How to Increase Coffee Shop Sales and Profits

How to Increase Coffee Shop Sales and Profits

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How to Boost Coffee Shop Sales & Profits

Small Changes Can Increase Your Coffee Shop Profit Margins

Your coffee shop sales are the lifeblood of your business. 

No sales = no business.

As a coffee shop owner, increasing your coffee shop's sales and profit margins should be the top priority. Like any other retail business, your coffee shop needs to experience sales growth to ensure your coffee shop's overall long-term health.

When it comes to your coffee shop, there are three essential factors you should examine to boost your coffee shop revenue.

These revenue factors are:

• Sales volume
• Average sales receipt price
• Overhead costs (Fixed and variable Operational Costs)

Each of these has a role to play in your coffee shop revenue. Therefore, optimizing each for profitability can really make a big difference in increasing your sales figures.

In today's post, we're going to talk about taking the steps to improve your coffee shop sales and boost your revenue and profits.

How to Improve Your Coffee Shop Sales

Let's look at those three elements we mentioned and then discuss strategies to achieve better coffee shop sales and increased profits.  But first, let's address a couple of important elements you may be dealing with if you are already open and operating as a coffee business.

1. Examine Your Current Operational Costs

First, consider looking at your overall coffee shop operational costs.

Examining your coffee shop’s fixed and variable costs will be an important first step to cutting the extra expenditures that can quickly accumulate and eat up any potential profit. But to do this, you have to collect good data. 

Tackling your costs is under your control and, thus, often the easiest to make changes to your coffee shop budget. A good place to start is to get yourself organized with your paperwork. 

Consider the following questions:

• Are you able to easily access your sales data?
• Do you know your monthly expenses (Where your money is going)?

Take the time to look at your system of organization and clean it up from the top down. Get your paperwork organized by adding practical items such as file drawers, folders, software, a point-of-sale system, and most importantly, time – you must give yourself time every week to stay organized.

2. Boost Existing Sources of Revenue

It's no secret that to generate more revenue, you want to maximize those things you are already doing to bring in money in your business's normal course. This means increasing the number of sales receipts and the price of those receipts.

This article will not focus on your coffee shop's fixed costs, including set lease payments, insurance premiums, interest, etc.

Rather, we will focus on things you can control immediately, which will hopefully bring faster results.

We believe that if you make the necessary changes or adaptations in the right direction with the elements listed below, you will hopefully begin to see results within 4 -12 weeks.

3. Establish Profit Goals

What revenue results are you aiming for?

Determine where you need to be – or where you want to be – in terms of your coffee shop revenue. Once you establish your goals, it will then be time to work towards them.

As we mentioned above, to move towards greater profitability, you need:

• Better organization
• Better data collection
• Established goals

You also need to know where you are at. How far deep are you in the black? How much additional revenue will it take for you to reach sustainability?

Determining where you are today can only be achieved by being organized and adequately collecting and analyzing data. Once you start there, you will implement the following tactics to reach your financial goals.

So, with that said, let’s talk about some points that will increase your coffee shop sales – and your profit!

The Profit Formula for Coffee Shop Profits

Increase in Revenue + Reduction in Costs = Greater Profits

This simple formula makes logical sense. You need to boost your sales and reduce your spending. To realize your full revenue-earning potential, you will need to do both at the same time. 

Increase in Revenue

• customer receipt totals
• Increase customer sales

Reduce Costs 

• Reduce Waste
• Increase Efficiencies
• Better Inventory Management
• Increase Efficiencies

So, how do we achieve the desired result from our formula above?  We have found some surefire ways to improve your profits and have listed them below. 

How To Increase Your Coffee Shop Sales and Profits

Increase your coffee shop sales:

#1: Invest in Barista Training

“Wait! Invest in training my staff? But I don’t have any money!”

This is quite often the first reaction that many coffee shop owners have when the recommendation comes up. That is why I’m putting it first on the list. Remember that resistance to change I mentioned above?

