How to Make Your Coffee Shop More Profitable

Make Your Coffee Shop More Profitable

How to Make Your Coffee Shop More Profitable

When starting a coffee shop business, the name of the game is profitability.

If you currently own or operate a coffee shop, you already know that your most important priority is to turn a profit.

Your profitably impacts everyone surrounding your business – from your employees, your property manager, your customers, and of course, you!

Struggling to make a profit is not where any of us want to be. Therefore, our goal should be to build a successful and profitable coffee shop business right from the start!

Nevertheless, we recognize that, at times, we will need to make changes to our strategies or business operations to improve our revenue and become a more profitable coffee business!

In this post, we will discuss several different ways to make your coffee shop more profitable. Consider the following as tips and strategies as food-for-thought, which you may want to try.

This post is the second in a two-part series on coffee shop profitability. For additional reading, please read How to Increase Your Coffee Shop Sales & Profits.

Plan for your profitability

How to Make Your Coffee Shop More Profitable

Develop a Coffee Shop Business Plan

Having a plan always puts you on a better footing to make money. By developing your coffee shop business plan, you will hopefully think through your entire business operation. Profitability rarely happens by chance. You need to plan for growth and profitability.

If your business is already up and running, I recommend revisiting your business plan. If you never got around to writing up your plan, consider writing out your goals – and how you plan on reaching them. You want to have a well-planned strategy for profitability and precise calculations of when you will reach your coffee shop break-even point.

Start With Less Debt

When you start a coffee shop – or any business – you have a couple of options. You either pay as you go with your own funds – or you can borrow money. The less money you borrow, the less interest you will have to spend on that money every month. Paying less interest or not paying it at all will allow you to reach profitability sooner than other coffee shop owners who started with a lot of borrowing.

Starting your coffee shop with less debt will free you from the shackles that hold down many new coffee shop owners. First, you will want to review your coffee shop funding mix and determine where you will get the money to start your coffee shop.

Be Frugal, Not Cheap

Cutting corners on research, planning, and getting the help you need may end up costing you more money in the end. Additionally, skipping out on essential things like investing in marketing, choosing the right coffee equipment, picking the right coffee shop location, or ordering quality ingredients – may all chip away at efficiencies and the unique things that can make you profitable.

You should plan on investing wisely in the things you need to be unique and profitable – and cut out things that don't make you money or play into your core concept.

Make Your Coffee Shop More Profitable

Hire Wisely

The quality of your hires can dramatically impact everything about your coffee shop business – from customer service to your monthly sales. If you hire amazing baristas, you will likely see an increase in quality service, better coffee being served, and overall customer satisfaction.

We've written previously on the need to hire amazing baristas. Hiring and offering barista training is significant in your successful coffee business. But other vital hires play a role as well. Additional hires include bookkeepers, accountants, coffee educators, marketers, cooks, and chefs. You may also hire electricians, carpenters, window cleaners, or any other type of contractor. Avoid cutting corners with your hires. Spending the extra money on a quality contractor may save you money, time, and hassle in the long run.

Reduce Waste at Every Point

It's easy to waste everything when you run a coffee shop. The better you reduce waste, the more likely you will be profitable.

The less you waste typifies an efficient staff and effective system. Reducing waste starts from the top. Train your staff to reduce waste, from coffee, milk, water, and sugar to napkins and paper cups.

For most businesses, profitability margins can be anywhere from 2% to 20% on every dollar of revenue received. So, by considering the reduction of waste at every point in your business, you could boost your income.

For example, could you hand out fewer paper coffee cups by providing porcelain cups instead? Could you ask customers if they would like milk or sugar instead of pouring it themselves? Could you order fewer muffins that will ultimately have to be thrown away?

Upgrade Your Coffee Shop POS

Upgrading your coffee shop POS system can save you money and bring in revenue more efficiently.

An upgraded POS system can help you keep track of employee sign-ins and sign-outs and pay them accordingly for starters. Too often, small businesses pay their employees for hours they have not yet worked, costing them hundreds to thousands of dollars per year – per employee!

