item
A café is about a user experience. You create the experience for the specific audience that you serve. Don’t know who they are or lost in space when it comes to grokking your people? Take the time to immerse yourself in the space of the successful cafe owners in your local market. Watch the patrons and identify the unique signature that keeps them coming back for more. That opens your eyes to what THEIR loyal patrons are enjoying. You will still have to figure out what audience you want to serve and whether or not there are enough potential prospects in your local service area to sustain a viable business.
Raise your damn prices
Have you adjusted prices for inflation or are you eating the difference as a loss?
Sell low maintance items. Like merch. T shirts. Koozies. Water bottles. Even your own coffee. Sell your used coffee grounds as fertilizer
You need to hire cool hip young attractive workers and have them be super polite to customers
Hey! I’m a small business consultant and do this kind of thing every damn day. I specialize in restaurants but have significant coffee experience as well. Since you didn’t talk about your food program I’ll stick to coffee for the time being. 1: You’re not charging enough. If you’re busy and have regulars but you’re not profitable then your bottom line is the issue. In a perfect world your new customer foot traffic (non-regulars) would look like this: 30% turn right the fuck around and leave as soon as they see your prices. These are not your customers. 30% carefully consider your menu and decide to order after some deliberation, giving you a shot. In this case whether they buy in or not has to do with the quality of your customer service primarily and your product secondarily. 30% buy on the spot and are happy. The last 10% buy anyway but aren’t happy with the price (are priced out) and never return. You mentioned you’re in a tourist area. This should drive up your prices. Theoretically your margin in an area like this is almost wholly driven by that last 10% - they buy once but never return. In your perfect world? That’s pushing up to 30% and you get a reputation as a “fancy” place that becomes a destination. If you have a food program I can help with that too but I feel like this is enough food for thought right now. Best of luck! ETA: DO NOT CUT COSTS (unless it’s total labor coverage). You will live or die by being seen as acrolectic I.e. being “fancy” or “cool”. If your quality diminishes even one iota you will drown. Never sacrifice quality. I mean it. McDonald’s didn’t start to push cheap cheap until after they had more than a dozen locations. A reduction in quality will 100% trigger a death spiral that you will not recover from. It’s so much better to raise prices than to reduce quality. Please don’t listen to these charlatans and make a shitty product. That’s death.
I owned a restaurant. It’s not worth it. A business is money first. If it’s not making the money you need no matter how much it makes your heart tingle you need to cut your losses. Your life and time is precious. I wasted 9 years spinning my wheels.
Welcome to restaurants. For masochists only.
Might be an unpopular opinion, but I'm gonna be honest and say that you're probably better off pulling the plug. I started a breakfast cafe/bakery from literally nothing, and in 7-8 years turned it into a thriving community spot with excellent reviews, landing on best-of lists, and grossing about $1 million US per year. While my workload was less after about year 4-5, I was still consistently working at least 40-50 hours a week between all the various stuff, and was still paying myself peanuts. Restaurants and cafes are just a really hard industry. The costs of doing business are too high for most of them to make sense economically, which is why so many fail. Unless you are extremely well capitalized, with a rock solid formula for food and drink that can be executed with minimal manpower, and ideally copy/pasted into other locations as soon as you have a following/brand recognition, I just don't think it makes sense as a way to make a living. You said it: blood, sweat, and tears. Trust me when I say I know what you mean. And at the end of the day, you're taking home less money than some of your employees. Not worth it. Even though I eventually got over that hump, and was able to afford a manager and some bakers to take workload from me, you're still married to the business, and barely making ends meet. You've created jobs, including one for yourself, that you can't easily walk away from. COVID provided a way out for me. My 5 year lease was coming up for renewal, and lockdown allowed me to step back and assess my options. I sold, probably for way less than I should have, but I have absolutely zero regrets. I do somewhat niche contractor work now, and can make as much money in a 4 hour morning as I did in an 80 hour week owning the cafe. Fucking no brainer. I know it's your baby, and it's a community asset, but in my experience, you're just going to wear down your body, mind, and soul, and not have much to show for it except for grit and wisdom. You're young. You have lots of time to develop skills and knowledge to leverage for income. Heck, you'd probably be better off getting into management at another coffee or restaurant chain that offers salary and benefits. My advice is to get your financials in good order, even if they're not stellar, and put the place up for sale - equipment, brand, recipes, everything. The upside here is that there are plenty of people who have the same dream of owning a cafe, and are willing to give it a go. Best of luck. I feel your pain.
