15 Tips and Strategies for Running Your Coffee Shop
According to a comprehensive study by Allegra World Coffee Portal, the coffee market in the U.S has grown by 3.8% in the last year. There are 35,616 coffee shops across the country and this number is anticipated to rise to 40,800, over the next five years. The U.S coffee market has increased to $45.4 billion, with 60% of coffee drinkers going to a branded chain, at a minimum of once a month. The increased competition in the coffee shop market means that small and medium-sized coffee shop owners need to continue to implement strategies to improve their bottom line. If you’re looking to open your own coffee shop or want to improve on the one you already have, read up on how to build a business plan for your coffee shop here.
Here are 15 tips and strategies for running your coffee shop to help you to remain competitive.
But first, how many hours a week are your managers spending creating schedules for your employees? Wouldn’t you prefer them to spend that time bettering your business?
To learn more about how your managers can cut down on the amount of time they spend creating schedules each week, click on the button below to start your free trial of Deputy. The employee scheduling software platform trusted by brands like Nike and Amazon.
How to save money while running your coffee shop
You should review every aspect of your coffee shop business to determine where you can make savings.
The following tips and strategies will help you to protect the profits of your coffee shop:
1. Source the best supplies at the most competitive prices
It’s advisable to review your supplier agreement at different times of the year to determine if you can negotiate a better deal. Staying with the same supplier may no longer be profitable for your business. Your supplier review should include finding out whether you can source the same products for a better deal. When looking for a better deal for your products, be aware of suppliers who provide low introductory offers and hike up prices after the original offer ends. Take a long-term view of your coffee shop business when deciding whether to switch to new suppliers.
2. Focus on your inventory
How you manage your inventory will have a big effect on your bottom line. Identify areas where food wastage is high and take steps to remedy this situation. For example, if a particular cake is not selling as well as the others, you can place it on promotion. If this fails, you should order a different type of cake to find out whether it will perform better. Your point of sale (POS) system will provide you with the analytics to inform you about your best selling products.
Consider automating your ordering process by using vendor managed inventory. This arrangement means that vendors take responsibility for managing your coffee shop’s inventory. This means that stock will be automatically ordered and delivered to you when it reaches a certain level. You specify the level your stock needs to be reduced to before it gets replenished. The benefit of vendor managed inventory is that you do not waste money or storage space on inventory you’re not using.
3. Automate staff schedule
The Allegra World Coffee Portal survey found that the coffee shop industry suffers from high staff turnover. Additionally, labor costs are a concern for coffee shop owners over the next year. You can address both high staff turnover and labor cost concerns by streamlining the staff scheduling process.
Most coffee shop workers are hourly staff that need to be scheduled and managed effectively. You should make the most of staff management tools to ensure you’re fully covered during busy times and that you reduce the number of employees at quieter times.
Deputy saves you time and money when scheduling your hourly coffee shop staff. You’re able to create schedules in one minute and can view your labor costs at different times. This insight enables you to make better budgeting decisions. Deputy’s auto-scheduling allows you to create schedules with just one-click, to provide you with details about how many people should be working different shifts.
4. Renegotiate your rental agreement
If your rental period is coming to an end, you should negotiate a lower price for your lease. Find out what the going rent is for your neighborhood and ask your landlord to match it if your payments are higher. Is your coffee shop in an area that has been affected by the so-called ‘retail apocalypse?’ If you have witnessed a reduction in foot traffic over the period of your lease, you should remind your landlord that he or she may find it difficult to get another tenant. Alternatively, you can agree to a reduced rental payment over a longer timeframe.
You can also try to include the payment of some utilities or insurance in your rent payments. When negotiating, present your landlord with facts and figures from your research. They may find it more difficult to refuse your request for a reduction in rent if you have compelling reasons.
5. Research your competition
Depending on the length of time you have owned your coffee shop, the landscape may have changed. Your research process should be continuous and not just confined to when you opened your business. Your research can include searching online to find out what similar coffee shops are offering. However, you should not restrict your research to only coffee shops of a similar size. It’s a good idea to check out what the branded coffee shops are doing. You can customize what is working for them and implement the ideas in your coffee shop.
Take your research offline and visit coffee shops in your area. Order different items on their menu and observe various elements of their business like: employee reactions, the layout, decor, and prices.
6. Train your staff in suggestive selling
The coffee shop is the ideal environment for suggestive selling. Implement a training program to ensure your staff is aware of how to make suggestions for different types of products. A successful suggestive selling strategy has a positive impact on profits. This is the reason that fast food restaurants like McDonald’s either try to upsell or cross-sell with every order. Train your staff to take every opportunity to ask the customer whether they would like to add more to their order. Use this technique to introduce new items at discounted prices to your customers.
