Not Your Average Cafe
In Australia the average cafe makes 7% to 10% net profit.
That means that a coffee shop making $520,000 (basically half a million!) a year, is paying the cafe owner, at most, $52,000.
In the worst case, with business loans and equipment repairs to pay, that could be much less … closer to $40,000.
The Australian minimum wage is $36,000!
It's time to Stop being Average ... make bigger Cafe Profits and Pay Yourself.
Discover 3 Ways to take control and boost your cafe profits starting today.
There are three key areas in which a little extra focus on your part makes a huge difference to the amount you can pay yourself as a cafe owner.
… and the practical things you can do to change your coffee shop and boost your cafe profits in these three areas are available for $27 in the ‘129 Secrets for Doubling Your Cafe Profits‘ by Cafe Coach.
1. Get More In and Control What Goes Out
Success in business is all about getting in more money and more customers, while at the same time controlling how much you spend; as well as managing what “go’s” (bad staff, expired goods, dead equipment).
This balancing act between how much you make and how much you spend (and waste) is the foundation of running a profitable cafe business.
If you don’t know how every dollar is flowing through your business, then the best thing you can do right now –
- get more customers and have all your customers spend as much money as you can get them to spend with you
- cut back on spending, renegotiate deals and change suppliers if you have to (including your internet, electric and gas)
- manage waste so you have less of it by looking at shelf-life, serve sizes and equipment efficiency (a grill that keeps burning is a no-no)
2. Never Discount, Always Sell More
Discounting always eats into your cafe profits.
There’s a kind of “obvious” logic that your brain gets tricked into believing when it comes to discounting. That’s until you do the Maths and realise that it’s just plain wrong.
So when you stop thinking that discounting is your only answer, the way you solve a problem (of not making enough money) can change to something that adds more money in your pocket.
I want to prove it to you.
Let’s imagine for a moment you get reckless and offer a 50% discount on muffins, hoping to sell more muffins to your coffee shop customers.
Using your POS data you discover that you usually average 240 customers through your doors to sell 12 muffins a day. But now with a 50% discount you have to sell 24 muffins (twice as much) just to make the same amount of money.
You’ve now created several areas of risk for yourself. The main one being that maybe you can’t sell those extra 12 muffins – so now you’re making a loss! Not just because you can’t sell 24, but because the 12 you do sell are earning you less than they were before.
Now we’ll solve the problem by selling more.
The menu price for a regular coffee is $4 and muffins sell for $4. From your 240 customers, 200 buy a coffee and 12 buy a muffin – $800 + $48 = $848.
To sell more muffins you offer customers a coffee plus muffin deal for $6 (yes, that’s your 50% discounted muffin, but the catch is customers have to buy a coffee to get the deal).
If no-one takes up the offer, you’ve still sold your 200 coffees and 12 muffins. So you’re still making the profit you were before.
Now for fun sake let’s say 9 people from your 200 coffee customers and 1 person from your muffin buyers takes up the offer. That’s sales of 191 coffees, 11 muffins and 10 coffee + muffin deals = $764 + $44 + $60 = $868. You just made an extra $20.
Until you’ve done the Maths to prove that you will be making money, don’t discount.
3. Use Budgeting Buckets
In the “old days” when business was all done with cash, shop owners would manage their money using envelopes. An envelope for rent, one for staff, another for bills and maybe one for the taxman. As they made money, they’d split it up and put an amount in each envelope, so when the time came to payout, there was money for it.
A simple but effective way of managing every dollar flowing through your cafe business.
When money went digital, some people lost the knack of managing money – and so the ‘budget bucket’ was “invented” to replace the envelope.
A ‘budget bucket’ also known as a ‘savings bucket’, is an account that you can name whatever you like that is linked to your main bank account. The idea is to have buckets (accounts) for the main things you need money for. Like taxes and GST, employee wages and superannuation, bills and rent, emergencies and most importantly, Profits.
The way many work with buckets is to set-up the ones they want, have all their business takings deposited into their main bank account and at the end of each week the owner splits the money from the main bank account, transferring it into the buckets.
For example, let’s say you have buckets for GST, staff, bills, emergencies and profits, and your Accountant has told you you need to set aside 30% of your earnings for taxes. You decide to split funds into your buckets like this – GST = 30%, profits = 15%, staff = 30%, bills = 20% and emergencies = 5%. If your main bank account deposits for the week where $28,000, you would transfer the following amounts into each bucket –
| Bucket Name | Percentage | Amount |
|---|---|---|
GST and Taxes | 30% | $8,400 |
Employees, Wages and Super | 30% | $8,400 |
Bills, Rent and Suppliers | 20% | $5,600 |
Profits | 15% | $4,200 |
Emergencies | 5% | $1,400 |
Some business owners even set-up bill payments for things like rent, internet, gas and water to be auto paid from a ‘bills and rent’ bucket.
By choosing to be dedicated to making a certain percentage in profit. One that you set aside each week, you are guaranteeing there is money made for you.
"I thought I knew everything about running and managing a profitable cafe"
“I’ve been working in a cafe environment for nearly five years and have been managing a cafe for nearly 2 years.
I thought that I knew everything about running and managing a café, and I was pretty confident to run my own. I was planning to buy into a café or starting one when I found out about the Cafe Startup Course.
I did the course since it was intriguing for me, and I thought I might be able to pick up something valuable that I had not known, otherwise I can always get my money back (with their money back guarantee). But, after doing the course I just realised that there were so many things I did not know, and so many aspects to look into prior to buying a cafe.
It was so complex and ‘tricky’ that some people, who do not have the knowledge, could simply walk into the trap and create a frustration out of their life, finding that they are not making any profit from the cafe. And, the course has shown me a lot of way to save money.
I was so thankful to our Cafe Coach for the advice and knowledge they had given me to prevent me from losing tens of thousand of dollars and headache. I suggest anyone who is serious about buying into a cafe should pay attention to Cafe Coach to avoid unwanted loss of money and headache.
It’s money worth investment.
Ignatius Liauw
Owner of Little Chloe Cafe
1810 Malvern Road,
Malvern East, Victoria, Australia
Need More Cafe Profit Making Ideas?
The $27 guide to doubling your cafe profits gives you 129 ideas you can put into action in your coffee shop business at any time.
It’s colour coded to help you find the right idea at the right time.
Choose ideas that are easy to implement and don’t cost much to do, or something to improve sales or your business processes. The guide has something for cafe owners at all stages of success.
Available now for immediate download. Get started right away.
