Specialty Coffee Retailer is a publication for owners, managers and employees of retail outlets that sell specialty coffee. Its scope includes best sales practices, supplies, business trends and anything else to assist the small coffee retailer.
Issue link: https://read.dmtmag.com/i/52159
the bottom line Food has a lower profit margin than coffee, yet customers expect it. How can you develop a menu that's both enticing and doable? BY PAN DEMETRAKAKES and industry observers. Given the realities of sales volume, check size and consumer expectations, off ering food is not, in most cases, an option—it's a necessity. "In a normal café in America, it's pretty diffi cult to have the W amount of traffi c that you would need and the number of cups of coff ee that you would need to sell to support your operation and make it entirely off of coff ee," says coff eehouse owner and consultant Bruce Milletto. "Th e more profi t centers you have, the better." Food adds a vital dimension to profi t, says Jonathan Smiga, CEO of Barnie's Coff ee Kitchen, a chain of 31 shops (six company-owned) based in Orlando, Fla. "It's meaningful to coff ee shops for two big reasons," Smiga says. "It adds to the check average—the transaction value goes up. You tend to serve a lot of people with a very small check average in the coff ee world. And then it induces more daypart use—you come by in the aſt ernoon for a snack or lunch, which is historically a quieter time in the café." Food sometimes gets looked at askance by coff eehouse owners because it has a lower profi t margin than coff ee. But that has to be viewed in context, Smiga says. If 10 percent of a $2 cup of coff ee goes for the actual coff ee, that's $1.80 in profi t. But if 25 or 30 percent of the price of a $12 sandwich is the cost of the ingredients, that leaves $8.40 to $9 profi t. "You have four times the profi t margin on that sandwich than you had on the cup of coff ee on a dollar basis," Smiga says. "On a percentage basis, the coff ee wins all day, but you put [more] dollars in the bank [with food] at the end of the day." In addition, new drink items tend to cannibalize the 10 | January 2012 • www.specialty-coffee.com ithout food, most coff eehouses will starve. Th at's the conclusion of many coff eehouse owners sales of existing ones, but food and drink are natural companions. "You're only going to drink one thing at a time. So if I off er you a smoothie versus a latte, I'm not really winning very much," Smiga says. "But if I can get you to buy food with your drink, it's additive." But establishing and maintaining a menu can be one of the trickiest aspects of a coffeehouse operation. Owners have to determine how to store, prepare and serve food with facilities and equipment that often are limited. They have to take into competition into account, both across the street and across the country. And perhaps most importantly, they have to work out a menu that reflects and supports their shop's identity. "You have to fi rst look at what is the ambience, what is the vibe, whatever word you want to use, of your coff eehouse?" Milletto says. "Who is your customer?" Th at's what led Vince Ellis from croissants to toast. Ellis owns Th e Coff ee House in Bristol, an English town that he describes as "a seaside town, not London. So we don't have 'artisanal,' we have 'wholesome and hearty,' and our customers like it." His clientele is mostly aged 30-plus, with more than half above age 50, and uninterested in fancy food—at least from a coff eehouse. "Th e menu has been adjusted over time to really suit our core market," he says. "Croissants were axed in favor of thick slices of toast from bread baked in the town." LEARN FROM MISTAKES One way to approach menu development might be to look at what not to do. One advantage of off ering food is that in many cases, the competitive bar isn't very high.