In an IBIS world study, the cafe and coffee shop industry is expected to grow 7.2% annually through 2016-2017. Australia’s growing coffee culture, as well as income growth, is fueling the industry’s 6 billion expected revenue this year despite the surging competition in the past five years.
Australians’ love for coffee is relatively new compared to Europeans. However, the industry growth these past few years ranked the country at 42nd in the world for coffee consumption. Now, as coffee demand increases, the coffee type that customers order from cafes has branched out into a larger variety from state to state – latte seems to be topping the list followed by flat white and cappuccino.
Given the statistics from IBIS, big chain cafes and independent cafes are trying to come up with the best ways to maximise profits. So which is the best way to go and what steps can cafes take to increase sales and profits?
New tools and resources for profit
Aside from time-tested tips, there are several things cafe owners can invest in to gain profit. Companies can offer innovative coffee makers, additional equipment, and a welcoming and impressive cafe interior. Here are some ideas which may help you increase your ROI for your cafe and improve your cafe as a business.
#1 Innovative and sustainable sparkling water refill
A bottomless bottle of water, for example, increased a Melbourne cafe’s revenue by $150,000. How?
The Brita filter bottling system, if employed by a cafe, allows cafe owners and restaurants to provide a ‘bottomless bottle of water’ as part of their offerings. This has been an alternative to pre-bottled water. The company provides designer bottles that allow to be dispensed with unlimited quantities of filtered sparkling and chilled water.
Cafes and companies who used the technology saved money compared to pre-bottled water. This provided a chance for restaurants and cafes to generate income. The water provider emulated the sparkling water system but this time in a refillable manner which is cost-effective and also sustainable. The on site bottling system provides a space-saving opportunity as well.
Brita offers cafe owners regular service maintenance. The dispenser has removable nozzles for improved hygiene, delivers water in high volume, and is equipped with led control panel that alarms when bottle replacement are needed, there is a main water supply failure or the drip tray is full.
The idea of serving sparkling water can be exciting plus the Brita technology can be customised to include your cafe logo on their BPA-free bottles. This is aside from the fact that the refillable and reusable bottles are high quality and sleek-looking.
Most cafe customers often equate quality equipment with superiority. Sparkling water is a plus and the recycling of water bottles adds points to those who are environmentally conscious. This eco-consciousness that can stick to your cafe brand may be a turning point and can be an attractive difference which makes your businesses stand out from competitors.
#2 Warmth and outdoor seating
Most cafes remove their outdoor seating when winter nears. This usually reduces the number of potential customers that can be seated which in turn reduces possible income.
This is where outdoor patio heaters come in handy. With the heater, your outdoor area can still be a place for friends, lovers and family to gather around, be it a chilly or rainy day. This will extend your yearly profits and keep you in demand among customers.
There are various options including an electric patio heater or natural gas patio heater. For safety, here are some guidelines from NSW Fire and Rescue unit and additional advice from New Zealand’s Energy and Safety.
Now for environmental friendliness, Solamagic from Australia produces various choices. Or you can check out UKs Chillchaser products.
#3 Going solar and saving
Solar becomes an energy-saving alternative to restaurants, cafes, and businesses and is the most feasible option amongst all alternative energy power.
Chipotle, the Mexican restaurant from the US, installed solar panels at 75 restaurants across America. This decreased the chain’s reliance on the local grid, paving the way to a move to cleaner and more renewable energy. The chain expected a payback from the project after two years.
Now, given this move, Australia’s cafe and restaurants can learn. Aside from the fact that the country is in the best location for solar power harvesting, the solar energy move has been in the country for so long.
Taco Bell for example employed a solar hot water system which offsets their usage by approximately 500 gallons of hot water each day. They had received a rebate and a Federal Tax Credit of 30% from the state of California. Other food establishments that benefited from solar include a Burger King restaurant from Germany which cut down on their energy usage and let them save.
These past few years, solar module prices have dropped, paving the way to better buying opportunities for home and business owners. And this July, LG Electronics announced the launch of its first bifacial panel which can harvest solar energy from both sides of the panel.
#4 Future-proof cafe concept
Asda developed this high value, low-cost dining option through its design that can optimise space called “Express Diner”. Although Express Diner is useful among supermarkets, the concept can be imitated or even incorporated in cafes and restaurants.
The Express Diner consists of flexible link and lock modular counters that can attach to nine modules with single electrical connection on. It has options of heated and chilled delis and multi decks. One can add or remove units. It has a premium look and its engineering is future-proof and adaptable to changes.
Other tips for cafe owners
Here are some little things you can do for your cafe which can give you big ROI.
