The business model of coffee shops is characterized by frequent turnover. With such, the opportunity to raise sales is nearly always available. Patrons can be encouraged to visit the establishment more regularly, and those who attend are likely to spend more. So, how to improve a cafe business? A successful strategy for sales can be measured by how many clients you reach that you could not have reached previously. The latter is something that cafe owners must think about to establish connections with the community. Increasing your cafe’s revenue may be more attainable and less complicated.
Cafe houses are said to allow you to make a profit without exerting much effort. The phrase “It doesn’t work like that” applies to everyone who has run a small business.
Many of the cafe’s profits come from the mark-up on its products (Gross profit is the amount you have left after taking out the cost of ingredients & GST). Nonetheless, Net Profit, the remainder after covering payroll and other associated costs, is usually modest. Now, let this take you on how to improve a cafe business in terms of profit.
1. Working with Numbers
It is entirely understandable: some people aren’t good with numbers. Thankfully, the data you need to work on is straightforward.
To better understand the basics of a Profit & Loss report, also known as an Income Statement, you must get acquainted with it. You may have seen this from your accountant after the financial year. The café business has higher net profit margins than the industry norm.
Then, how to improve a cafe business? By reducing the total cost of goods, rent, and wages, it is possible to achieve maximum profit.
Coffee is one of the most expensive things in every cafe. When you do these monthly assessments, you know where opportunities exist, and you can adjust.
As always, double-check with your bookkeeper to ensure that the bank feed is set up and run the profit and loss report. Also, check the expense categories. After this experience, you will have a clear understanding of where your cafe stands.
2. Grow your Sales
Reducing employment hours, hiring younger personnel, and buying cheaper supplies are specific things people start with when reducing costs. This is a misconception about how to improve a cafe business. In the short term, better margins can happen. However, in the long term, sales decline as service is slower and the quality of items diminishes. When sales go down, you have to cut back even further. And thus, so it goes until nothing remains.
Finding a way to develop is crucial to having a successful and sustainable business. Variable expenditures, such as rent, have a more significant impact on increasing costs, but increasing sales help keep variable costs in check, such as wages. So, what do you do if sales aren’t growing?
In this situation, most owners will immediately begin marketing concepts such as social media, special offers, and loyalty programs. This discovery is that getting the essentials right– consistently outstanding coffee, food, and service, plus a great atmosphere– is the only thing that can genuinely substitute for good service.
When you work within a business all day, these things are incredibly easy to say, but it isn’t easy to assess how objectively impactful they are when you do that every day. Getting honest, sometimes harsh feedback from people outside your business can be valuable in these scenarios.
3. Efficiency Improvement
Inefficient service does nobody any good; it’s non-appalling for consumers, the people doing the work don’t like it, and it costs you the money you never intended to spend.
The efficient method to make your team more productive is to focus on efficiency—making your team more productive while using less time and effort. Reducing costs is a great way to both generate sales and reduce costs.
Here’s how you do it:
- Go for simple rather than complex menu offerings. When you have a more extensive inventory of materials and things, your total time spent on service and inventory management will increase. Streamline your products.
- Make your workflow better. Put equipment, benches, and furniture to reduce the amount of running about on the part of employees.
- Machines that do similar tasks repeatedly, such as automatic coffee grinders, tamping robots, milk steamers, and contactless card systems, are excellent choices for automated procedures.
- To keep the front of the house focused on clients, set up your cash register (POS) system to transmit dockets immediately to where they are needed (kitchen, coffee bar, etc.).
4. Review Product Mix
The variety of products you sell does not all consist of the same things. For some menu items, sales and margins are great, whereas, for others, they are low.
You should first identify the differences. Pay attention to the reports part of your cash register if you’ve discovered reports. If you look in the product mix report, you can analyze deeper.
When deciding on menu items, think of it as an NFL football squad. A product is not delivering the results it should, so it’s time to shelve it and bring in new, fresher talent temporarily. Your overall café profit will be lower because of these low-selling, low-margin products.
5. Work on Capacity
First, sales are increasing. Second, productivity has increased. It means it’s very likely you have the opportunity to raise your business’s capacity. In other words, you could enhance sales by getting rid of unnecessary obstacles or by identifying a new target market (e.x. opening earlier for commuters).
Some specific approaches that you can take:
- Delays should be reduced. People are more inclined to return to the restaurant if the service is quicker. If your restaurant or coffee shop is genuinely unique, yet your service is quite slow, you might not have a steady stream of loyal customers.
- Adding tables and altering the floor arrangement is an excellent way to handle peak-time seating congestion.
- Look at your business hours and see if you can find any extra hours to add to your schedule. It may take time to build up your trading hours, but it will come back and help you in the long term.
- Promote an incentive program that encourages customers to visit during slower periods.
- Additional mobile ordering options could be beneficial.
It is a challenge on how to improve a cafe business. There are a lot of factors to consider. Your rent or mortgage, salary, and utility expenses are fixed costs. Thus, it is critical to concentrate on the controllable variables: customer experience and the potential profits that come from your sales. Various methods are also available, and the strategy’s effectiveness may vary from one business to another.