The significance of coffee is really reflected in the gross profit. We talk to the experts on how to do coffee well..
Q With all the specialist coffee shops, is it worth bothering with coffee?
Jason Tamplin: Yes. Coffee is a very important part of our business. In more transient stores coffee can account for 10% of sales. However, the significance of coffee is really reflected in the gross profit. Through careful management in these transient sites it can be nearly 20% of the shop’s gross profit. Customers will stop at specific sites just to get a decent cup of coffee - that’s why it’s important to have the right coffee option.
Q What route did you decide to go down with your coffee-to-go offer and why?
Tamplin: We have tried multiple approaches to coffee, from our own machine to branded bean-to-cup offers. However, we have seen a 200% uplift in sales with Costa, as a result of the brand. But whatever route you take, it’s important to implement it correctly. You have to make sure the machine is in the right location and put seating in if possible.
Kash Khera: In the past we’ve worked with a couple of companies, but at the moment we’re in the middle of developing our own coffee offer. This will be bespoke for SimplyFresh stores, but it could also go into other symbol groups as well. Some of our retailers have already decided to do their own thing and bought good reconditioned machines off eBay. They then approached us to help them get their coffee offer off the ground so we were able to source a company that supplies coffee and a service contract. The good thing is that this approach is fairly low risk because if it doesn’t work, you can still sell your machine on eBay. If you do it yourself you can make shedloads of profit but there’s obviously more risk. But then again there can be just as much risk signing a two-year contract with someone like Simply Coffee.
meet this month’s masters
Kash Khera’s family bought their first store in Kings Norton more than 22 years ago. Since then he has opened several other stores and started his own franchise, SimplyFresh, in 2010, along with his brother Sukhjit and colleague Tony Holsten. They currently have 40+ stores in the group.
Jason Tamplin has worked in the forecourt sector for the last 12 years and for the last nine has worked with Jeremy Symonds at Symonds Forecourts. His Somerset forecourt won best forecourt at the Forecourt Trader awards last year, with Tamplin landing the prize of best manager.
Q What’s the key to successfully cross-selling coffee with other products such as pastries, cakes and biscuits?
Tamplin: You have to offer the right product at the right time. A good example of the cross-selling we do over the weekend is putting a table next to the coffee machine and placing fresh patisserie on it. This has resulted in us selling nearly 100 croissants at weekends.
Khera: We do a link deal supported by Cuisine de France and our coffee provider, where you buy a coffee and get a free pastry. It’s a good mechanic because there’s so much profit in coffee that if you do it properly you can afford to give something away.
Q What’s the secret to making a profit from coffee-to-go?
Tamplin: The key is having the right machine in the right location. The price of a coffee is less important, as customers seem to be willing to pay slightly more for a decent-tasting cup.
Khera: It’s all about demographics. If your store is in a residential area, you need to offer a combination of quality and price.
Q Are there any potential pitfalls?
Khera: There isn’t a one-size-fits-all approach to selling coffee and there are lots of potential pitfalls, so retailers need to be fully aware of the dangers. It can be a highly profitable and lucrative area, but stores need the right advice. They also need to do lots of research because there are so many choices out there. A lot of the third-party suppliers require you to sell a certain amount of cups per day and if you don’t hit these targets you have to start paying for things. So if you’re going to put a coffee machine into your shop, you have to be sure that it’s going to work otherwise you’ll only end up taking it back out again.
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