Mentoring a Lower Hudson Valley NY coffee shop to financial stability
- A coffee shop in Rockland County, NY has not been profitable.
- It has a very good location with excellent pedestrian traffic – especially on the weekends.
- Sales remained constant during COVID-19.
- Baked goods are made in-house and are EXCELLENT.
- Sales volume can handle the rent.
- In reviewing the un-profitable status, the PRIME COSTS of Labor and Product were too high.
- Ticket averages were low – i.e. not selling enough of house made baked goods.
- The owner and Harris put together an agenda for a management meeting to address these issues.
- Number one on the agenda was to call for a weekly management meeting the same day of the week at the same time every week – no exceptions.
- At the first meeting, we addressed why the cafe was losing money.
- The Prime Costs were too high
- #1 pricing – by analyzing the costs of the coffee and pastry – and researching competitor pricing – it was determined that prices were too low.
- Retail “dogs’ not produced in house with high costs did not help ticket average or promote more business. And they were cutting into purchases of more profitable house made products.
- Scheduling personnel needed to be tightened up – especially anticipating busy and slow days.
Why were sales low?
- Merchandising in store was just wrong.
- Confusion of available product.
- Front window did not “sell” to all the pedestrians walking by
- Confusion of where and how to order.
- The shop was promoting self enough
- By immediately addressing these issues in a thoughtful, well-planned, and reasonable manner sales increased immediately, profit margins on products increased.
- Even with increasing employee wages, labor costs went down.
- 3 months later, the coffee shop was generating a significant profit for the owner/operator with more sales growth on the way
- The business is being run more effectively on a daily basis.