May 17

Getting Profitable

Lesson 6: Building Sales – Part 1: Being The Business Consumers Want to Patronize

So far in this series of articles on profitability, we’ve explored how to control a “cost of goods,” and how to reduce your other business expenses. However, if those actions don’t result in profitability, then building sales will be the only option left to you. Every coffee business can generate a profit if its sales are great enough!

Being a business that consumers want to patronize is essential for ramping-up sales.

Who are your customers and what do they want? Where can you take advantage of opportunities in your marketplace? What menu items, services, actions, store features, or concept modifications can you add to your business that will generate additional income?

My first suggestion is to evaluate your business strengths and weaknesses, and then develop a strategy to make your weakness into one of your strengths, in essence turning it into a selling point! For example, I’m assuming you may never have the name recognition and marketing budget that Starbuck’s or Dunkin Donuts has. In reality, they are the “sharks” in the ocean, and you are a “little fish.” However, being the small local guy or gal can have its advantages. A proclamation of, “Locally owned and operated, keep your money in (name of your town),” prominently displayed on your business sign, store window, and marketing materials, can be extremely effective. After all, you’re probably not a mega global corporation with a never-ending lust for greater profitability and higher stock values. In reality, you’re most likely a “little guy,” striving to provide a better life for you and your family. And, most of your customers are probably just like you. People have a choice of where to spend their money. All other things being equal, consumers would rather support a locally-owned business. You should let them know that you are locally owned, and encourage them to spend their money at your business!

You should also reinforce the assertion that you are a good local citizen, one who’s worthy of supporting. Do this by embarking on some high-profile activities that will benefit the local community. How about organizing a walk or run to raise money for the local food bank or homeless shelter? Or, find an expert speaker to give a presentation at your store about the available options and implications of different Medicare programs. Of course you will need to promote your events, and you’ll need to ask you local media outlets to do the same… for free (since these events are a public service). Having your name circulated throughout the community promoting your good deeds, and having participants come to your store to participate in or attend those events, is an effective and positive way of promoting your business, especially to those you have never visited it, or perhaps never even heard of it.

Because your business generates the majority of its income from the sale of beverages and food, how might you expand upon what you are currently offering to generate more customers and a greater check average? Adding wine and beer to your menu will certainly increase your average beverage purchase, and attract more customers in the evenings. What about your food menu? Do you currently offer hot breakfast sandwiches? What about lunch, do you offer a variety of grilled panini, salads, and soups? Do you offer any items that could fulfill the niche of being a quick, ready-to-eat dinner? If you answers are “no,” then you are missing a lot of opportunities. Realize that one of the things you have to offer as a coffee business is being the viable alternative to lack-luster fast food.

Beyond offering breakfast, lunch, and dinner, there might be other food items you can offer that fulfill a need within your marketplace. If there is no ice cream shop in your area, then why not add an ice cream dipping cabinet with a half dozen flavors, and sell cones, bowls, and milkshakes? If no one in your area offers pizza by the slice for lunch, then why not take on pizza production? Between your slice business at lunch, and whole pie sales in the evenings, pizza alone might double your current business volume.

Finally, you can increase your sales and profit by adding another business component to your current coffee business. For example: If you already sell wine by the glass and beer by the bottle for your customers to enjoy in-store, then obtain a modified beer and wine license that also allows you to sell bottles of wine and six-packs of beer out the door. Of course you’ll have to designate some floor space to set up some merchandising racks and shelving, but your business will then become a coffee bar/fine wine & microbrew beer shop. By doing this you will attract a whole new segment of the population. You are also likely to discover that some of your current morning coffee customers will return in the afternoon on their way home from work to by a bottle of wine or six pack of beer. And, your new wine and beer customers will also see that you serve coffee, so you are likely to capture some of them as morning coffee customers as well.

Motivating customers to patronize your business starts by identifying what they want, and what there are needs for in your marketplace. The philosophy of, “build it and they will come,” only works some of the time. The philosophy of, “build it and stock it with products and features that people want and need,” works every time!

Ed Arvidson is a 25-year veteran consultant to the Specialty Coffee industry, and President of E&C Consulting. Elements of this article are from his new book, “How to Get Profitable in the Coffee Business.” www.coffeebizhelp.com

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