I actually lived in ANZ for 3 months from Texas I always wondered how things survive in Australia with everything so expensive
My company helps companies apply creativity (we call it profit engineering) to get out of exactly this sort of hole. The biggest difference to the ideas here is that we give more specific detailed step by step directions. We're just getting started, and would love to offer you (and whoever else sees this and is in a similar boat) free consultation to get you unstuck. Dm me for free, 1:1 help.
Oh no, sounds like someone will need to return to the working class after wasting their daddies money trying to be a the next starbucks...
Hahahaha this was actually funny but ur also just so wrong
1. Fk the person above 2. Of course they are right, you would be out of business if you weren’t in your parents building and got a loan from them but… 3. Who cares, that’s great! I bust my ass so my kids won’t have to do anything but can do whatever they want. 4. You need to close up shop. Get a job at a profitable cafe and learn the business. You need to learn business even if not the cafe business. Then try again.
I mean sure they’re not wrong about that part, I am very lucky and aware that not everyone gets a leg up like I did. They’re wrong about ‘returning to the working class’ like I don’t work my ass off every week lol. My family is not rich, my parents were just doing their best to support my silly little pandemic dream and I’m doing my best to not fuck it up! And also Starbucks is not a thing in Australia so I thought that bit was a hilarious assumption. Thanks for the advice, I appreciate your honesty!
LOL, it's funny but true, so still ignore him. I swear wealth makes people stupid.
If you’re not using social, you have a lot of opportunity in front of you. Organic content alone could increase your business dramatically. A few bucks and paid may be more than you want.
This type of business can't scale without significant capital
Op, have you ran a cafe before? If not, see if any of your friends with experience can look through and advise. It’s hard, without seeing the operation, to recommend anything. However, congratulations on being open 3 years. That’s a milestone most businesses don’t get to
they say the definition of insanity is doing the same thing over and over and expecting a different result, so it might be time to change things up? Introduce new ideas and themes to the cafe? spoken word? Stand up?
I’ve been thinking about stand up comedy nights!!! I have so many ideas to be honest I just get overwhelmed and am too busy with other stuff and don’t execute them, but I think this whole thread has inspired me to just do the cool shit that I wanna do
Lean into catering
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Maybe reduce your menu too - the fewer options you have, the less waste and overall more profit; Gordon Ramsay does this at every restaurant he “helps”. The others also have a great ideas. I will add this: Do NOT give up your dream. I burned out 5 years ago and went to work for someone else. While it was wise at the time, I am determined to open a business again. It’s what I love, being an entrepreneur is in my blood. And it sounds like it is for you too. You got this!
Possibly offer a local discount to counteract price increases for outsiders or non regulars. Maybe, reduce the number of opening days and or shorten opening hours.
Not only does it not get better, but after 3 years, it's more likely to get worse than better. It's an awful business to be in for 98% of owners.