7. Offer a delivery service
Customers now have the expectation that every product should be available at their convenience. With the increase of same-day delivery and food ordering apps, the coffee shop market is not immune to these demands. This is the reason you should consider implementing a coffee delivery service. Starbucks is meeting this demand by introducing a delivery service in around 2,000 stores in the U.S.
Coffee delivery is not just reserved for the big name brands, local coffee shops like K-cup in New Jersey are offering delivery services. Start small to test out your coffee delivery service. Choose to deliver within a one-mile radius and expand this area if you are happy with the results. Ensure that you include a minimum order to maximize your profits.
8. Enhance your interior
Create the atmosphere that best suits your coffee shop by making the most of visual merchandising. Do you want to portray a cozy environment or are you after a more modern look? Re-evaluate your decor to determine whether there is anything that can be added to give your coffee shop a boost. Enhancing your coffee shop does not need to be expensive. A well-placed painting could work wonders. To enhance a sense of community, implement a technique used by boutique hotels. They commission work from local artists to create a buzz and show support for the community.
9. Focus on your ordering area
The ordering area needs to receive the most attention because this is where customers spend money. You should prioritize the products that have the highest profit margin. For example, an exotic coffee blend should be front and center. Therefore, this product should be at eye level while low-profit items like bags of normal roasted beans should be in less obvious places.
Make your ordering area vibrant by showing off a display of different syrups and other high-value add-ons. Draw attention to your most profitable drinks and food by creating signs and posters with their details. Your aim should be to make the most profit out of every drink you sell. Try to encourage your customers who are used to ordering a plain coffee to step out of their comfort zone and try something different.
10. Show appreciation to your regulars
With the increased competition in the coffee shop market, it is more important than ever to show that you appreciate your regular customers. They could choose to go to any other coffee shop so let them know you’re grateful they opt for your establishment. Appreciating your regular customers makes sense as it’s easier and more cost-effective to keep existing customers than to acquire new ones.
You can choose to implement a loyalty card program to reward customers with a free item after they have purchased a specified amount of coffee. You can also try something more informal, like giving them samples of new specials before anyone else. Small touches make your regular customers feel appreciated so they’ll keep returning and also introduce their friends to your coffee shop.
11. Add the right products
It could be tempting to add every new product to your coffee shop menu. However, it’s more likely that your coffee shop will remain profitable if you focus on your core products. You should have a strong brand identity and everything in your coffee shop should reflect this. When adding new products to your menu, think about whether your main customer demographic will be interested. To avoid having a menu with too many items, remove low margin items when adding new food and drink.
12. Invest in the best equipment
Using the best equipment can improve the efficiency of your coffee shop. As a result, this efficiency can lead to an increase in profits because you will have shorter lines and improved customer satisfaction. If you invest in an espresso machine that saves you a minute with each use, this time adds up to a significant saving throughout the day.
13. Allocate tasks
When your staff isn’t serving customers, they should be either cleaning your coffee shop or prepping. Everyone should be aware of what’s required to keep your coffee shop at an acceptable standard on a day-to-day basis. You should create a schedule for prepping, cleaning and any other task that needs to be done.
Allocating and checking that tasks have been completed does not have to be time-consuming. With Deputy, you can use the Tasks feature to allocate different jobs to your staff. Your staff can let you know the task has been done by checking it off. Carrying out jobs like labeling perishable items and discarding them after their expiry date is a requirement by law. Use Deputy’s task function to help you remain compliant with the law by ensuring that all legally required tasks are undertaken.
14. Familiarize yourself with your local community
Running a successful coffee shop does not only happen inside your establishment. Making connections in your neighborhood can also boost your bottom line. The nature of a coffee shop makes it easier to integrate yourself in your community because it’s a place where people come to relax and socialize. You can partner up with local charities to show your business gives back to the community. Additionally, you can also incorporate child-friendly spaces in your coffee shop to encourage mothers and children to visit.
15. Cultivate the right atmosphere
Your coffee shop should be known as a place where people not only get coffee. The atmosphere in your coffee shop should encourage customers to meet with friends, relax and socialize. Every detail in your coffee shop should be geared toward creating an inviting environment for customers. The longer the customer stays, the more they will order, which is good news for your bottom line.
You can only operate a coffee shop effectively if you have an intuitive way of organizing your staffs’ shifts. Deputy is trusted by more than 90,000 businesses (including coffee shops) to schedule their staff easily and quickly.
Click the button below for a free trial of G2 Crowd’s #1 Workforce Management app.