Additionally, you can determine through your POS data collection which products are selling well and which products you should eliminate.

Utilize the data collection your Coffee Shop POS system can provide to make better managerial decisions. By streamlining your inventory and your product lines, you will maximize your profits while reducing your costs through losses.

Market Your USP

Your coffee shop's Unique Sales Proposition or USP – is the “thing” that makes you unique.

Figure out what makes your coffee shop special – and promote it!

Is it your organic shade-grown coffee beans that make you unique? Is it your panoramic city view, cozy location, outdoor seating, or specialty food that you offer? Whatever it is that makes your coffee shop special, you need to promote it. You need to market it and leverage it against your competition.

Why offer something unique and then bury it in the ordinary? Instead, highlight your best attributes and let your customers know about them.

Adapt to Fill Voids in Products & Service

It might be essential to take a step back and see how your market has changed at various times. What are your customers now looking for? Are your customers still the same as when you started the business years ago? Are they looking to have lunch instead of breakfast? Do they want beer instead of coffee?

You may have to adapt your coffee shop menu, tweak your hours of operation, or your marketing to garner more business – and reap more profits!

Analyze Your Spending

Increasing your profit margins also means analyzing your costs. By engineering your costs to be lower throughout the week and month, you can widen your profit margins.

While you might want to spend more time looking at your operational costs (such as labor, inventory, and utilities), you may also want to look at your fixed expenses (including your lease payments, monthly fees, etc.).

After you understand what you are spending your money on, you might be able to re-negotiate your rent costs, vendor costs, etc.

Determine where you are spending and see what you can cut without compromising your quality products or customer service.

Serve Something You Can't Get Anywhere Else

To boost your sales and profits, you may need to revamp your coffee shop menu. But, again, your customers' needs might change over time, and you have to adapt to stay ahead of your competition.

When you serve unique items that appeal to your customers, you are likely to drive further sales. Therefore, your unique products also positively impact your marketing and USP.

What can you add to your slightly different menu? Could it be a variety of new flavors to your lattes? Or maybe you offer amazing gluten-free bagels or other healthy snacks? Could it be seasonal or new specialty drinks?

Look at Your Vendor Costs

Your inventory costs can quickly add up. These include coffee, food, fruit, snacks, or whatever stuff you sell.

Be on the constant lookout for other sources of inventory. For example, shop for discounted items or buy in bulk for non-perishable items, such as napkins, cups, sleeves, etc.

If your vendor costs are creeping up, consider if you will pass along those costs to your customers or temporarily absorb the expenses until you can find new vendors to work with.

Explore how you can save money on vendor-related costs. For example, will it be worth it to bake your gluten-free products?

Remove High Cost/Low Margin Menu Items

Focus on your high-cost items that offer low returns. For example, you may have to buy wholesale gluten-free muffins for $3.95 apiece. However, to properly make a profit (and cover the delivery charges), you might have to charge $2.50 to your customers. Will offering a muffin for $6.50 be sustainable to your customers?

If not, remove the item. Go through each item on your menu and determine if you are:

• losing money
• breaking even with this item
• barely making any money
• making a significant profit.

If any of these land on the first three bullet points above, phase the item off your menu.

Train Baristas to Sell

Training your baristas can have a tremendous impact on your profit margins.

Trained and empowered baristas make better decisions, offer better customer service, and waste less product. In addition to providing higher quality beverages, they also serve to attract repeat business.

Additionally, training your baristas to upsell or cross-sell products can boost your average ticket order.

A quick note on baristas: If a barista has low morale, they will likely be wasteful and careless with your customer orders quality of coffee and accidentally damage equipment. Avoid low morale by paying well, allowing your baristas to make tips, and holding each other accountable.

Ways to Make Your Coffee Shop More Profitable

Additional Questions:

How much money can I make as a coffee shop owner?