As business owners, we invest in things that we want to receive a return from. Getting more productivity from our employees is one of them. Barista training almost always shows quick results.

What does barista training do for your coffee business?

First, it boosts morale, increases employees showing up to work on time, and encourages better practices – that can save you time and money. Educated employees also produce a better product or coffee beverage. Barista training can eliminate waste as well as reduce employee turnover.

These things (an increase in punctuality, productivity, morale, and a reduction in waste and turnover) all have a financial dollar cost.

Consider a coffee training program, which can often be done through your wholesale coffee roaster. You can also hire a local coffee trainer for a couple of weeks to analyze and re-train employees on coffee brewing, espresso extraction, latte art, customer service, or other relevant subject areas.

Increase your coffee shop sales:

#2: Improve Your Inventory Management

Reasons for shrinking profits can be found nearly everywhere in a well-established business, and often the culprit revolves around your inventory.

Being able to break bad inventory management habits will be essential to squeeze out more cash.

Your variable costs (costs that you control to some extent) can skyrocket if you’re not managing your inventory well enough. Ordering too many or too little of any of your inventory items can cost you either lost sales or waste.

Far too many coffee businesses end up throwing away too many sandwiches, bagels, or muffins weekly. (Giving them away to your employees, friends, or family members may make you feel a little bit better, but you’re still losing money!)

Ordering too much of anything before you need it can also cost you upfront costs that you may not ever recover.

So, how do you better manage your inventory?

First, determine if you actually have an inventory management problem. Look around and ask your employees. If possible, review your POS analytics.

Answer the following questions:

• Do you have way too many unused syrups?
• Did you run out of coffee beans during your morning rush?
• Are you throwing away food at least three times a week?

Understand your daily sales. I am not just talking about the money you are making, but which exact items are you selling.

You can do the necessary accounting by hand, such as reconciling your checkbook. You can also do it with an affordable coffee shop POS system, which we will talk about next.

Increase your coffee shop sales:

#3: Do You Need a Point-of-Sale System Upgrade?

Every coffee shop needs a Coffee Shop Point-of-Sale system. In addition to “ringing up” your sales and processing all of your credit and debit transactions, your “cash register” or Cafe POS system should also be working to collect all the inventory and sales data you need to make better management decisions.

Your Coffee Shop POS system should:

• Process all transactions without a problem (online and offline)
• Be affordable
• Help you with your inventory management
• Provide you with real-time data analytics
• Manage employees

Choosing the right POS system for your coffee shop is important for all these factors. In addition to not receiving the sales data that you need to collect, getting “nickel and dimed” can make the difference between making a profit or not.

Today, Coffee Shop POS systems for your coffee business can be a powerful tool to help you manage inventory, your employee schedule, and transaction costs (all variable costs that can add up quickly each month!)

Fortunately, you do have plenty of options. We recommend Lightspeed POS for your Coffee Shop.

Increase your coffee shop sales:

#4: Improve Your Cross-Selling or Upselling

Cross-selling or upselling is an absolute must to increase your revenue and thus reach profitability.

Some people don’t like to do it because they don’t like to be too pushy. If you believe in your service, if you believe in your coffee, and you believe that your products add value to your customers, then upselling isn’t being pushy at all. 

Customers walk into (or drive up) to your coffee business because they want to buy something – so help them along. Encouraging your customers to choose one of your new flavored coffee drinks, your freshly-baked muffins, or seasonal apple pies will move your inventory faster, generate greater sales, and pique your customers’ interest.

Encouraging your customers through upselling or cross-selling is an essential part of customer service.

Hiring the right employees and providing the right training to cross-sell or upsell can generate a tremendous amount of value for your customers.

If you are not cross-selling or upselling already, I strongly recommend that you begin to do so. Recommendations by your friendly staff can go a long way to producing the revenue you want.

This strategy isn’t just about making a quick buck. Having real success with cross-selling and upselling is knowing what your customers want and what they value. Only then will you improve your sales.

