5 Ways to Reduce Coffee Shop Monthly Expenses

In the hospitality industry, profit margins are about as tight as they can be. Many businesses are lucky to make a 10% profit from sales, and most of this goes toward overhead costs, debts, and taxes. Reducing expenses is something responsible business owners should always have in the back of their minds. 

Coffee shops are one of the most common hospitality businesses out there. Millions of people across the world depend on these establishments to give them that extra caffeine kick they need in the morning. 

Your coffee shop operating expenses will play a significant role in staying profitable. Without a watchful eye, your inventory costs can skyrocket, and credit card payment processing fees may cut into your profit.

Starting a coffee shop is the first step in your hospitality adventure. This blog will explain the basics of starting a successful business and offer tips to help you keep your budget for a coffee shop profitable. 

The basics of setting up a coffee shop

Coffee shops can be a great way to break into the hospitality industry. Not only is coffee popular with people from all walks of life, coffee shops can be set up nearly anywhere, and have a relativity simple business plan. 

If you’re thinking of starting your own coffee shop, be sure to consult our helpful checklist below. 

Build your concept

When starting a coffee shop, it’s important to have a clear vision of what you want the business to be. Non-franchise coffee shops trade on their uniqueness and this is something you should consider. 

Ask yourself the following questions:

• What sort of coffee will you sell?
• Will you sell anything apart from beverages? 
• What vibe are you aiming for?
• Who is the target market for your shop?

Write your business plan

A well thought out business plan is the backbone of any small business. This plan should include your business concept, the budget plan for your coffee shop, how much the average coffee shop makes per year, and how you plan to operate as a cafe owner. 

Do your own research and see what you should consider and include in your plan. You should also make an appointment with your bank and a financial advisor to see if there are any business loans available to you. 

Source what you need

Once you have your plans in order, it’s time to take care of the practical side of things. This includes securing your premises, finding a reliable food and drink supplier, and interviewing staff. 

At this stage, you should also consider how you’re planning to market your new coffee shop. Word-of-mouth and social media marketing are good options as they are both locally effective and cheap.

Tips on keeping your expenses low

The average profit of your coffee shop will be impacted by a number of different factors including location, supplier costs, and business tax. Keeping expenses as low as possible is integral to your business. Follow these helpful tips and you’ll be able to make solid savings each month. 

Cut down on waste

The food and drinks you serve in your shop represent your entire profit margin. The more you through away each day, the more your bottom line will suffer. Tracking your stock levels is a good way to ensure your getting the most out of your produce. 

Electronic point of sales (EPOS or POS) systems, such as the Epos Now Cafe system, come with sophisticated inventory management tools that gives coffee shop owners the ability to take real-time stock checks in minutes. 

Train your staff

It may seem obvious but training your baristas to a very high degree costs money. What may not be obvious, is that the cost it takes to train your baristas will be paid back many times over. 

Not only will your baristas know how to reduce waste and make a wider range of drinks, but your customers will also appreciate their professionalism. Customer service is a cornerstone of successful hospitality businesses and customers will choose business with good service over bad service every time. 

Consider your suppliers 

Managing a hospitality business means you’ll be on the hook for negotiating with suppliers. When this is a large part of your daily work, it can be easy to slip into a familiar routine. You know your supplier, they know you, and so on and so on. 

In the interests of cutting costs, you should always be evaluating your relationship with your suppliers and shopping around for the best deal. Take care when do this that you’re still receiving high-quality products and keep in mind that sometimes if a deal seems too good to be true, it is. 

Lower your labour costs

Labour costs, along with rent and tax, are usually the biggest expenses of a business. Workers are very aware of their value in the market and so are asking more of their employers in terms of pay and benefits. 

This is a good thing for the wider economy as well paid workers spread their money around. Of course, it does cut into your profits. One way you can minimise this is by only hiring as many people as you need. You may also consider picking up a few shifts yourself. 

Boost natural lighting

Coffee shops open early and close late, so the lights and machines are always on. Minimising how much power your shop uses can heavily decrease your coffee shop's monthly expenses. The machines have to stay on to keep the coffee flowing, but you should try to keep the light switches turned off.

Allowing more natural light to enter your cafe will reduce your expenses. Natural light allows you to save money on electricity and offer an airier environment. In addition to the financial benefit, using natural light is an eco-friendly solution that will help the environment and draw in conscientious guests.

Give your business a boost 

While cutting down on expenses is always a good business strategy, you should never cut corners. You wouldn’t use inferior coffee beans so why would you use an inferior POS system? 

Epos Now offers your coffee shop unrivalled benefits including:

• Real-time business insights that give you a better view of your business
• Detailed reports on cash flow, profit margins, and overheads
• Automated stock updates so you never run out of your customers’ favourites

If you’re interested in finding out more about Epos Now, get in touch with our team below.