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Permalink Reply by nohoana on June 6, 2011 at 1:32pm

Congratulations on getting to the first year mark!

 

When you say it is 'slow' put in ratio of a weekday, 75% 50%?

Have you focused on increasing Saturday business?

 

Look closely at the profitability of Saturday, if you are still cash flow positive I would definitely stay open and look at ways to increase the business and spend time cleaning and recovering from the week.

 

 

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Permalink Reply by John P on June 6, 2011 at 3:34pm

Short answer: If Saturdays are not what you want to focus on, no need to be open. Those people who come Saturdays will come on Friday if they don't want to miss out. 

.....

Congrats on your first year!! I have to caution you, you are falling into the trap many new owners do-- needing to add 'grab and go lunches' in order to boost business is a red flag. This means something within the coffee aspect of your business is awry. It might be efficiency, it might be product quality, it might be over-staffing ( a result of poor efficiency, both in design and drink making), it might be product waste.

 

As a general rule, the first remedy for improving sales involves spending more money. On better product (beans) and improving training. In the end you will have a better product, which you can charge more for, and more people will come because of that. 

 

The further you move away from your core - coffee/drinks -- the more it will erode your business. To be successful your foundation needs to be sound. Shore up your foundation, sales will come. 

 

 

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Permalink Reply by Mike McGinness on June 7, 2011 at 8:12am

I'll elaborate a bit on food (beyond coffeehouse tradional support baked goods type stuff) versus being a "coffeehouse". We purchased our first location November 2007. At the time it was known as Paradise Cafe and Espresso Bar. At the time 40 to 50% of sales was in made to order deli and pannini sandwiches, quiche, soup, salads etc. We wanted to move towards being known for our coffee not food. The first year even installed our little USRC 3k there storing greens offsite, no room! Talk about a PIA, every roast session having to transport greens to roast!

 

Anyway when the stock market crashed end of '08 suddenly food sales went from a consistent daily $250 to $350 over night to one Monday $17.50 total food! Obviously staffing needs for a major lunch rush versus a couple orders HUGELY different. Food never recovered, people were scared and brown bagging it much more, so we'd see multiple sub $100 food days with one maybe two days a week over $100 once in a blue moon over $200. And for almost two months continued staffing for the lunch rushes that virtually never came anymore. And the excessive payroll nearly closed our doors. I learned a HUGE lesson, the cash register rules for staffing, and adjust accordingly rapidly.

 

So we continued offering an extensive menu of made to order foods on a skeleton crew. When an occasional rush did happen now people complained about slow service. Tried to explain couldn't staff for one rush a week 5 days a week. People don't care, they want what they want and want it now. So last July we got rid of made to order and switched to greatly reduced food offerings making sandwiches etc. each morning for grab and go. Sales were extremely slow, people wanted lots of choices, wanted made to order back. Food sales remained dismal as we tried various kicked up sandwiches and wraps made in advance but food just never was worth the time and effort anymore. Overall sales continued to slide with December 2010 being the worst month ever while our other two locations (no food) had great Decembers.

 

Now during this same time period the manager's attitude took a nose dive. Customers complained about the atmosphere. We discovered he was openly discussing and complaining about our company and us "abandoning him" with customers. All problems and lackluster sales were our fault no fault of the locations manager. March we made a manager change with Bry taking over, shortly after got rid of food altogether (except baked goods). Focus was now fully placed on our Core, Coffee As Culinary. Almost immediately sales begain to increase. May's gross was over 50% greater than Dec' 2010 and the highest grossing month since Aug 2010 after getting rid of heavy staffing needed made to order food. Profitability is returning to the location, with no food, just exceptional coffee offerings.

 

The location is no longer known as a deli that also offers espresso beverages and pour over coffee. Our Downtown Vancouver location is now known as a kick butt coffeehouse.

John P said:

Short answer: If Saturdays are not what you want to focus on, no need to be open. Those people who come Saturdays will come on Friday if they don't want to miss out. 

.....

Congrats on your first year!! I have to caution you, you are falling into the trap many new owners do-- needing to add 'grab and go lunches' in order to boost business is a red flag. This means something within the coffee aspect of your business is awry. It might be efficiency, it might be product quality, it might be over-staffing ( a result of poor efficiency, both in design and drink making), it might be product waste.

 

As a general rule, the first remedy for improving sales involves spending more money. On better product (beans) and improving training. In the end you will have a better product, which you can charge more for, and more people will come because of that. 

 

The further you move away from your core - coffee/drinks -- the more it will erode your business. To be successful your foundation needs to be sound. Shore up your foundation, sales will come. 

 

 

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Permalink Reply by Jason Shipley on June 7, 2011 at 9:35am

Mike,

We are at a similar point with our business, In the next week we are going to pull the plug on our lunch offerings, The current plan is to do some grab and go stuff in the refrigerated display but I suspect we will find the same thing you did. Customers want to customize their order and will not want a prepared sandwich. We bake most of our pastry offerings on site currently and will be bringing in some specialty tarts and cupcakes from a well know local patisserie. I hope we get the same results as you have.

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Permalink Reply by John P on June 7, 2011 at 11:27am

Mike and Jason,

 

These problems with food (as Mike aptly described) have been well established time after time after time. From a business side it goes far beyond eroding your core, but that, in my opinion, is the heart of it.

 

Greater labor cost, higher COGS, and higher waste are some of the most obvious problems within a coffee shop environment -- and as you push sales of these items to cover the expense, you are losing money you could be making by focusing on the drinks. As Mike laid out, many people have a budget for their coffee house purchases. If they have $20 a week, it's better for you make the bulk of that $20 in coffee rather than in food. People should always come where their first thought is to spend their money on coffee, and pastries and small food items should always be an addition... and in limited supply so as to reduce or eliminate waste.

