Sales and Savings

Cafe’s have been operating on extremely tight profit margins for a long time, and the current state of the industry hasn’t made that situation any easier. One of the things you can do to maximise the profitability of your business is to carry out a regular Sales and Savings audit to find ways you can make more and spend less.

Start by setting goals and targets and sharing them with your team. They might be daily, weekly or average transaction value (ATV) sales targets, upsell goals or targets for the reduction of wastage or wages.

SALES

There are only 4 ways to increase revenue… 

  1. Sell more to the customers you already have
  2. Get more new customers through the door
  3. Increase  frequency of customer visits
  4. Raise your prices.

Start with the customers you already have and work on getting them to spend more, come back more often and tell their friends about you.

Train your team to be a sales team. Make sure they know the menu well and which companion items to offer with each dish. Teach them how to upsell as both a tool for sales growth and customer engagement.  Selling doesn’t have to be pushy – your team should be proud to offer more of your range to your customers. A strong ‘second coffee’ culture is the easiest one to start with. You can use this Companion Sales Guide Template to give your team the information it needs, and this Second Coffee Scoresheet to keep a tally and reward your best sellers.

Put some energy into retail sales. Retail beans are the easiest and most obvious. Put some display bags front and centre by your till. Add them to the menu and spread the word via your social media channels. Even better if you have your own branded beans! 

Explore other new revenue streams. A lot of venues will have brought on delivery and ramped up takeaway. Can you add in some other retail items? Ready made meals? Think about what you’re already using or making e.g. dukkah, sourdough loaves, chutney, eggs etc. Cafes with a strong, loyal customer base and great branding should consider creating merchandise, like t-shirts of coffee mugs.

Some of these ideas that many venues introduced early on in the restricted trading phase you may not have introduced at the time, as you didn’t have time and were scrambling to stay on top of the rapidly changing circumstances, but now that the market is more used to these ideas and things have settled down a bit, you might want to consider adding them in now.

Find out more about what your customers want and how to serve them better by doing a survey. Implementing the ideas a survey reveals should increase ATV as well as customer retention and return frequency.

Improve in-store signage, promotion and merchandising. Clear simple signage and compelling, well positioned displays. Make sure everything has a clear price tag. Use table talkers to promote deals, specials and new revenue streams.

Create bundle deals that increase average spend, like a coffee and muffin deal or a meal with a drink, that adds value rather than simply discounting your products. Getting into a consistent rhythm with regular deals means that customers are more likely to get used to these offerings and remember them.

Make the most of what you’ve got, like doing a deal on end of day stocks left in the cabinet in the afternoons to minimise wastage and get something rather than the nothing you’d get if you threw it away. Create and cost these deals, inform staff, tell your customers and keep a tally and/or wastage record so that you find the ideal stock level to minimise stock on hand.

Start a loyalty program to encourage return customer visits. There are a bunch of apps that will make this easy for you, and some are built into or available as add-ons to POS systems or pre-ordering apps. Bear in mind that some of these apps don’t give you access to your data, which is not ideal so try and find one that does.

Raise your prices. Profit margins were already slim before this all started, and intense competition kept prices low. Now’s the time, if ever there was one, to increase prices to more realistically reflect what your products cost to produce, and the more in the industry that do it, the better. Try increasing overall menu prices by 5% in tandem with sales data, finalised costings and a menu refresh.

If you have been holding back on increasing your coffee price and are currently priced at less than market standard, then think about increasing your prices too. 

Find compatible partner businesses in the local area that you can work with to co-promote and increase revenue for each other.

Revisit your marketing plan if you have one, or create one if you don’t. Start by focusing on the free channels available to you like social media, business listings and review sites, and create a strategy around it to make it more effective.

If you don’t have a mailing list, now is the time to start one. Ask people checking in to your venue if they would like to receive updates and special deals via your email newsletter.

Really the best marketing you can do right now is to provide a quality customer experience. Word of mouth is the most powerful advertising. Encourage customers to recommend you, check-in on social media, write a positive review or testimonial, or give you 5 stars.