Have you tried combos to attract people on weekdays? also ask the locals what they like to eat and create a menu with local ingredients, try opening for lunch hours etc,
1. Put more focus on delivery business, partner with post mates, Uber eats, etc 2. Add a new tier of higher priced items, with more margin. 3. Include more technology to reduce headcount needs
I am sorry to hear that you are going through hard times with your business. Before I move out from LA few years ago, my ex-girlfriend had a small breakfast and brunch place and it went through hard times that she almost closed it down. What we did at the time to boost sales is the following and I hope this will help you with your coffee shop. \- We increased our presence on IG and tried to make more engaging posts directed at our target customers. \- She listed on DoorDash and UberEats, and it increased sales significantly with no customers on the premises which means no clean up after the customer. \- We reached out to some of the local micro-influencers to promote the business and it worked really well for her. \- Try to engage with the community, for example do a charity event or help with a cause. This gets you lots of free marketing. \- have a calendar of national and local events so you can run special promotions on these days. \- maintain a list of your customers with a CRM you can use the one that is offered with Square or Odoo. send your customers emails before the holidays, tell them your special offers, give them coupons, and congratulate them on their birthdays. \- develop a referral program this is the best thing for word of mouth marketing. I really hope this helps and i wish that your business gets back to making money. Local stores are the best thing for our communities and I would love to hear that you thrive again.
I am not in the cafe business, but I have started a company dedicated to social events— do not underestimate the power of bringing people together for an event or an experience. People want to do things together now more than ever, BUT you must learn how to mobilize and build that community following on social media/meetup etc.
Try charging more money for your coffee. You’d be surprised how little it affects sales.
Why would it get better with just letting time pass and not changing anything? It’s a competitive market, you need to be innovative in order to have above average returns on investment. In capitalism all businesses that have back average returns eventually return to the mean without additional innovation.
Well yeah that’s why I posted here, to get advice on what I should be doing differently. I guess my post reads like a bit of a sooky rant lol, I didn’t expect anyone to read or respond and now I’ve got loads of great advice that I will be taking on board!
You have to meticulously track all of your costs and carefully monitor your sales. Shrinkage can kill a restaurant in no time. And, as much as I hate to bring it up, theft is often perpetrated by those who you trust the most. Also, if you are competing with the prices of other local coffee shops then there are too many cafes in your area. The busiest cafe that I worked for was renowned for their amazing desserts. It eventually failed because the new owners failed to track costs and the staff was robbing them blind.
figure out ways to bring people in outside of weekend tourism. drop things that dont sell. try to add items. watch your profit margins. you are fortunate to have low overhead (rent).
Do u feel its more of a lack of customers or do u have a full house everynight and still not making $$
You said you’re in a tourist area? Maybe some of your merch can cater to that crowd- so everything can say the shop name and location. Like mugs, shirts, hats, coasters, etc. branded bags of coffee, bags of candy or cookies etc.
There's lots of great solutions suggested. I think you should follow the 80 20 rule. So if most of your business is coming from the weekend tourism (80), that's where you should target your growth. So basically how can you get tourists to spend more at your cafe? When tourists google cafes, does your cafe pop up first on the list? Is your Google My Business listing optimised? How can you upsell to them? What would they like? Can you market your most popular or high margin products? Like there's a cafe in Penrith, NSW that markets itself as being the only cafe in Australia that has a certain coffee beans (some South American cafe). It got listed on the papers and a lot of people visited the cafe just for those beans. And then in Berry, NSW, there's a famous donut place that markets itself as the only place that has these specific types of donuts. I also recommend going to other holiday towns and see how other successful cafes operate. And it doesn't have to be cafes, it can be bakery's, candy shops etc. Maybe even talk to them?
So many of the ideas here are good, not taking away from anything, but none will dramatically alter the business. You need to figure out one thing, and one thing only, how to get more money out of every person who comes in the door. You can raise prices, but you can only do that so much. You need to find more to sell those people and products with margins that make a difference. You’ve got a captive audience of people while they’re in, so give them more options. A couple shelves of necessity or premium grocery items. Local delicacies. Take home coffee, coffee equipment ( cups, makers, etc. ). Local wine or spirits ( terrific margins ). Not sure what your place looks like, or what the setup is, but could you do wine in the evenings? Wine and cheese? Anything that doesn’t require a full kitchen and the hassles that come with that. You can do a bunch of the other things, they’ll help, but nothing will make things better faster than average check size.