Increase your coffee shop sales:

#5: Bundle Deals To Increase Sales

Breakfast specials or lunch specials can move inventory and boost sales. Everyone likes a good deal and will often spend more to get one. Bundling items can be a win-win scenario.

Consider the cost of each of your items. Determine what your existing margin is. What complementary items go together well at your business? Perhaps soup and salad, or muffin and tea, or crepes and eggs?

Price your “specials,” knowing your full wholesale costs and pre-determining your margin of profit.

Experiment with several bundled items for a couple of weeks and see what kind of sales you get. At the end of a time period, can you determine whether or not you sell more of each item than you had previously? This is why investing in a good Cafe POS system would help you get the numbers right.

Increase your coffee shop sales:

#6: Modestly Raise Your Prices

It might be time to give your business a raise. When was the last time you raised your prices?  If you have tried hard to keep your prices low for some time to help your customers, you may need to do some research and reconsider your price points.

Determine the following:

• Do your prices reflect your local area?
• Are your prices competitive with your competition?
• Do your prices reflect the quality of your product and service?

As a coffee shop owner, you already know as much as anyone else that customers are very price-sensitive. Even the smallest of price increases can generate a negative reaction.

Understanding the reasoning behind your price increases will help you better communicate the modest price increase to your customers and give you the confidence to stay on course with your price increases.

Increase your coffee shop sales:

#7: Develop a Coffee Customer Loyalty Program

Repeat business is critical to boosting your sales. Every regular or loyal customer can generate enormous earnings over time. Treating regular customers well through consistently good customer service and well-pulled coffee will impact your annual sales.

I will acknowledge that business experts and coffee shop owners often oscillate between having coffee shop loyalty programs and having nothing. If you are on the fence, consider the following:

Let’s say you have a customer who visits your coffee shop two mornings a week. This customer purchases an Americano and muffin nearly every visit.

• Coffee $2.75 coffee
• Muffin $3.50 muffin
• Total $6.25

Multiply this by two days. You get $12.50. If a loyalty card or program brought him in an extra visit per week, he would spend $19.00 per week before tips.

This works out to…

• Spending per month: $76
• Spending per year: $912 (not including tips!)

That’s a $300 annual increase by adding one single day per week through a loyalty program! Of course, not all coffee shop loyalty programs are the same. You’ll have to develop a program that your customers value and make financial sense for your coffee shop.

Increase your coffee shop sales:

#8: Serve Beer and Wine

Consider adding wine and beer to your coffee shop menu. If your café sits in the “right location,” accessible to the right customer base, adding serving alcohol at your coffee shop may boost your sales.

Also, adding beer and wine will most likely expand your business hours into the evening and most likely expand your product offerings. If priced right, you will ultimately move your inventory and increase your sales and profit margins.

Like Starbucks, even the big corporate coffee guys are experimenting with adding craft, local beers, and wine to the menu. Offering a mix of alcoholic beverages, as well as coffee, can maximize your earnings.

Increase your coffee shop sales:

#9: Offer Coffee Education Classes

Generate interest in your roasted coffee. A great way to do this is by offering coffee education classes or free “coffee cuppings” or tastings. Small coffee tastings can allow your customers to explore your chosen coffee profiles and learn to appreciate the value behind the coffee you offer and your premium prices.

Setting up free weekly coffee tastings really doesn’t have to cost much for the potential returns it can give.

I encourage you to talk about your coffees or the other products you might have in your inventory – and allow your customers to buy bags of coffee and a curated selection of your pastries, muffins, or cookies.

Educating customers can boost credibility as a coffee shop proprietor. Your one-on-one time with customers increases trust, loyalty, and repeat business.

Increase your coffee shop sales:

#10: Reconsider your Wifi Hotspot Service

Offering your customers WiFi can be a tricky question that all coffee business owners with limited space need to confront.

Of course, you are sensitive to your customers’ needs, and you want to provide the best service possible. This may include having a wireless internet connection.

But you also don’t want to give up your best tables to “café campers” which often discourage paying customers from staying longer and spending more. After all, you run a business, not a library. 