SAVINGS

There are lots of ways to save money if you look, and finding efficiencies in the way you do things can be one of the best ways to do that.

Recost your menu to ensure that your food costs percentages are in line with your profitability formula goals. There are lots of recipe costing apps and programs out there, such as CookKeepBook or MenuCoster and certain POS systems like Kounta have costing capability built in or plug-in modules available, but at the very least you can use a simple costing sheet to work what you should be charging for each dish, especially if you have a small menu. Don’t forget to add packaging, cutlery, condiments etc into your costings where relevant.

Ensure that your kitchen team is not over-portioning, as this could be costing you a lot of money. If you haven’t already, create portioning guides and recipe cards with presentation images, to keep costs in line and ensure consistency across service periods with different team members

Streamline your menu, using POS data and food costing info to create a more profitable menu overall. It’s said that the optimum number of items on a menu is 7, so try and keep in between 5-9 items in each menu area to maximise profitability.

Minimise wage costs by keeping it tight and having clear expectations of team members, rostering in 15 minute increments if you have to . Ensure you have systems such as open, close and cleaning checklists in place to make the staff’s jobs easier and to get the most out of their time.

Trim your opening hours.  Many will have been operating on reduced opening hours during recent times, which may have revealed that you don’t necessarily have to go back to your old ways.

Carry out some barista training with a focus on maximising speed and efficiency while minimising waste.  Efficiencies skim preparation time, give you room to grow and foster a more desirable way of getting the most out of your team.

Likewise, carry out some kitchen training around portion control and wastage minimisation and make sure the systems are in place to support that

In keeping with the old adage “What gets measured gets managed”, implement a wastage log for both kitchen and front of house. Start today! 

Review workstation setup and workflows to ensure your team is operating as efficiently as possible in the space.

Reduce your selection of cabinet foods to minimise wastage and stock on hand, keeping in mind that you’ll need a plan for what you can use to make a less empty cabinet still look great, such as baskets of fruit or bottled items with a long shelf life.

Reduce stock levels of pantry items, and create specials to use up old stock.

Have you found there are some things you didn’t need during the lockdowns? Consider whether you even need to start them back up

Do you still need newspapers? Think about getting rid of them or minimise them and put in some books and magazines instead. We did this at one of our cafes and it was a great success. It may seem like a small thing, but even 4 newspapers a day at $2 = $2920 extra in your pocket in a year.

Invest in technologies that increase efficiencies (apps) and reduce time and wastage (Puqpress, Juggler systems).

Carry out a supplier review, something you should do every 6 months or so.  Renegotiate with current suppliers, or change to a new supplier who will offer you a better deal.  