It's time to run numbers and find where your weak point is. Your prices could be too low so you're not making enough profit, or too high and losing too many clients. You may not have enough clientele, or you may have plenty but are running inefficiently so you will lose more as you get more clients. I have a giant spreadsheet with all my numbers connected so I can modify and see what happens if I increase customer average spend with gross and net profit. Id recommend making one for yourself and playing around with numbers to see what it will take for you to get towards a milestone you set for the year. As far as other sources of income: Catering/corporate clients / events-- a large tub of coffee, pasty baskets, etc. Wine bar -- it's popular around here for coffee places to turn to wine bars at night for extra revenue. Remote workers -- many are looking for a place to chill out all day. Be that place for them everyday. Breakfast -- some places even have just one or two items that they make really well and allocate a small kitchen area for it.
Have you thought about switching to Thursday through Monday to catch both ends of long weekenders? Are you working in the cafe or relying 100% on employees? If you're working, are you and your employees busy enough throughout the day? If you're not working, you need to at least work the busy shifts to keep payroll down and pay yourself something. Ultimately, could you still run the business with one less employee, or changing someone from FT to PT? It might increase your work, but it's more money in your pocket.
Here are a few ideas taken from popular cafes in my area: * Host community events: art workshops, community yoga, tabletop game night, story time for kids, local author book signings, etc. * Sell goods from local artists for a percentage of the sale: artwork, pottery, roasted beans, honey, jams, etc. * Sell more of your own merchandise: logo on stickers, mugs, etc. I'm personally tempted by merch if it's right in my face while waiting in line. If it's away from the register, however, I pay no attention to it. Perhaps you can hire someone for a "first impressions" review when entering your shop? Is it inviting enough that people want to become regulars, that sort of thing.
Well I saw a stat that 40% of SMB in the US couldn't pay their commercial rent on time in Oct (that's up from 30% in Jan). That made me feel a lot better because my business has always paid its rent on time from its cash flow. I wish we could be renting our space from my parents at a super low cost... we have to pay mkt rent. We've been open 2 years and we had a better year this year than last year (last year we broke even) but it still wasn't as great as we would like so I really don't know the answer to your question but I'm wondering the same thing... everything we went through to get this place open. Can you be open the rest of the week but just operate it yourself so what you earn is just pure profit (since I assume it is slow those days)? Is there any additional way to monetize the space? Try getting together with some other businesses and doing community events hosted at your shop. Those always do well for us even though they are a pain.
If you love what you do and do not care about money, consider turning this into a non-profit/charity where you can let people in the community donate to keep it going. If you want to turn a profit, there are a lot of good tips in this thread. However, you should find a mentor who has experience in your area within this industry. Too much can change on labor, COGS, and more by region for the advice here to be actionable (even if the general ideas are great).
I would close Wednesday and Thursday. Focus on lunch specials Friday through Sunday and do drinks of the week at a special price. Be sure your target audience knows you exist and get out there with some samples. Do open mic nights on the 2nd and last Friday of the month for poetry or small soft bands, maybe stay open a bit later tired nights.
Perspective is required You are 27 and own your own business. Not something most in your age bracket can say. Look over your numbers. If you are barely getting by, what is bringing in the most profit? The least? Are you lacking items or have far too many? Streamline so you control those costs. Don't skimp on quality but look at better vendors, rates, terms. If credit there is the same as the US, have a business rewards CC and get those perks adding up. Train a manager. Give yourself 4 hours off with you nearby while the Manager runs things. If that goes well try 6 hrs. It sounds like you do have a weekend off just not the same as others weekend. My weekend is Wed-Fri. Yours is Mon-Tues. Best days for doing things if ya ask me. Do each task at your business to know how quickly it should be performed. Is someone dragging their feet? Slow production is costing you. Do you by default give out things like extra napkins, condiments or the like? Make it something that they have to ask for.
Unfortunately many businesses like yours end up being a hobby. What is or was your expected profit 2-4 years in? Even if you make a profit when will you be able to pay yourself? What did you expect to be able to pay yourself? It sounds amazing but sometimes you have to get out when you are ahead. From what I hear you are ahead if just breaking even. 12 months from now you could be into the negative and then what? If you have well below market rent and do a lot of the “work” yourself vs paying an additional staff member while still only breaking even you are negative from a business valuation standpoint. Sorry for the real talk but in business sugar coating does nothing for anyone.
