July 2006 Edition
Turning Java into Gold

One of the great marketing successes of the last decade is the remarkable turnaround of coffee.  Whether it’s the result of successful franchises such as Starbuck’s or Tim Hortons who transformed basic coffee grounds into a gourmet beverage, or the way popular television shows like Friends, Frasier and Sex and the City depict a cup of java as not just a way to get a quick fix of caffeine, but as a form of socializing, we don’t know.  One thing is certain, coffee sales went from a steady decline in late 80s to a money-making phenomena that is showing no signs of letting up.

 

The good news is, coffee gurus have already done the hard work. All you have to do is turn their success into your success. 

 

Here’s how to do it in two easy steps:

 

1. UPGRADE YOUR PRESENT COFFEE – That’s right, go for the premium beans. Today’s java drinkers are connoisseurs.  They might still drink a store brand at home, but if they’re ordering it at a restaurant, they want the good stuff.  Plus, at a yield of 50 cups per pound, price is not much of an issue as the difference between a $7.00/pound coffee and a $10.00/pound coffee is only pennies per cup:

 

                                       $7.00 ÷ 50 = 14¢ per cup

                                       $10.00 ÷ 50 = 20¢ per cup

 

2. RAISE YOUR COFFEE PRICES – Upscale coffee sellers charge anywhere from $1.50 to $2.50 a cup. What happens if you raise your prices from $1.00 to just $1.50 per cup?

If you are selling 100 cups per day the results look like this:

 

          Before the Upgrade                                                After the Upgrade

100 cups @ $1.00 = $100.00 per day                        100 cups @ $1.50 = $150.00 per day

 

Profit Improvement

 

You got $50.00 in extra sales for just $6.00 in extra cost for the two pounds of coffee needed for 100 cups! That’s $44.00 per day or about $15,400 per year.

 

One other thing to remember is that premium coffees have better stand alone sales, so their popularity is not limited to meal accompaniments.  This means that if your coffee is good, chances are your dessert and after-meal sales are also going to increase — boosting your total sales by an average of $5.00 per customer.  To further enhance your sales, you may want to consider adding a few more items to your dessert menu.  Not only do java drinkers tend to order something to eat to go with the coffee, many are willing to pay extra for coffee-like desserts such as lattes, espressos, mochachinos, and exotic blends including Turkish coffees and Mexican Cinnamon lattes.

 

 

For an added boost, try offering geographic varieties and flavours to create even more interest. Also, take advantage of what your sales representative has to offer in point-of-sale and marketing tools to let your customers know that you’re in the coffee business. Before you know it, you will be turning your  JAVA into GOLD!