Pete Bisulca, a good friend, provided this link to a good page in re recycling coffee grinds. I have not tried them all. And thanks to Pete’s wife for watching out for us coffee lovers and retailers and concerned citizens.
Melissa Breyer is the Author. More on Melissa.
Perhaps one of us can share how to sell the grinds in order to improve profit margins. Please comment.
First, congratulations to Bubba Watson, Masters Champion.
Your Unit sales volume means a great deal. Why? because it determines what your Unit Costs are. These costs must be covered in the price you charge. Your profit margin must cover unit costs in order to break even. In the following example, the owners salary is considered a fixed cost. For this example, too, imagine you sell only one item –> cups of coffee, and your costs are:
1. $60,000 – Your Salary (always first on the list, for this is why you are in business).
2. $15,000 – Rent
3. $75,000 – Total Fixed Costs (I added the term Fixed, that is, they don’t vary no matter what your volume is.)
Now suppose two scenario’s. First, you sell 1000 items per month. Second, you sell 5,000 items per month.
Annual volume is therefore, 12,000 units in the first scenario, and 60,000 units in the second.
You can now calculate what your unit costs will be:
A. – $75,000/12,000 = $6.25 cents per unit in scenario one, and
B. – $75,000/60,000 = $1.25 per item in scenario two.
Now, if the cost of materials for a cup of coffee are: Cup – $.10; coffee – $.20; and other stuff – $.20, then the cost of materials is $.50 for each cup sold.
Let’s further assume your desired profit is $30,000 per year, or $2.50 per item at the 12,000 volume level, and $.50 if your volume is 60,000 units per year. It is now easy to calculate your price.
|Column1||Scenario 1||Scenario 2|
|Unit fixed Costs||$6.25||$1.25|
|Cost of Goods||$0.50||$0.50|
|Price Must be||$9.25||$2.25|
Remember: Total Costs + desired profits/ volume = the price you must charge.
This may happen in sites like large Malls or Broadway and 42nd Street in New York, but in the vast majority of cases, it takes a lot of hard work, time, and flexibility.
So if the problem you are researching is really a location issue, look to Improve Your Profits. Location is not a profitability issue, unless you are paying more than the traffic is worth at a mall, for example.
Margins are: Price – Direct Costs = Margin. They come with many names. I’ll just stick with this definition. Direct costs are your product costs, the classical Cost of Goods Sold. Right now forget about labor, rent and other stuff, even if you know what the unit cost is. Just accept my definition.
The most important part of this equation is Price. If your margins are not getting you what you want in life, and thus making your business life less fun, you should start with price. You need to know, for a fact, certain, what your competitors are charging. No guessing. I could get very fancy here and talk strategy, quality, service and product plans, but I will not. Just price.
You have little control over costs. They are market driven. You may save a dollar here or there by changing, for a time, your coffee supplier, for example, but this is not going to solve a margin problem.
What will solve your profit margin problem is raising your price. Obvious right. Takes courage to do this. I’ve learned the hard way that sudden, unannounced price increases really get customers angry. This is not good. In fact, it is very bad. So decide, but give everyone fair warning. Then raise them. Why? Too Simple, you say.
The reason is indeed simple. Price increases, the amount of the increase, goes directly to profits.
And, without trying to pollute your mind or your store, take down all those negative ads; you know the ones. Bathroom for my friends only, not you, outsider.
Never, never give up. There is an answer. Generally, always say ‘sure, I can do that”. If you lay a foundation of always giving, you will get, and make the price increase stick. And like this person, think.
These two coffees are going to compete with the honors won by Special Blend, Navigator Blend and Rocket Fuel combined. You think it is hot outside now, these two coffees will raise your sales temperature to new highs so keep the air going strong.
It was a terrific Saturday Morning morning at Sweet Life Bakery. Stephen invited me over, and I left with a box of buns after a double espresso, expertly made by Ariana, barista. I recognized several people from my early 90’s shop on Landis Ave.
Everyone is smiling and happy. The window to the kitchen keeps everyone in touch with what is happening in the store and gives customers a chance to watch cake making. Today there was a refrigerator door full of orders for today’s cakes. The place was humming.
Ariana made a very good double espresso with full crema that lasted till the cup was empty. Well done Ariana.
