2012

Building Healthy Profits

9 12 1 L

If I were to ask you your story, and how you came about managing or owning a coffee shop, you would probably tell me that it’s because you are passionate about roasting, passionate about serving people, passionate about coffee.  However, at the end of the day, like every other person or business, you need to make ends meet; and more importantly, you need to be profitable. If you decided to read this article because of the title, it shows that you care about the success of your shop.  Let’s take a look at a few products and services that can help you increase profits, so you can continue to do and serve what you are passionate about: Coffee. (The author of this article is making free assumptions based on the fact that you are reading a coffee magazine).

1. Offer a customer loyalty program.
Have you ever wondered how you can get your occasional customers to come in more often? Chain cafes figured out long ago that customer loyalty programs significantly increase sales because of this very reason. One of the latest loyalty programs out there is Perka. Perka is a mobile loyalty platform (mobile app), that lets small businesses recognize and reward customers by paying attention to which customers are helping you make the most profit. Perka is a punchcard in consumer’s phones that allows retailers to send push notifications and send customers offers inviting them to come by the café or coffee shop.  According to Rob Bethge, Co-Founder of Perka, “Getting regular customers that come in three times a week to come four times a week will have a great impact over the course of a year.” As they say, ‘80% of your profits will come from 20% of your customers;’ make sure you are nurturing them and inviting them to stop by more often.

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Annual Profit Potential: Based on a shop that has monthly sales of $5,000, the Perka calculator estimated $3,996 (See Graphic for details or use the Perka calculator to calculate your own.)

To see how Perka can increase your profits go to www.getperka.com/foryourbusiness/
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2. Offer a boost.

Position your concept to reach the health-minded consumer. Individuals are often looking for vitamins, and energy supplements that will make them feel healthier and more energized. Compete with juice bars, health clubs, and other retailers who offer supplement-boosts for their smoothies & frappes. According to David Gross, CEO of Add a Scoop by Smoothie Essentials, “Supplement-boosts will help you sell more blended drinks! Supplements are a 70% + gross profit add-on.” Moreover, Gross adds, “75% of all adults in the US take a multivitamin- 65% of all US adults take supplements.” Don’t miss out on the opportunity to sell more blended drinks and make a profit on each boost.

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Annual Profit Potential: $1,277.50 (See Graphic for details)*

For more information visit 
www.smoothieessentials.com
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3. Spice it up.
FWhile many of us can’t live without our daily cup of java, there will be individuals that come into your shop requesting other options. Make sure you do not dismiss these consumers, by offering a wide array of beverage options. According to Bipin Patel, Founder of Tipu’s Chai, “Tipu’s Chai™ is a bold alternative to coffee, tea, and American Chai.  Stop shipping water by using our new Chai Now™ food service product to make your own chai tea concentrate.  We supply the reusable bottle and the chai – you just add water!” Regarding profits, according to Patel, “At the Master carton level (6 cases/ 12 units per case) one pack of dry mix is $3.93 and makes one quart of chai concentrate.  Each quart makes eight 8 oz servings.” Considering, an average coffee shop sells each chai between three and five dollars, after selling one cup of chai, the remaining servings of the pack will be profit!

Annual Profit Potential: $11,023 (Assuming the shop is selling 16 oz Chai at $4.)*

For more information visit www.tipuschai.com
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4. Diversify your services to attract new customers.
GAttracting new customers can sometimes become a challenge for a coffee shop.  Not everybody knows about your shop, or the great coffee you serve. For this reason it is important to diversify not only your product line but also your services.  According to John Newberry, President of Venco Business Solutions, “Retailers can offer an additional service for their customers by offering an ATM… Profitability can come to the business in several ways. It will put more cash in the location for customers to spend. It will cut down on credit card use, which will save on expenses. It will also bring more customers into the location to use the ATM and they will spend money while there.” An average Venco ATM costs about $2,100; if you charge $3.00 per transaction and you have an average of 35 transactions per week, you could get an additional $105.00 profit per week. Not to mention the additional flow of new prospects that will come into the shop and will probably make a purchase.

Annual Profit Potential: $5,460

To diversify your services visit www.vencosolutions.com
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5. Encourage customization, and charge for it.
HNowadays, people are looking not only for diversity but also customization. People enjoy and demand that retailers offer a wide array of options. For this reason syrups and flavorings are a smart addition to your menu; especially, if you offer products that are sugar-free, low-fat, zero carbs, etc. According to Brenda Weldon, Marketing Coordinator at Weldon Flavorings, “Weldon Coffee Flavorings is the sensible and healthiest way to serve delicious flavored coffee… Our flavorings are totally unsweetened and contain no sugar, artificial sweeteners, creamers, powders, calories, carbs, fats, or sodium. In this health conscious age finding ways to serve your customers healthier products just makes good sense.”

