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Permalink Reply by Mike McGinness on June 10, 2014 at 10:20am

We ditched our blenders 5 years ago so can't speak specifically to COGS for blended beverages. Bottom line if you want to keep the doors open and make even a tiny profit price based on your COGS regardless what Joe Blow is charging. If you are attempting to mimic the big chains menus and compete on price you loose and always will. They have massive buying power.

Our focus is on quality. A hand shaken iced 16oz syrup added latte we charge $4.60 with double shot, $5.60 quad shot. The few syrups we offer are in house made as is our chocolate sauce. Our customers don't bat an eye and we have been growing at over 50% annual rate for over three years surviving the recession also recently voted "best coffee in Clark County" in local newspaper reader's poll. 

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Permalink Reply by Jim McKenzie on June 11, 2014 at 8:17am

Michael,

Kerry recently purchased Big Train. Not sure if that helps them or not.

I can share with you we cut out distributors and pass the savings on to our customers. We have a one case minimum which is five pouches of three pound bags which can be mixed ($80) or straight ($75). 85 - 16oz. drinks in a case. Ends up to be about .88 cents per 16 oz. drink. Free Tubs, scoops and shipping. The cost of our product to produce is twice that of our competition...which means we use better ingredients. Frappes should be the best margin product other than coffee that you sell. We sell a introductory mixed sample case for $25 if you would like to check it out call me or google Enlightened Beverage or Treehouse Brands. 

I hope you find a mix that works for you.

Kind regards,

Jim

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Permalink Reply by Michael Garrison on June 12, 2014 at 10:29am

Thanks, Mike and Jim. I understand the need to charge an appropriately high price for quality. Jim, I've taken a look at your products. I like that you offer the basics. You seem to be quite a bit cheaper than many alternatives. But you mentioned that your products are of greater quality. How are you able to compete?

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Permalink Reply by Jim McKenzie on June 12, 2014 at 12:05pm

Michael, 

Great question. We sell directly to the customer, we do not use distributors. That is the main difference. Quality is our biggest advantage, we also private label for several companies. One private label customer wanted a knock off of a major competitor. To give you an idea about quality -we can sell the competitions product with the very same ingredients they use for $47 dollars per case delivered (we sell private label in pallet quantities only). Our Enlightened Beverage line we sell for $75 delivered. We are not trying to get rich, we know it is tough making a living as a cafe owner so we are here to help. And in turn we hope to grow our business by being an asset to our customers.

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Permalink Reply by Danny Heiss on June 19, 2014 at 5:53am

Find a middle ground. Do what it takes to survive. Upgrade your quality when you can, and make your cost cheaper if you have to. You can put your foot down and say "I will never change my principles", but you may struggle financially, or even have to sell. I want to give my community the best, but the community has to reciprocate that they want or need the best as well. I agree with Mike about competitive pricing. You can't compete with Starbucks or McDonnalds on pricing. Just be better than them. It's not hard to do ;). But if you take it too far without your customers consent, then you may start hemorrhaging money on labor and costs. Testimonies of successful people can be encouraging, educational, and critical for growing our businesses. But what works for Mike 100% may only work for others 50% of the time. Or not work at all. 30% cogs seems high to me for a blended drink though, considering it's mostly ice. You may benefit from modifying your Big Train recipe to make it more cost efficient. Is that including all your paper and condiment cost as well? Or do you keep that in your overhead?

Danny

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Permalink Reply by Michael Garrison on June 23, 2014 at 10:27am

Hey Danny,

Thanks for the response.  We include the paper and condiment costs in COGS.

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Permalink Reply by Michael Garrison on June 23, 2014 at 10:29am

Hi Jim,

Do you have any current customers I could speak to about your enlightened product line?  About how large of an order is a pallet?    I see you sell samples for $25.00.  How long does that take to ship?

Jim McKenzie said:

Michael, 

Great question. We sell directly to the customer, we do not use distributors. That is the main difference. Quality is our biggest advantage, we also private label for several companies. One private label customer wanted a knock off of a major competitor. To give you an idea about quality -we can sell the competitions product with the very same ingredients they use for $47 dollars per case delivered (we sell private label in pallet quantities only). Our Enlightened Beverage line we sell for $75 delivered. We are not trying to get rich, we know it is tough making a living as a cafe owner so we are here to help. And in turn we hope to grow our business by being an asset to our customers.

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Permalink Reply by Jim McKenzie on June 23, 2014 at 10:46am

Sure Michael,

I just "friend requested" you so once you "friend" me I can send you a private message with some names and numbers of our customers. You can also give me a call 651-769-4820 or email me at one of the emails on our site the "info" one works fine.

A pallet is 80 cases, a case is 5 x 3 lb pouches.

Sample cases ship via FedEx ground from our production facility in Chicago. Usually two to three days to OKC. Shipping is free and the mixed case will come with 5 tubs, lids and scoops (free as well). 

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