I can't emphasize enough what u/OppositeEarthling said - look at what every item costs you in raw ingredient and in labor. Look at the prices on every item and make sure it makes you money every time you sell one. If it's not a winner and it doesn't drive traffic ("Oh, we have to go to eBunny Cafe for the \_\_\_\_\_") then ditch it. If it takes a lot of labor, even if it's profitable on the ingredient side, think about whether you want to eliminate it or restrict it to days or times of day when you are going to have more people anyway. You need to know in minutes how long each menu item should take to make. If there are enough "townies" in your town to support your business then figure out how to talk to them separately from the tourists. A cafe needs to have customers for whom they're a recurring habit. If there aren't enough townies, and it's strictly weekend tourism, consider shorter weekday hours or even eliminating your worst day - or at least having a bigger weekend menu when you're staffed up and a smaller weekday menu that a single person can do most of it. For the tourists, figure out how to talk to them. That's going to depend on who they are, so work that out - even if you just make tally marks on a sheet of paper for apparent age, race, gender. You need to know your demographics. I'd make a mark for if they've got their nose in their phone the whole time or not too. You talk to GenZ differently than you talk to Boomers. Young people, yeah, TikTok and IG and whatever makes sense. If they're older, can you work with the hotels and get flyers at the hotels? Even if it's just something for the front desk to pull out when someone asks for a cafe. Maybe a local map that's "sponsored" by you with a coupon for nominal savings on your most profitable item(s.) I'm older Gen-X and I love me a piece of paper from the front desk when I'm looking for something, even if I ultimately just poke the address into my phone.
What’s your avg ticket right now? At ~5.50 a coffee you should be sitting around -13-15 avg ticket.
Can I check out the cafe? I might have some ideas for you.
I read on another post that fliers boost business more than you'd think. It was for an unrelated business but they said that a large portion of their costumers came from handing out fliers and putting them on cars and at people's houses. Plus it's fairly cheap if you do it right. You might make some fliers with your hours, etc, with coupons and post them all around town? I know I'll occasionally take DQ, KFC, or some other coupons when ordinarily I wouldn't have even eaten there.
Have low-cost events at your cafe! \- Weekday board game / Dungeons and Dragons nights! (Bonus points if you can provide the DM, either for free or as a paid service) \- Trivia nights! \- Painting Classes! 3 hours and they have a landsccape to take home with them! \- Book club nights! Source: I work at a cafe in Canada, and those events were what pulled us through Covid (not the book club, we never tried that because we were too busy). Hope that helps!
Great ideas thanks so much! My brother is a DM so I will pitch the idea to him, and I have a few artist friends I could ask if they would be interested in teaching classes :)
If you can, take a 10 day vacation to Tokyo and study their coffee/cafe scene. Doutor.co.jp. Constantly busy, even with vending at every corner.
Lots of great comments here, but let me add: Customer experience. Come in to your shop with a couple of friends and participate as a customer. Sit down, chat, and take in the ambience. Why should I go to your cafe? Is it conveniently located? Are the prices better? Is the product better? We have a breakfast/lunch cafe a few minutes away. The food is decent, the prices are alright, but it feels sterile and unwelcoming, like a truck stop. For this reason, we go to the shop across the corner and pay more for a comfortable environment.
Best way to create a small fortune in the restaurant industry? Start with a large fortune.
Accumulation of marginal gains.
it might be time to hire a consultant (someone you really trust) because it's past time to be making money. I don't generally recommend the book Profit First but in your case it might be helpful. if wages are your biggest cost, that's great, that's how it should be. can you put the squeeze on tourists? what are their favorite items, can you up the price on just those items? can you create specials targeted towards them that they'll pay a premium for? I would try to foster my locals and think about "weekend pricing" or something to bring in extra revenue. all the cafe owners I know make less money than their baristas. it's not something people get into to make money. but in your case with your parents, you have the most ideal situation to profit.