So what should you do?

• While each location is different, you may need to revisit whether you want to continue offering WiFi.
• You may also want to determine the reaction of shutting down your WiFi from your customers. Will 80% of them be fine with no WiFi?
• Test your decision by turning off your public WiFi for a month. A month is a good time to determine any differences in sales from the next.
• Once you can compare the numbers, you must ask yourself if it is worth cutting off WiFi to generate better sales and customer experience.

Increase your coffee shop sales:

#11: Your Coffee Menu May Need Upgrading

Jazz up your interior menu displays. Interior menus and displays can be an excellent way to communicate with your customers.

Many coffee shops don’t have a menu board pushing “this month’s special” coffee drink or pastry. If you want to sell it… you will have to promote it. This includes promoting your products within your store. 

Don’t assume customers know what they want before entering your business. Many customers simply have the mentality of: “Hey, let’s check this place out.”

Help them buy something from you!

You help your customers buy from you by communicating through menu boards, special product displays, and verbally through your staff. 

But don’t depend on your staff – they are busy making drinks and getting customers’ orders right.  So, update your coffee shop menu board to be simple, clear, and fun.

If you have specially named unfamiliar drinks, prepare yourself and your staff to answer any questions.

Aside from your menu boards, have displays only geared to push one drink – the drink you want to promote. Perhaps, it’s a seasonal drink. Perhaps it’s the small shipment of high-quality Ethiopian coffee. Have a separate display for a food item. Perhaps it’s your freshly baked pie…or new bagel sandwich.

The displays can be purchased rather cheaply, or you can make them yourself with a few materials you have lying around. They don’t have to cost anything, really.

Increase your coffee shop sales:

#12: Hiring Friendly Baristas

Your baristas are the most valuable asset to your coffee business. A “great” barista with a congenial attitude and positive disposition can generate more revenue per week than one with a poor attitude or communicator.

The customer service offered by your staff is paramount. One bad experience could turn away a potential regular customer – in addition to up to 7 of his or her friends.

A poor barista can slowly bleed a coffee business dry. Giving away drinks, giving generous discounts to friends and family members, and offering poor service can ruin your dream of having a coffee business. 

Hiring a well-trained barista is just as important as picking out the right espresso machine if your current baristas are:

1. Not dependable

2. Inconsistent with their service

3. Don’t have the right attitude

Increase your coffee shop sales:

#13: Quality of Your Coffee

Ever ordered a cup of coffee that was horrible? Well, I have to. Quality matters.

Quality coffee is more expensive. It will eat into your margins. However, having cheap, poor-quality coffee can also wreck your business.

So, how do you determine which direction to choose: the quality or lower-priced coffee?

I would always choose quality coffee because it’s probably why you got into coffee in the first place, right? (Can you imagine a wine store owner only offering cheap wine? Probably not!)

However, the answer to your business should be based on your customers. What’s your customer like? Will, your customer like or appreciate the rare coffee from Yemen or shade-grown coffee from Guatemala? Or do they just want a coffee-sugar drink they can run to work with?

Which direction you choose should be based on what kind of customer you have, what kind of customer you want, and what kind of coffee shop you want to be. If you think you need a coffee change, then you probably do. Consider choosing a wholesale coffee roaster that fits your needs and tastes. 

Increase your coffee shop sales:

#14: Improve Coffee Shop Parking and Accessibility

What can you do to boost parking and greater accessibility to your location?

The ability of your customers to conveniently park in front of your business will boost your sales.

What can you do this month to clear parking spaces in front of your business? Can you put up signs that state, “This parking space is for coffee drinkers only!”? Or can you work with the city to add a 30-minute parking sign on the adjacent street? Can you work out a deal with your property manager, business district, or city to improve parking?

Additionally, how can you better provide access to customers?  Can you create better exterior signs? Can you work with the city to put in wheelchair curb cuts?

Improve your parking and accessibility, and you will improve your sales.

