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Cafe Business: 4 Powerful Steps to Thrive in the 2020’s
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In the hospitality business, the most effective way to make money is either increasing the alcohol selling volumes or maximizing the volumes of take-way operations. Over the years we have seen very cafe businesses that generate decent revenue out of alcohol, which makes the option to exploit takeaway operations more attractive for this business profile. As labour gets scarce and more expensive, we believe that only who adapts will thrive in the 2020’s.
If you are starting a new business, you might also be interested in our previous post on “How to start a new cafe with no money“.
Most of our clients were fully focused on dine-in over takeaway, looking successful and busy from outside, but making very slim margins due to extra service required to achieve high volume sales. A takeaway venue would have reached the same volume with much less investment.
Here are some very simple but powerful steps you can take to make your business ready for the coming years.
Step 1 – Make Your Cafe Business Takeway Friendly
Make sure your cafe business has accessibility for people to easily order take-away. Go outside, put yourself in your customer’s shoes, walk around the cafe and ask yourself the following questions:
- Are there are tables on the way to counter?
- How quickly can you deliver the coffee and the food?
- Is your workflow adapted for takeaway?
- Where would you be waiting for your takeaway to be delivered?
- Is it easy and accessible when more people are waiting or it is hard and you have to move around obstacles?
All these details can be the difference between a successful takeaway operation and a total failure.
Step 2 – Use Third-Party Delivery Apps
It is no secret that COVID has changed quite drastically the way we are currently behaving as consumers. Working from home has never been so popular and the use of technology has evolved to supply even more convenience to this new lifestyle. We have seen cafe businesses and restaurants completely changing their way of serving and unfortunately many of those haven’t survived.
We have also seen a new generation of consumers rising from this change, young adults that have adopted technology and social media as a critical part of their lifestyle. How can we take advantage of this new type of lifestyle and adapt our businesses to it?
What has been happening over the past few months
As coffee wholesale and distributors we have been fortunate enough to have a great team that could quickly help us to adapt to what many are calling “the new normal”, so we could survive and evolve into this new era. We have also been helping several of our wholesale clients (or what we prefer calling “Wholesale Partners”) to do the same and adapt their businesses to thrive in the future years.
We have noticed tho key points for this conversation:
- cafes that were reluctant to adopt technology, making no change, have seen their businesses drastically decreasing over the last 6-12 months
- several of our wholesale cafe partners that have adopted the technology, especially the third-party apps we will mention below, have seen their business actually grow.
Why we think it works?
The use of apps allows customers to order their meals and receive it at their door without having to leave their homes or workplace. The main apps in the Australian market are DoorDash, Deliveroo, UberEats, MenuLog. Here are some of the advantages of using a third party App as a point of sale in your cafe business are:
- Use of technology – studies say that more and more young adults in the US are using technology for doing their shopping, which also includes purchasing meals, electronics and clothing. This is exactly what we are seeing across our clients that have been using Apps as a point of sale, in fact, some of our clients claim that 45% of their revenue is now coming from their customer ordering through Apps.
- Exposure of your business to further audience, consumers that cannot see your business but on their Apps;
- Exposure to young adults that are adept to technology and reach for food apps not only as a convenience but mostly as the day-to-day behaviour;
- Convenience to clients that don’t want to leave their homes or their workplaces;
- Most of the apps now offer integration to some of the most used POS systems such as Lightspeed and Kuonta, hence making it very easy to reconcile and track its ROI;
How about the cost involved?
We have been talking to several cafe owners that are struggling to adopt this idea, most of them say it is too expensive to run as commission and fees can be up to 30% of the sales price. Well, running and developing an App is extremely costly and all these Apps are here to make money also, just like we are as coffee wholesale and so our clients as cafe retail. The best way to make a win-win is to add on the fees charged by the App on the items you are selling. Consumers that use the app to receive food at their door normally value convenience over price and they will pay more to have this convenience and we have repeatedly witnessed this type of consumer behaviour on our cafes and on our clients’ businesses, in fact, we have seen some of our clients’ sales increasing by 45% by adding Apps as a point of sale. Furthermore, we also suggest that passing on merchant fees on eftpos is critical and the more consumers are adept to technology the more normal and acceptable it is. We have transitioned from free fees eftpos terminals to fully passing on to consumers. We noticed very few customers enquiring about the cost. EFTPOS terminals we suggest are Tyros and CBA that easily allows automatically adding on merchant fees on each transaction. We are also noticing that retail merchant is becoming an emerging market with more and more players coming along, giving cafe owners more flexibility to choose better products with lower fees.
Step 3 – Implement Third-Party Beat the Queu Apps
There are also apps that allow customers to order ahead of their arrival on the cafe. The most used apps are: Skip and Hey You and the advantage of partnering with these services have the following advantages:
- Convenience in rush can order ahead and receive the coffee and food ready to buy their arrival in the cafe;
- Exposure of your business to further audience that uses these Apps on regular basis;
- Relative lower fees compared to delivery Apps;
- Save time for not having to physically be taking the orders as the App will receive the money by directly depositing it on your bank account;
Step 4 – Create More Sales with a Retail Outlet Cafe Business
During COVID-19 we have helped several of our clients to set up their cafes as a retail outlet. It is a great way to create new revenue streams and maximize revenue. Some examples of the retail section include but are not limited to displaying the following products:
- Coffee Beans Retail packs;
- Tea Retail Packs;
- Coffee appliances such as small coffee makers;
- Coffee Capsules;
- Vegan milks not available in supermarkets, milk options such as MilkLab, BonSoy, some specific Oats Milks;
- Reusable Coffee Cups;
- Chocolate and Chai Powders
We have witnessed some of our clients even selling other types of exotic products such as high-end olive oil, fresh bread, locally made honey and jams. Make sure you display quality products that are not available in regular supermarkets, it will be likely to sell.