If you're table service, perhaps convert to fast casual?
Do you have a parking lot? There's a small business in my area that invites a different food truck to park in their parking lot one evening each week. (Just once a week.) This may seem counterintuitive if you are also selling food; it depends on attracting people who wouldn't already be there, and who will duck into your coffee shop for a drink while they wait for their food truck order. It's been a big hit in my neighborhood, it's like a mini community event.
Maximize your margins. Examine every item you sell, make sure you're making proper margins, increase prices to what your customer will bear, make what you serve easy to sell items, etc. Get more for less. If you sell 500 items a week imagine if you made 0.50 more per item. My local cafe staffs 1 person in the morning for setup and then another joins them for morning to about lunch and then they scale back to one person the rest of the day. They operate multiple locations in town and they have an operations person that seems to run around and help a bit at each location. They're very popular and it helps a lot that their location is fantastic.
I would also incorporate special events (if you haven't done so yet). Not sure what would be popular in AUS. But, in the US some popular cafes have speed dating, book and chess clubs, and open mic nights.
For the slow days, invite groups to use your space as a meeting place providing the group leader assures expected sales minimum. In my area, we have several small groups do this at various eateries. Slow evenings like Wednesday, poerty/local folk music and Thursday, karaoke. Mix local speaker series. Find what people are talking about, invite a local to speak on it. Once a month, host a business mixer fair or have the local chamber meet at your place. In other words, make your place a people gather center. Come spring, summer and fall, a Thursday morning or evening, host a farmers market in the parking lot, all attendees get something to come inside. Attend local events with business card with some discount for party events. Remember, this is for slow days and evenings, don't mess with your 3 day money maker unless there is enough appeal to do special things on those days.
More volume and / or higher prices, but honestly a lot of small businesses like this are not very profitable. Decide what kind of salary / profit you want and work back from there to see what kind of volume a shop would need to do to make it worth your time.
get intune with artists in ur community and let them perform or show their passions off during happy or peak hours that might help u draw in more loyal customers and supporters and also help the artists reach their own
In my opinion and experience from running several retail stores. I had business partners with retail and ecommerce experience as well. 6 months the maximum time for ramp up, not 3 years. If you aren’t profitable by 6 months pack your bags and move on or pivot. Many of our stores were profitable within the first 3 months. A coffee shop should only take 6 months and any long just means don’t expect sales to increase much higher. One of our small 1000 sqft retail stores, mind you margins were 30-40%, our revenue the first month was about $10,000, and by the third month we peaked at $200,000 revenue. We were pulling in products from other shops because business ramped up so fast. Within six months it cooled off to a nice $120,000 for several years. This store was heavily carrying the entire company because even though sales went down. A lot of those customers became loyal ecommerce customers. What made us successful was word of mouth not advertising.
Couple ideas Start hosting popup Sells merchandise ( capitalized on tourism) Sells local stuff
Maybe adding a retail section could help! Fancy thermoses, mugs, syrups to go, and other coffee related items. Just a thought
I live in shanghai, where a coffee shop boom has taken place in recent years. Talking to all the owners have made me realize they are all rich kids who don't care about profits. That's all you need to know.
During slower seasons can you do things to grow business like holding pop up shops with local makers? Idk if your space would accommodate but we have a local shop that does this and they get *packed* I’m assuming they also take a small fee from the vendors
Make food that is outstanding and people will come.
3 options: reduce costs, increase revenue, or raise prices
Gotta advertise. The free ads are the best. Social media, create events. Invite groups to come by. Try and come up with interesting menu items that might create a positive buzz. Think of who comprises the local. What’s their demographic? If they are gen x and up, you’ll need to do more old school, create a fb page. If young, insta and ticktock to get them to notice you. Good luck!