Increase your coffee shop sales:

#15: Look at Your Schedule and Hours of Operation

Your business profits are when you serve customers in the best way possible.

This means having your coffee business open when your customers need you to be open.  Are you missing serving many customers because you are closed on Saturday or Sunday?

Consider the role that your schedule plays in generating revenue. Additionally, consider looking at what your employee schedule looks like.

• Are you overstaffing during slow periods of the day?
• Are you understaffing during rush hour peaks?

Over and understaffing can cause so many problems, lower morale, frustrate customers, produce waste, exacerbate bad habits, and lower or shrink your profit margins.

Make an honest assessment of where you need to change. If you need help, bring in a consultant or a coffee trainer. Or use a new coffee shop POS system to help you analyze and make sense of the data.

Fix your “hours of operation” and  refine your employee schedule, and you will

1. Bring in more sales per day
2. Maximize your return (ROI) with your employee costs.

Increase your coffee shop sales:

#16: Look at Your Schedule and Hours of Operation

Do you have a marketing strategy? Has it slipped on your priority list? Examine your marketing and promotional strategies. Changes are that you can implement – or re-implement – affordable marketing and promotional strategies that can generate a bigger buzz and reinvigorate your sales. Added marketing and promotional efforts can boost your income significantly. Consider reading our post, How to Promote Your Coffee Shop Business.

Increasing Coffee Shop Sales:

Mixing of Art & Science

As a coffee business owner, you will have to make changes that work for you and your business. There is no cookie-cutter solution that will work for every business. The art of making more sales requires you to try some of the tactics above in a way that works for your business.

Let's list the ways again you can generate more coffee shop sales below:

• Invest in Barista Training
• Improve Your Inventory Management
• Do You Need a POS upgrade?
• Improve Your Cross-Selling & Upselling
• Bundle Deals to Increase Sales
• Modestly Raise Your Prices
• Develop a Coffee Customer Loyalty Program
• Serve Beer and Wine
• Offer Coffee Education Classes
• Consider Your Wi-Fi Service
• Your Coffee Menu May Need Upgrading
• Develop a New Marketing Strategy

Take one or two of the above recommendations and start there. Many of them don’t cost very much to do. However, they require you to change your manner of thinking, which is often the most difficult challenge. 

If you do try any of the following or have recommendations of your own, consider sending us an email. We’d love to hear from you.

If you have already tried many of the tips, you might have to ask yourself some more challenging questions. 

Additional Questions To Improve Sales:

• Is my business convenient enough?
• Is the visibility of my business sufficient?
• Should I renegotiate my lease?
• Is it time to move to a new location?
• Is the competition too stiff?
• Am I serving the wrong customer?
• Am I invested in a strong marketing strategy?
• Do I need help managing, training, and keeping track of my accounting?

All of these questions can get to where you want to be: more efficient, more customer-centric, and less wasteful.  

Top Recommendations For Boosting Coffee Shop Sales:

We reviewed fifteen tactics and strategies that you can employ to boost your sales. I don’t expect you to make all these changes at once.

However, I believe that you can make some important decisions that will help you tremendously within a week or two.

So, where do you start? If you had to choose only three of them, I would decide on the following:

• Get a new Coffee Shop POS system (Read more here):

A good cafe POS system will help you collect the data you need to make better decisions – save you money and inventory, and help track your employees.

• Improve your interior menu boards and product displays

• Instruct your employees to upsell and cross-sell

Making small but relevant changes and giving time for it to make a difference can increase your bottom line. Have another suggestion? Send us an email; we'd love to hear from you!

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Based in Seattle, Washington, USA, Coffee Shop Startups is dedicated to providing you with the most relevant information on how to start a coffee shop business successfully. Over the last 11 years, we've helped thousands of aspiring coffee business owners worldwide. We harness the experience, wisdom, and knowledge of many successful coffee shop owners to help you increase your chances of success and profits. We support business owners who want to start a coffee business by providing them with valuable information on starting their coffee business successfully.