How to add $1,000 to your coffee shop's bottom line next month

Slashing Costs and Expenses

Developing and implementing a program to increase sales may take a little time to put together, and yield results. But, cutting costs and expenses is something you can start doing tomorrow that will show immediate results. So, where should you look and what should you do to cut costs and expenses? Money can leak from your business in a number of ways, they include:

  1. Over paying for products and services you purchase
  2. Losing product because of over portioning
  3. Losing product because of spoilage
  4. Losing product because of waste in production
  5. Losing product because of theft
  6. Losing money because of theft
Over paying for products and services

One of the quickest ways to gain some additional bottom line income is to reduce what you are paying for the products and services you purchase. Everyone who starts a coffee business has to make decisions about what products they will use, and who they will purchase them from. Unfortunately, once a source has been found, few comparison-shop to see if they are getting the best deal.

The easiest money you'll ever earn is the money you don't spend! Think about it, for every extra dollar you spend on products or services, it will take more than a dollar in additional sales to get that dollar back. Because there is a direct cost related to sales (the expense of the ingredients used), that cost reduces the retained income. If your cost of goods averages 35% of sales, then an extra dollar earned only produces 65ยข of gross profit. So, it will actually require almost $1.54 in extra sales to recover your lost dollar ($1.54 x 65% = $1.00+).

When looking to save on the products you purchase, it will not be necessary to reduce prices on everything you buy to realize some substantial savings. Like many things in life, the 80/20 rule is applicable here. You'll want to concentrate on the 20% of products you order, which probably represent 80% of your total dollar purchases. Following is a list of items this most likely includes:

• milk• cups• napkins• coffee• syrups
• sauces• smoothie puree• powdered blender base• pastries
• sandwich meats & cheeses• bread• paper bags
• cup wraps (Java Jackets)• dish detergent, etc.

<<Previous PageNext Page >>