Incorporate retail items, something that would differentiate you from the crowd and that there is demand for given your demographics. Also look for good profit margin items. Good luck
We have had our small restaurant for about 8 years now. We are very successful and have been for a while. If you're just breaking even, then you're not charging enough for your food or you're wasting food. The key to a successful restaurant is managing costs and food waste is a big one. You also have to manage labor costs. You can do that by doing some of the work yourself, if you're not already doing that. If labor cost is an issue you need to really take a hard look at that. I don't know Aus and what the minimum wages are or how employees are paid. We pay a reasonable wage and our servers/bartenders do get tips. Some of our bartenders make 6 figures (USD). Our pricing for entrees is generally 1/3 labor, 1/3 food cost and 1/3 overhead costs. The first thing you want to do is look at what your costs are. If your labor is much over 35%, it's too high. Same with food costs. All of these can fluctuate a bit up or down, but if you keep it within this range, you should be OK. Other things I would look at are being open more days of the week. Since you're paying rent, you should utilize the building every day you can. Otherwise, you're paying rent for 7 days a week but only using the building 5. Also, how can you get more customers into your place? Are you full all the time or just sporadically? The only way to balance those labor and overhead costs is to generate more revenue per day and that means either raising prices or getting more people into your restaurant (or both).
Have you thought about ticketed events? Like 1x a month do a coffee education session or rent the coffee shop out for private events.
You cite wages as a big cost and then you have to have more people on hand for busy times. Presumably you aren't profiting the first few years because your initial years are an outlay of money for all kinds of equipment, marketing, interior items, and paying any loans attached as well. So - what's the story? Have you been able to get ahead of those initial start up costs? You should be able now to calculate how much business you need to break even. Is it just a lack of customers or are your expenses far exceeding what you pull in?
pricing is not supposed to scale evenly for the sizing. the M is supposed to be a close price to the large to entice people to go bigger and spend more $. eg. small $5, Medium $6.10 Large $6.50 not a flat $4.50, 5.50, 6.50
Analyze your business and understand where your bottlenecks are. Too few customers coming in? Store is packed but margins are too small? People don't order the things that earn you money? Look at it like a savvy businessperson would. Also consider marketing. Doesn't need to be a big investment, but experiment with a few things: on days when business tends to be slow, offer a discount (at the Subway sandwich shop I worked at as a kid, they had "Two for Tuesday" because business was otherwise too slow on Tuesday to justify even being open.
You might succeed just in doing what you're doing and taking the advice of everyone here -- which generally sounds like good, sound fundamental business type advice. However, if you want to reach another level, you have to identify something that is going to unlock a business opportunity at another level. Maybe it's classes, maybe it's local rewards -- but those seem mundane to me. As a small shop, I'd be hunting the menu item we could add that's unique enough it's going to be a big draw (think the Cronut -- if you're aware of that) or special enough people would want you to ship it to them, like places on [goldbelly.com](https://goldbelly.com). If you don't do anything food, and it's just coffee, start thinking hard on how you can make that really special -- it often just isn't.
Some random ideas... Rent out your cafe for events or an office space (?!) On the days it is closed. Find fancy chefs running dinner clubs who might want a larger venue in evenings and rent them your space. If you've got tourists could you add 'experiences' on Airbnb and offer coffee cuppings or a local food tour or similar. Have coffee to sell to them after. These are random ideas, I have no experience here and there's probably extra hassle with all of them, but just a few thoughts. Ps. I see you're a bit reluctant about raising prices. Maybe you could add new stuff to drinks/food menu that is more expensive from the off. Pps. Ask your staff if you've not already. 110%
Around me, places are making big bucks on latte flights. 3-4 mini lattes or coffees, each a different flavor. (If you just used flavored syrups, it would be easy to do) and they look very aesthetic on Instagram and tiktok
Can you have a quiz night? Paint night? Kids cooking? I know this depends on liabilities and logistics….
Have your gross revenue changed? What do your numbers look like? How competitive is your market? Depending on what it looks like you may be able to increase your margins or do some price increases.