The Cafe Fix_Part Two: Team

My last blog began a discussion around the 5 key factors that contribute to the success, and failure, of cafes. I started with Leadership because good leadership and a clear vision will set up a solid foundation for your business and give it the best chance of success. Following on naturally from good leadership, and intrinsically linked to it, is your Team. The importance of a great team can’t be overstated, and I could literally talk about this subject for hours, just based on my own experience in business, but put simply – it’s your team that deliver on your vision, and because of this they have the ability to make or break your business. When I ask my clients, cafe owners and managers the question ‘’what is the biggest problem you face in your business?”, the most common answer  is always “staff” and I find that it’s generally a combination of four factors:
  1. It’s really hard to  find great staff
  2. They can’t get them to do their jobs properly
  3. They’re scared to ask them to do their job properly for fear of losing them
  4. The rate of turnover is high so they find themselves constantly recruiting and training new staff members.
In my cafes I was very fortunate to attract the right people, but it wasn’t just luck, it was hard work.  I worked hard on maintaining good culture in my businesses, I invested in my team both personally and professionally, and I was committed to the continued streamlining of systems to improve efficiencies, reduce wastage and provide accountability frameworks which ensured everyone understood the parameters and expectations of their roles. So what can you do?  How do you motivate your team to do more than just show up?  How do you find staff that can be ambassadors for your business and care enough to value things like correct portioning, watching & managing espresso extraction, or just the simple things like greeting your customers with a great big, genuine smile?! An easy way to look at it is to break it down into 3 parts: Gain, Train and Retain. GAIN Whatever method you choose to get new talent to walk in the door, your team should be hand picked by you. I want to drive this point home because it is absolutely vital that your team members  fit the vision for your business, that they complement the skills of the existing team and that they will contribute positively to the culture of your business. I’ve always hired based on a combination of skills, experience, attitude and energy.  To formalise your process and help you understand what you are looking for in your team, I recommend you create a matrix of ideal skills and attributes. This will allow you to grade candidates from low to high and provide  a reference point during the recruitment process, with 4 key objectives and outcomes in mind:
  1. Establishing a benchmark for what you are looking for in your team members
  2. Creating a standardised approach to assessing new talent, as well as existing team members
  3. Gaining an understanding of what areas your team need to improve on (which can also form part of their path for growth within the business and the setting of KPIs)
  4. To give clarity to your team on what your expectations are around their roles
My assessment sheet includes ‘soft’ and ‘hard’ skills, graded from 1 to 5 and includes things like:
  • Communication skills
  • Problem solving ability
  • Ability to cope with pressure
  • Ability to resolve conflict
  • Confidence and personality
  • Years in the industry
  • Role specific skills such as the ability to troubleshoot extractions and perform latte art (for baristas), the ability to carry 3 plates or to manage a ‘section’ (for floor staff) and so on.
You also need a clear picture of the existing team’s skills, so you can identify any skills gaps in the business that need to be filled.  A combination of various skills and attributes in an individual and in the whole team will form a big part of the success of your cafe. How you recruit will depend on the size and nature of your business.  Cafes with strong team culture and an established credibility in the community will naturally attract talent. Whether you put a position vacant sign in your window, place ads on employment websites, utilise social media, word of mouth referrals or recruitment agencies, the most important point is to be clear on what you need, beyond simply filling the role. Also, no matter how desperate you are to find a new team member, please don’t settle for 2nd best.  The negative impact a wrong team member can have on your team culture, your customers’ experience, and ultimately your bottom line, outweighs the short lived ‘warm body’ that fills the gap.  If you have a great team culture already, your existing crew will step up and take on more hours or responsibility until help arrives. TRAIN Being in such a customer focused business, you need a happy and competent team, capable of delivering on the needs of the business. So how do you get them to do their jobs consistently and reliably? Clarity is key – you don’t know what you don’t know right?  Having a staff handbook or manual, which includes all the important information, guidelines, position descriptions etc, will make this much easier. In terms of training a new team member, you or your manager need to lay down the expectations of the role in a one-on-one session to set the correct course from the outset, using the following steps in order of priority:
  1. Create your Skills Assessment Matrix, including both soft and hard skills
  2. Develop position descriptions (PDs) that clearly outline the expectations for each role and get your team members to sign off on their role
  3. Provide a proper induction into the business, including operational aspects, vision and company culture, and customer experience expectations
  4. Collaborate with your team using the Skills Matrix to set individual targets and map ongoing progress. This creates a goal-oriented environment and sets the course for personal development
  5. Set team goals, whether that’s daily or weekly revenue targets, or based on other metrics like wage costs, COGS, wastage, finishing times etc.