Innovative service and menus
You must admit, the onslaught of hundreds of cafes within a several mile radius can kill a business. You offer the same coffee, the same perks and the same desserts in different packaging. So what can make your cafe stand out?
There are plenty of things to do. Aside from the mentioned resources above, you can tweak your service style and menus to draw in customers. How can it be done?
- Serve a specialty secret recipe drink.
- Focus on something unique like going organic or local.
- Have a cafe theme running throughout your food, equipment or cutlery.
- Make your cafe Instragrammable.
For the latter, the better-looking your food is, the more exposure it will have on social media platforms like Instagram. In this social media-driven business world, the way you are presented online can make or break you.
Take, for example, Starbucks’ Starbucks Evenings. By capitalizing on their slower times of the day, the project is said to add $1 billion to the company’s overall revenue by 2019. For those who are not familiar, Starbucks offers wine after 4 pm. The experiment started in 2010 and was slowly implemented across key US cities and might be coming to worldwide chains soon. It also includes craft beer and small plates of food.
This addition to the menu for cafes isn’t exclusive to Starbucks, other restaurants and cafes took the cue and used it as a unique offering as well. For example, Snappy Salad from Texas added wine and beer to their menu which increased their dinner time sales by five percent.
But of course, this isn’t just about adding alcoholic drinks to the menu. There are other menus waiting to be discovered. You can also capitalise on a dessert that is unique to your cafe.
Wifi limits can increase table turnover
Ever heard of wifi squatters? They’re your customers who buy one coffee and sit in your cafe all day, charging their laptop all day and using your wifi all day. Now, these wifi squatters may be bad for your business. In cafes, the more table turnover there is in a day, the more profit you make. So what’s the remedy?
Starbucks can survive the trend but how about small cafe owners struggling to increase revenue? To avoid driving away paying customers due to lack of tables, the remedy is to:
- Offer time-limited wifi use.
- Charge for wifi use.
- Change wifi passwords every two hours.
- Eliminate wifi.
Take for example the case of a coffee bar in San Francisco that has to turn away potential customers since patrons choose to stay a long time. To remedy this, the owner opted to restrict access. They had express tables where there is a 30-minute limit and are offered for non-computer use. This increased their ROI by 15-20%.
Sony is now even developing a technology in the form of electrical outlets that can read a users laptop identity which can set limits on the customer’s electricity use. It is one thing to lure customers with these perks but it is also one thing to know at which point you can save.
Point of purchase promotions
This is the easiest and the most used technique to increase any store’s ROI. Putting little knick knacks at the counter that are affordable can entice customer during the payout process. This can be good for a cafe’s revenue since, according to numbers, 82% of purchase decisions are being made in store.
To work this technique for your cafe, read this Harvard Business Reviews article on the subject – Better Marketing at the Point of Purchase
Open ahead of others
There can be an advantage to this. Remember that early birds catch more worms. Opening an hour before other cafes may add a heap of sales for those customers who wake up early. This might depend on your location as well. Take for example this graph that shows that Sydney’s peak is at 8 am while Melbourne is at 9:30 am.
Acquire the technology
We don’t mean replace every appliance you have in your cafe when a new one comes out. The thing is, there are appliances like your espresso maker, for example, that may be giving you better ROI with better technology. Although acquiring technology should be done with care and study, there are moments in business when you have to keep up with your competitors.
This doesn’t just apply to the coffee making appliances, it goes with new digital payment technology schemes, the tools and resources we mentioned above and even social media ventures.
Social media and online presence
Social media today can be everything. I for one am guilty of this – you see a friend’s post about a great cafe with good coffee, you stalk the cafes page, check its location and you visit it the next day. Social media exposure is important. Cafes can have a huge presence on Instagram, Facebook, Twitter and Snapchat. Although websites and SEO can also do well for cafes.
Social media presence can be in the form of sponsored posts if you are starting and later on moving into unsponsored once you gain the following. You can venture into Youtube too; it’s underutilised in the industry although video marketing is gaining traction in today’s marketing.
Try to start with one or two platforms and know where it works. Some other tips:
- Schedule your posts.
- Make it your customer’s point of view, share their experiences.
- Don’t just make a go at it, track down your engagement stats.
And don’t forget that there are other marketing strategies out there if you are ready to venture into something big. Like rank in google better or be prepared for a much wider audience.
Know your regulars and stop the discounts
And know that it’s more expensive to lure in new customers to your cafe than to retain older ones. To keep old customers, try to make them feel important from time to time. Offer them little exclusive perks.
And another thing, don’t overdo it with discounts or stop it completely. It can bleed your cafe dry. Instead of discounting, add little things like offer a small upgrade after 10 or 15 purchases.
So which is the best way to go and what steps should you take to improve your cafe ROI? It’s up to you cafe owners!