As a coffee shop owner, the money you make depends on how big your operation is, what your costs are, and what your profit margins are. If you have robust sales but low margins, your take-home or net profits will be lower.

Your costs also play a significant role in how much you make as a coffee shop owner. Your rent, utilities, inventory, and labor costs are just a few things you have to pay before collecting any real profits.

For an in-depth look, consider reading How Much Does a Coffee Shop Owner Make?

Is it profitable to open a drive-thru coffee shop?

A drive-thru coffee shop business can be very profitable. However, your success factors depend on your traffic, accessibility, average ticket prices, etc. Since visibility, traffic, and accessibility are paramount to your sales, it's essential to look for a good location for your coffee stand.

A drive-thru coffee stand typically means less startup and operational costs. However, the margins can be just as high as in a regular coffee shop. So, there are a lot of factors to consider. For more information, consider reading How to Start a Drive-Thru Coffee Business.

Is it profitable to sell coffee online from home?

Selling coffee online from home can be profitable. If you are selling from your home, you will generally have a lower overhead because you won't have to pay for rent, labor, and utility fees.

How much money you make selling coffee online from home will depend on your branding, marketing, and sales volume. For more information, please read How to Sell Coffee Online From Home.

What are my biggest costs to start a coffee shop?

Your most considerable costs in starting a coffee shop will be tied to your location. Typically, your rent and build-out cost the most money. This may include paying architects, designers, and contractors, and paying for materials and permits. Your high operational costs may include your inventory (coffee, cups, milk, wholesale food items) and labor costs.

How to Make Your Coffee Shop More Profitable

Whether you plan to start a coffee shop or you might be a few years into operating a coffee shop, profitability should be your primary focus. Whatever the case, you can start right now to improve your profitability strategy.

We've discussed several important ways to make your coffee shop more profitable. We will list them again below:

• Develop a coffee shop business plan
• Start With less debt
• Be frugal, not cheap
• Hire wisely
• Reduce waste at every point
• Upgrade your POS systems
• Market your USP
• Adapt to fill voids
• Analyze your spending
• Serve something you can't get anywhere else
• Look at vendor costs
• Remove high-cost/low-margin menu items
• Train baristas to sell

Are You Ready To Get Started?

Unlock Your Dream Coffee Shop Business with Our Exclusive Coffee Shop Startups Kit!

Ready to transform your passion for coffee into a thriving business? Look no further! Our Coffee Shop Startups Kit is your key to brewing success. Here's why you can't miss this opportunity:

35-Lecture Coffee Shop Business Course: Our kit provides a comprehensive A-to-Z lecture series that covers what you should know and how to plan your coffee business. No more guesswork – follow our proven roadmap for success.

Comprehensive Coffee Shop Business Guide: Our kit includes a detailed, step-by-step guide that takes you from creating your concept to your grand opening.

Expert Interviews and Insights: Benefit from insider tips and industry secrets that successful coffee shop owners and experts share during one-on-one interviews. Learn from the best to stay ahead of the competition.

 Business Essentials: We provide business plan templates, checklists, and resources to streamline your startup process. From permits to menu planning, we've got you covered.

Cost-effective Solutions: Save time and money with our expert advice and budgeting tips. Maximize your ROI and minimize headaches.

 Adaptable to Any Setting: Our kit is designed to suit various locations and customer demographics, whether you're eyeing a trendy urban spot or a cozy corner in a suburban neighborhood.

Includes Exclusive BONUS Material!

👉 Order Now and Begin Your Journey!

Don't let the complexities of starting a coffee shop overwhelm you. Our Coffee Shop Startups Kit is your ticket to entrepreneurial success. Take the first step towards owning a profitable and fulfilling coffee business today.

Join the thousands of successful coffee entrepreneurs who started with a dream and a great plan. Your journey to coffee shop greatness begins right here!

Comprehensive. Proven. Affordable.

The Complete Coffee Shop Startup Kit

(Instantly Delivered To You)

Complete Coffee Shop Kit Sales Graphic

Coffee Shop Startups

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.