The point of these steps is to provide clarity, gain consensus and implement accountability frameworks that create pathways for staff to grow with the business. It also fosters team cohesion when everyone understands how they can contribute to a common goal. From there I would either personally train new recruits, especially key team members, or have your section leader (chef, manager etc) take on that training role, using all of the systems you have in place to guide the process.  What I also encourage is having existing team members (not necessarily the lead people), pass on the training of smaller tasks when they have shown competency themselves. It’s a really great way to empower them, improve their confidence and build comradery. Once you’ve taken the time to align the growth of your team with the goals of the business, it’s about ensuring your day-to-day systems are clear and current, so your team have a proper framework to work within. I plan to talk more about Systems in a later blog, but by developing and implementing a suite of systems such as standard operating procedures for product delivery, and open, close and cleaning checklists that team members place their initials against, you create clear guidelines, expectations and accountability.  When you are in the training phase with a team member, it’s also a good idea to set timeframes for tasks to further clarify expectations, provide recipes and costings worksheets to the kitchen team so they have the formulas to work with, and set up order sheets and par levels so that staff understand stock management and can carry it out effectively and efficiently. The point of all of this is not to create a checklist for the sake of it, you are providing parameters and for the team to achieve goals and meet your expectations as well as creating an easily repeatable induction process.  Clarity around expectations of the staff, including their roles as sales people and ambassadors for the brand, makes it easier for staff to do a good job. Of course none of this is of any use without you or your manager following up and providing feedback, positive reinforcement and resetting the course for new goals and targets. RETAIN Retaining great staff should be the easy part, especially if you have followed the above steps.  But we all know that staff turnover in cafes is pretty high. So how do you minimise that, and hold on to the ‘gold’ as long as possible? I’m a strong believer that life is too short to have a bad time at work, and for this reason I have done my utmost to create cafes that are a great place to work in.  I know this sounds simple, but if you look after your staff, they will look after you. I’ve had staff follow me from cafe to cafe because they want to work with me, and be part of the team I’ve created.  You should invest a great deal both personally and professionally in your team, and the benefit is not only their loyalty but, in many cases for me at least, beautiful friendships. I believe we all want to be part of something, and that we have an in-built desire to grow, be appreciated and contribute to something worthy of our time.  We are also social creatures, and the cafe space has come to hold an important place in the fabric of a community, not only as a meeting place (and socially acceptable drug dispensary), but to serve a valuable function as a 3rd space, a place to be that sits outside of home and work.  So if you own a cafe, you need to accept the reality that you’re in the people business and your success will be dependant on making memorable moments, not just with your customers, but with your staff as well. Creating a positive, healthy and well run workplace is a great starting point, but as humans we are all unique in our motivations, so there are other steps I recommend you put in place to create a workplace that’s valuable to an employee. Let’s face it, there are plenty of cafes out there, so if you aren’t creating a great space to work in, you will have real difficulty retaining quality staff. On top of that, a lot of hospitality staff have other priorities in their life – they’re students, artists, musicians etc, and unfortunately few see it as a long term professional choice. Accepting this and working with it is your best option. Here’s a few ideas around the ‘give and take’ of getting the most out of your team and keeping them on your roster:
  1. Create targets and goals, with incentives for reaching them, based on their motivators. Whether it’s a gift of movie tickets, a team dinner once they hit a collective target, or a profit share scheme for your manager, incentives can motivate staff to go that extra mile.  Keep in mind that not everyone is motivated by money.
  2. Provide feedback on targets and continually reset the course with performance reviews every 3-6 months.  Create a pathway for growth.
  3. Invest in their personal growth, including the stuff they do outside of work.  Go to their important gigs, keep track of what’s going on in their personal life, be flexible when they need it (within the constraints of running your business).
  4. Listen to their ideas and feedback
  5. Work by their side to show your capabilities and expertise – let them learn from you.
  6. Hold monthly meetings that are a combination of staff training session, team meeting or social gathering, depending on the needs of the business at the time
  7. Be a great leader
  8. Thank them often
At the end of the day, you can’t control anyone but yourself.  People will make promises and let you down, sometimes they’ll give it their best and still don’t quite meet your expectations, and everyone has good and bad days because at the end of the day, we’re all human.  Trusting the process, in the ebb and flow of staff, has always kept the smile on my face and brought awesome new humans onto the roster, just in the nick of time. Which brings me to my last point – fun & humour.  I’ve always employed the dancers, the artists, the misfits, the musos and the actors because, as I said, life is too short to have a bad time.  We became known as the cafe with ‘Coffee and a Show’ to our customers, which was really just ‘Us at Work’, vibing off the madness of pumping out 10 kilos of coffee and 150 meals in 4 hours . Whatever the vision you have for your cafe, I recommend you add a healthy dose of laughter into the mix, stay present, and remember that tomorrow is a new day and a fresh opportunity to trim the sails. Takeaway Points
  1. Create a great work environment and team culture and half the work of finding and keeping great staff will be done for you. People will want to work at your cafe.
  2. Know what you are looking for and what your business needs in terms of skills and attributes when it comes to the recruitment process.
  3. Set clear goals, targets and expectations and build accountability on those goals and targets
  4. Establish systems to make it easy for team members to do their jobs
  5. Make room for fun and laughter

