May 29, 2017

VIDEO: Will Your Third Wave Coffee Shop Be Profitable?


It’s one thing for your coffee shop to serve amazing specialty coffee. It’s another for it to be profitable.

And that’s why, in 2015, Andrew Tolley presented on third wave coffee shop profitability at Barista Guild of Europe. Andrew Tolley is the Co-Founder of Taylor St. Baristas and Harris + Hoole, as well as a three-time sensory judge in the World Barista Championship, the UK Cup Taster’s Champion 2015, and the holder of a host of other impressive qualifications. Here’s his advice on how to make sure your coffee shop will stay profitable – without compromising on quality or service.

How to Run a Profitable Coffee Shop

The first point Andrew Tolley makes it that good-quality coffee is not enough! Profitability is important, and it rarely happens without planning. Here is his outline for a coffee shop’s profits and losses:

Revenue= 100%

Labour = 30%
Cost of goods sold (ingredients) = 30%
Rent/rates/taxes = 20%
Overheads = 5%

Profit = 15%

(Please note that your model may vary according to location, brand, and accounting practices in your country.)

However, his second point is the key one: Will your coffee shop be profitable enough to allow you to run it according to your vision and values? This might be serving high-quality coffee, paying fair and sustainable prices, having the best equipment, investing in staff…

He breaks this down further, looking at points like how the speed of customer service issues affect profits – in numbers – and how you can you improve efficiency on the brew bar. Oh, and he also discusses how to account for loss-leading products (because sometimes, not everything can be profitable) and incorporate food.

In other words, this video is essential viewing for any coffee shop owner.

SEE ALSO: Stuggling to Profit? 6 Ways to Keep Your Coffee Shop Making Money

SEE ALSO: 5 Tips for Hiring The Perfect Barista

Please note: Perfect Daily Grind does not own the rights to these videos and cannot be held accountable for their content.

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