My wife loved the morning-glory muffin. I loved the espresso and the Hot Havana Nights Coffee. You can buy Sweet Life Bakery Hot Havana Nights Coffee by the bag in the store. I guarantee you will like it.
The store has increased from 750 feet to 2850 feet, added baking equipment and a walk-in freezer, which provides all kinds of bread for their customers, and more tables to enjoy the new views on the main downtown avenue in Vineland, NJ. I’ll head over there after blogging.
KMO is working on new means of communication that will enable you to Improve Your Profits and in the process implement new ideas. If you want to particiapte in these efforts you are more than welcome. Please contact me at firstname.lastname@example.org for details.
It is clear that this decade and perhaps this century requires more imagination, flexibility and dedication and committment to meeting your goals in the coffee business. Sharing on the social net, or, Web 2 as it is also known, is a road you can travel largely researching and implementing change in your business, without a large investment in new technology.
Please stay tuned.
Congratulations to Robert Kraeuter and the staff at Kaffe Magnum Opus for excellent service and high quality products. These are harsh times and we did not expect to grow much, if at all in 2008, but the results are outstanding. I believe there was a flight to quality and it fueled the sales growth.
Please contact Robert@kmocoffee.com if you would like to share in the experience and growth.
2008 was a tough year because the Wall Street crowd dominated the commodities markets, including coffee. While oil has fallen drastically, however, coffee is still high. With Starbucks and others closing stores it is surprising that the fall in demand is not driving prices lower.
We all know too that the collapse of the banking system led by lousy lenders is effecting overall demand. As the saying goes: “When the going gets tough the tough get going”. Now is the time to execute your backup plans, or, your plan B. Nothing is a Sacred Cow, be tough on all your expenses. This is the time to ignor the naysayers and get out and mix it up in the market.
Invest you time and effort in training, hiring well, and community connections, new organizations, house parties, speaking engagements at youth oriented groups. Get to the High School and make sure they know your WiFi is free. Sponsor talks in your shop directed at the demographic that will respond to coffee. Too, sponsor recitals for the local music teachers or music stores, or schools, encouraging stage shows in your shop. You’ll get the whole family out to see their children and grand-children perform.
Please, as soon as you read this, make a list of what you will do tomorrow to build your sales. Tomorrow, begin to execute the new changes. Change is good. If you want higher sales you have to create activities that will bring in new customers and develop relationships with existing customers. Do not do tomorrow what you do every day. Start with getting up later, or earlier, take a different route to the store, open in the back instead of the front, stop at the local newspaper stand for the paper you will now leave on the tables. Take down some handwritten signs, and make sure you rest rooms are available to everyone, not just customers. (see the end of this post for an important question).
In the meantime I urge our customers to visit www.sellmorecoffee.com for ideas for improving your profits.
Thank you all for your continued support. Since starting KMO we (Cathy and I and our staff) have insisted on above standard service as the primary advantage at KMO. We answer our phones (people do), we basically will do whatever you want (we have a huge number of products, many of which are custom and not on our already long lists), and we unconditionally guaranty our products. If the coffee does not meet your expectaions, we will take it back or replace it. No questions are asked. If you want to experience this service, give Robert or Terry or Ciara a call. Or write to me at email@example.com
Bob Johnson, Founder
Question for all the owners of stores that have signs that read: “Bathrooms for customers only”. What is a customer? The person who buys a coffee today? Yesterday or a week ago when you were out? Why drive non customers away? Are not non customers exactly the people you want to come in? Keep the rest rooms clean and attractive. Especially the ladies room. If you have to put a sign up about the bath room, put this one up “unlike every other retailer in this area, our bathroom is clean and available for who ever needs it” Come on in. You will like our service and our coffee.”
On my CEO Blog I’ve been reviewing and summarizing You Can Compete: Double Sales Without Discounting by Bob Phibbs. I’ve just read chapters 6 and 7 on both hiring and training and they are a must read for every coffee store owner.
They are a must read. If you don’t have a copy Robert Kraeuter, president of Kaffe Magnum Opus will get one for you without obligation. Healthy coffee retailers are a part of KMO’s mission. It maintains several coffee sites one of which contains valuable ideas for increasing sales.
I’m very excited about this book and in particular these two chapters. They contain basic information about hiring and training. If we all do what is presented in these chapters we will all be more successful.
The summary is on Docspoc
Founder, Kaffe Magnum Opus, Inc.