How to make a profit in a cafe

2.7%

That’s the average annual profit for a hospitality business in Australia. That’s terrible. That’s including high-end restaurants and low end fast food.

The reality is most hospitality vendors have no idea what they’re doing.

I always recommend coffee shop owners read Colin Harmon’s book What I’ve Learned from Running Coffee Shops.

We’re heading for a recession in Australia. What will you do to compete, to innovate, to differentiate, to lower costs?

These three things remain:

  1. Quality
  2. Efficiency
  3. Service

I have seen the loneliest, obscure, tiny, middle of nowhere cafe with no food KILL IT when they obsess about quality. Their coffee is direct trade, their latte art perfect, they’re truly “specialty coffee”. Within 3 months they’re an institution.

I’ve also seen the best venues with design awards in massive foot traffic areas totally miserably fade away.

There are principles such as…

  • Vendor experience in hospitality
  • Low rental (no more than 5% turnover)
  • Unique selling proposition
  • Cash flow management

…that are eternal. They must be honoured. However quality in every aspect of your business is critical for success in a mature, competetive environment especially when our government isn’t equipped to deal with global economic realities. You must be vigilant.

Quality is elegance and intentionally augmenting every customer experience and is cost insensitive

If the best milk is 6 times more than the worst milk it’s a no brainer. Use the best milk. Especially if the latte ends up being 6 times better. This must be balanced with efficiency (Pt3).

Efficiency is removing any and all unnecessary processes without compromising the values of the business.

I had a waterless car wash in 2004. I made a mint. I was able to wash cars without moving them. I was able to wash cars without a bucket. Without a hose. Without refilling buckets. Without all the mess and fuss. I made $47 every 6 minutes. While my competitors had to unpack all their unnecessary equipment I had already washed 4 cars.

The final part of my definition is intentional and important: “without compromising the values of the business”.

The waterless chemical I used was brilliantly efficient and yet it did not compromise my values of cleanliness, professionalism and presentation. Many of my customers exclaimed that waterless was better than any water wash they had experienced. I washed $500,000 Mercedes for the Linfox family private fleet without water. Easy. Efficient.

Your cafe is loaded with inefficiency. Loaded. Chained. Bearing down on your time and your profit.

There is no cafe in Australia where I cannot personally increase profit by 10% in 5 minutes. Sadly 99.97% of cafe owners are too involved in their business or trapped in the old way that they will not change even when a light is shine in their face. Is that you? E-myth?

Efficiency will force you to remove all unnecessary processes and always will improve quality.

If you want to read point 3 on “Service” your secret weapon, email me jonathonsciola@gmail.com

Faith. Hope. Love. Coffee.

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