 

Now the argument that cash flow trumps profit is right, but most of us aren't in a high volume area and don't have that benefit of five hundred eight hundred or a thousand transactions per day. So it's about balance -- keep the focus on the quality of  the coffee and espresso you offer, price accordingly (higher than everyone else in your market), and you can have cash flow and profit.  People who come to our shops have a finite amount of money to spend. It's up to us to limit the choices to those that are most beneficial to us.

 

Resist caving in to a few customers desires and whims. "I want soup" or "Do you have breakfast?" These people are really NOT your customers. Customers "get" what you are doing because you know what you are doing. Wavering creates uncertainty and would-be customers can smell it in the air. Have a clear conviction in what you do, and customers will follow willingly. 

 

People can get great lunch anywhere. The choices for great coffee and espresso are small. And for each of us, the ideal for our customers is that there is only one choice. And don't worry about getting all the customers... just worry about getting the ones that help your business by purchasing those things that solidify your core and create a profit.

 

Jason Shipley said:

Mike,

We are at a similar point with our business, In the next week we are going to pull the plug on our lunch offerings, The current plan is to do some grab and go stuff in the refrigerated display but I suspect we will find the same thing you did. Customers want to customize their order and will not want a prepared sandwich. We bake most of our pastry offerings on site currently and will be bringing in some specialty tarts and cupcakes from a well know local patisserie. I hope we get the same results as you have.

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Permalink Reply by Mike McGinness on June 7, 2011 at 9:23pm

As a follow up last June when still doing made to order food our little (20 seater max) Downtown did about $12k, $500 to $600 daily about half in extreme up and down food sales with high labor costs. The switch to making sandwiches and wraps each morning ready to grab didn't work and sales plummeted, the managers attitude turned sour and sales plummeted further.

 

After March's change to new management under Bryan business almost immediately began to improve. Immediate and daily. Cleaning and polishing the place up, focus on the coffees, still making food to grab but it's sales lackluster at best ever accounting for a lessor percent of sales. Sales continured to increase while food sales lanquished. A few weeks ago we got rid of all food except pastries. Daily avg kept steadily increasing. Today for the first time since getting rid of made to order food last July 4th we not only broke the ocassional and increasingly not so occassional but more frequent $400+ day but shattered it with a $562 ZERO food other than pastries hell of a lot of great coffee day. Last June with about 50% food averaged the same as today strictly on coffee. With great coffee and GREAT attitude alone Bryan has proven that the Downtown location can not only survive but thrive.

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Permalink Reply by Jay Caragay on June 8, 2011 at 2:27pm

Our Saturdays have become so slow that it's nearly not worth being open at all on that day.

 

I think you've already answered your own question!

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Permalink Reply by Erin Tovar on June 10, 2011 at 7:55pm

Thanks to all who replied.  Lots to think about for sure.  We are in a unique location as far as the town as well as being one of VERY few independent coffee houses in and around the Fort Worth, TX area.  So much of what "works" in the northwest/east doesn't even translate down here!  (Had a lady the other day tell me, "Gimme one of them 'lotties'...translation, lattes-haha).  But, at the very least, it's made us think outside the box.  We are excited about new opportunities that have presented themselves just this week.  We are being true to who we are and always wanted to be (a community coffee house that serves an exceptional product) and we believe that it will pay off in the end!  Thank you all for your encouraging words and advice.  It helps us so much knowing we are not dreaming an impossible dream, even though sometimes, in our little blue-collar TX town, it feels that way.   

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Permalink Reply by Mike McGinness on June 11, 2011 at 9:43am

Like you said it's only been just short of a year! Keep the faith and hang in there. Rome (or great coffeehouses) aren't built in a day or even a year:) Maybe start doing coffee tastings every Saturday to expose people to your coffees. Free coffee tastings. Put flyers up anywhere you can. Especially obviously seen glaringly at your drive-through window! Give it a few weeks months before deciding if it's working to pull people in. Have it fun, make it exciting. Sometimes one maybe new coffee, maybe different contrasting coffees, same coffee different brewing methods etc.

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Permalink Reply by Dan Gorder on June 13, 2011 at 9:39am

I find the whole food or no food discussion an interesting one.  On one hand, you have the coffee purists who think that focusing on anything but your coffee will erode your core business.  On the other hand you have the owners who are struggling and need to increase sales.  The successful purists often point to an issue with the coffee products as the reason for other's failure.  Serve awesome coffee with great service and the people will come!  This simply is not always the case.  There are too many other variables... location, access, competition, need, etc.  Often, coffeeshop owners are simply undercapitalized and don't realize how much money they will need to make it through the first 3-5 years to establish their awesome coffee.

 

For me, I am in a suburb on the wrong side of morning traffic with no drive-thru.  I have survived, but not without hiccups, and I am now making a move to better provide for what the community wants.  I added ice cream (a mistake, it eroded my core business, getting rid of it when I move), I added soup/salad/sandwich offerings (a positive, well received and will be a staple of the new location), and I started roasting my own (overwhelmingly good decision).  It has taken years to figure out what works where I am located.

 

To the main question, figure out what your location will support.  Sounds like you have a great commuter location.  Maybe you just stay open until 1 each day and close on the weekends.  Will you make money doing this?  Perhaps you get a lot of evening traffic to your area for other businesses and becoming more of a cafe makes sense.  Evaluate what your area really wants and what the traffic supports and don't be afraid to adjust.  Even Starbucks is adding more food... the trend is reasonably priced quick serve restaurants.  Surviving on coffee alone for many like us is impossible.

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