Annual Profit Potential: $1,095 (Assuming the shop is charging $0.50 per shot.)*

For more information visit 
www.weldonflavorings.com
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6. Expand your product offering while promoting your brand.
IWhy not promote your business and brand while making a profit? Whether for personal use, or as a gift, there are multiple items that consumers are willing to purchase such as to-go mugs, in-house drink ware, or t-shirts. Janet McNaughton, President of Lasting Impressions says “We offer an A La Carte collection of Drinkware, Apparel + Grab & Go products for retail sale.  Designed specifically for the coffee industry, each themed item can be branded with a logo and transformed into a mobile billboard that creates a second profit center.  This new product line will be unveiled at Coffee Fest in Seattle on Friday, September 21.”  According to McNaughton, effective promotion is essential; profits on these items will vary depending on smart pricing, shrewd product positioning in the store, and consistent promotion with each customer at point of sale.

Annual Profit Potential: Varies widely.

For more information visit 
www.LastingImpressionsGifts.net
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7. Target the health conscious.
JA prevalent trend in the food and beverage industry is products that are labeled ‘Organic’ ‘and All-Natural.’  Diversifying your menu and product offerings to attract new demographics, will in turn, increase revenue.  Torie Burke, Co-Founder of Torie & Howard, LLC, emphasizes on the importance of offering health conscious products, “Continue to offer refreshing health conscious grab and go items featuring sophisticated flavor combinations for today’s on the go customer.” Burke adds, “We offer Organic and Kosher certified delicious fresh from the garden flavors in a 2 oz travel sized recyclable tins. Most important to the consumer: Our flavors taste as if they are fresh from the garden and feature no GMOs, No Corn Syrup, Gluten Free, Soy Free, Casein Free, Nut Free, Dairy Free, No Artificial Flavors or Colors, and at just 12 Calories each delivering all natural satisfaction without the guilt!” Make sure to market your products by highlighting healthy features and using healthy buzzword that will appeal to customers.

Annual Profit Potential: $9,636 (Assuming each tin is sold at $4.99.)*

For more information visit 
www.torieandhoward.com
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8. Retail products that endorse coffee culture.
KRetailers have recognized the importance of teaching customers to taste quality coffees by providing cupping and coffee education. This not only enlightens the consumer to what quality coffee is, but it shows a new side of coffee they might have been unaware to.  Another way to teach customers is by showcasing different brewing methods, and showing individuals how they can do it themselves. Empowering your customers to brew at home, will not only promote your whole bean coffees, but also by offering brewing equipment at your shop, you will have an additional revenue source. Alex Tennant, General Manager at Aerobie, says, “Coffee lovers who brew delicious coffee with an AeroPress will brew more coffee and therefore buy more beans.”  According to Tennant, an Aeropress wholesales for $15.00, and a retailer could sell it for $29.99, providing a $14.99 profit per sale.

Annual Profit Potential: $1,558.96 (Assuming 2 Aeropress brewers are sold per week.)

For more information visit www.aerobie.com
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9. Encourage larger purchases.
LAn essential and highly profitable tactic that is often neglected is upselling. Upselling is often an easier task than spending all your efforts trying to bring new customers in. It is important to train your baristas to sell more to your customers, and continuously entice your customers to make additional purchases.  However, this should be done in a subtle and clever manner, so customers are not displeased or aggravated. Make it an apparent better deal for consumers, by offering combined food and beverage specials, or recommending a larger size coffee to those who do not specify on the size.
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10. Engage through Social Media.
MConsidering the average person spends an average of 405 minutes on Facebook, 21 minutes on twitter, and 89 on Pinterest each month1, Social Media is a highly effective channel to reach consumers and get exposure. The best part is that it’s free! In today’s society, having a Facebook and Twitter account is essential to keep in contact with your customers, and market your brand. Make sure you assign someone in your staff to manage your Social Media. However, having a Facebook page is not enough; you need to engage your followers. Pinterest and Instagram are other popular Social Media tools that will allow you to get more exposure and gain followers.  Many retailers have embraced Instagram and are using it to feature pictures of their latte art, events, and coffee travels. Social media is all about engaging and getting creative! As of this September, Perka, the loyalty platform, also integrated social media so retailers can run specials and promotional offers by allowing their customers to ‘like’ or ‘share’ their page.  In addition, consumers can share specials and coupons with their friends. Imagine your ‘50% off’ coupon going viral!

*Because situations vary so widely, we have made these assumptions based on a coffee shop that is open 363 days per year; receives 100 visitors per day; and assuming 10% of the sales are based on this specific product.

To learn more about healthy profits and marketing strategies come to our workshop at Coffee Fest Seattle Sunday, September 23rd, at 10:05 am Room 4C3!

1 The Mounting Minuses at Google+, Wall Street Journal, February 28, 2012. http://online.wsj.com/article/SB10001424052970204653604577249341403742390.html

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