The Cafe Fix_Part One : Leadership

It’s been an interesting few months, working with everyone from small start up cafes to multi-site franchises.

Regardless of the scale of the business, I’m continually reminded of 5 key issues at the core of an operation’s dysfunction, and then I’m finding those same 5 things at the core of its success. At the centre of it all is leadership.

I talk about leadership a lot with my clients because, in my opinion, good leadership is the most important aspect of running a successful business. With good leadership comes better cohesion within the team, which flows into higher quality and consistency of product and a better customer experience.

In the projects I’ve worked on recently, I’ve experienced varying degrees of owner/manager engagement and all for various reasons – exhaustion, inexperience, loss of vision, financial stress and so on. How different people manage these issues within themselves is critical to retaining composure, clarity and the ability to stand strong for the team.

The first step in being a great leader is knowing where you’re going, and where you’re leading your team. Whether you call it your vision, mission statement or BHAG (big hairy audacious goal), create the vision for your business and articulate it in things like mission statements, your code of conduct and your employee culture documents. It can be layered into your social media with hashtags as well as in other customer facing material.

From your vision, set your business goals and targets with timeframes that keep you on track, and this becomes the roadmap to guide your team. The vision, articulated as goals and targets, provides your team with clarity and purpose and gives you the foundation of their KPIs. Another great thing about having all of this articulated for your team is gaining consensus on the mission at hand. The wrong staff will shy away from someone with clear goals and expectations and the right staff will buy in, invest and believe in you.

A great leader can inspire on a grand scale but also have the frameworks in place to focus the team on the tasks at hand. A great leader contributes to achieving those goals, they create accountability and they reward effort and achievements. That’s foundational.

Then we have what’s always in a state of flux – every day your cafe is open, every service period, every shift change, where anything can happen and often does. How a leader deals with these unplanned events can build the trust and respect that unites a team under their direction.

When I’m working to build a leader’s skills, I’ll generally find an analogy that strikes the right chord with that person. Some of my preferred analogies include the coach of the team, the captain of the ship or the flight attendant during turbulence. Usually one of these scenarios resonates with the person, and from there I can grow an understanding with them of how pivotal a role the person in a leadership position has in the successful running of a shift, team or company.

Being faced with varied levels of skill, experience and engagement among staff members means that every day, every shift, or even every hour, the team will need a leader who can set a course and navigate them through a changing landscape, cohesively and seamlessly. It can be an exhausting gig – sometimes it’ll feel like you’re the ringleader at the circus, sometimes you’re winning a war and other times you find yourself on a vast ocean with no wind to fill your sail.

Too often I see ‘teams’ that are actually not teams at all, just a group of people. They have no clear direction, no goal, no sections, no communication, no accountability and, in short, no one leading them to their potential.

In hospitality, and in the current climate of a saturated market where customers are literally spoiled for choice, there is only one game to play. It has to be an A game, and you can’t afford any gaps in the play.

There are examples of poor leadership all around us, but in a cafe it means there will be dysfunction in the team vibe, the level of service and product quality will suffer, and systems won’t be followed, resulting in damage to your profitability, a drop in customer retention and an increase in staff turnover.

On the other hand, good leadership will align your business to give it the best chance of success. If you’re struggling or know someone who is struggling in this area, the course can be can be quite easily corrected with some tools of empowerment, the creation and adherence to systems, clarity around expectations, accountability and, importantly, a positive mindset that embraces a culture of review and realignment.

I’m continually amazed at how quick the wins are when a leader steps into their power, and the results feed directly in to sales, improved team engagement and customer retention, and make your cafe a nicer place to be for everyone.

Takeaway Points

1. Set and share your vision for the business and use it to map out practical goals with clear time frames
2. Build individual KPIs that align with the goals you have created, and build a culture of accountability within your team
3. Keep the map close at hand, reference it, realign the course as needed
4. Believe in yourself