Cafe Investment Gone Wrong - Looking for Ideas!

ModBot on 09/03/2023 - 06:09
Last edited 12/03/2023 - 07:04

Hello Fellow Ozbargainers!

I'm long time follower of this forum and absolutely love so many insights from different people and thought it might be good to post this here.

Background
Come from an IT background and have a stable income. I've always wanted to be my own boss and have done quite a few small gigs myself and have always done well. Aimed at having a side-hustle which can generate some money by investment which has good ROI.

Situation
I recently invested in a cafe business (had 0 experience though have worked at a restaurant) with three partners(including myself). We did our due diligence of checking POS records and all other accounts. Spoke to a business consultant before taking over - the sales were good, and considering we continued with the same sales and an increased wages for staff, we would make our returns back in 8-10 months.

However, since we took over, the sales have reduced by about 30 - 40%. We retained 90% of the staff. Our Google reviews were ~4.5 stars when we took over and we have actually managed to increase our average to 4.8 stars. No matter how much effort we put in, we are not even breaking even. All of us have full time jobs and we all ensure that there is no impact to our full time jobs by taking turns of doing things.

I know interest rates are hiking but from what I can understand from other cafes is that their businesses are not seeing much of a drop. I'd not want to name the cafe over here but it's located in a posh suburb with about 3 cafes within 50m.

I'm here to ask my fellow Ozbargainers what would you have done if you were in the same situation?

So far we have -

  • Started the dinner service with an exciting menu but not many people know about it
  • Spoken to multiple social media marketing agencies - they are expensive!
  • Handed out flyers with discount coupons (we are right opposite to a school)
  • Started Happy hours in the evening
  • Tried Instagram advertising - didn't work that great.

Things we are considering:

  • Letterbox droppings (not sure if this will work - I usually throw away any junk from my mail but most of our customers have suggested doing this)
  • Updated website
  • Social media marketing
  • More signage
  • Google / Meta advertising

All of the above needs more $$$ to be pumped in to which everyone of us are a bit hesitant at this stage due to the uncertainty.

I understand that this is a very generic question and like I said, I would not want to name my cafe here as it won't be the right thing to do but I was hoping to gather some interesting feedback on this forum which has helped me in the past.

There has been a steep learning curve for all of us and we really want to make this a successful business but with the uncertainty, we feel that we are trying to win a lost battle!

Happy to answer any questions that you have as long as I don't breach OzB T&Cs.

Please note: All of us are immigrants and have worked on low wages when we came into this beautiful country. When we took over this business we were very clear that we are NOT going to underpay anyone and have a fair working arrangement with every staff. Please do not suggest to cut on wages / staff!

UPDATE

Thanks everyone for the feedback - looking for some specific feedback on offers that would pull you in to a cafe. I've gone through all the comments and there are very good suggestions out there. Here is the link to my comment with all feedback

Financial

Comments

      • resisting the urge on 09/03/2023 - 11:00
        +6

        Given you are not as busy as before, consider giving everyone a week off, one at a time.

        Or an extra day off, each week.

        Only stipulation being they have to go to at least one really good cafe and critique it from the perspective of its customers, and themselves (think in the clientele's boots, not just their own). Give them a well-thought out form to fill in, with a notes section.

        This- and a formal session with the rest of the team afterwards, will allow you all to share in their experiences and review and enhance your own offerings- as well organically ensure a keen focus on service and customer experience.

        A lot of what a cafe is about is emotion/atmosphere/ambience

        Also, 1/3 loss of revenue is the kind of volatility you can expect with inflation and the previous disruptions thanks to lock-downs, etc. From what you say connecting with the local community better (we're all stuck in houses) is important. Maybe you can come up with a strategy to re-connect and lure them out- walk their dogs to the cafe in the morning, come for lunch/dinner with their partners/families instead of ordering takeout- have an experience, and avoid the washing up.

        Another thing… Is your ceiling high/open, your ventilation obviously covid safe? Most have done nothing about this at all…

      • Slippery Otter on 09/03/2023 - 12:11
        +3

        You have wonderful staff!!!

        Our staff didn't care, slacked off, hid in the back when they could, and eventually reduced their hours down to 0 and never rehired.
        Its hard seeing money out the door when we can barely pay ourselves. Sales is slowly declining and I plan to walk out of the business end of this financial year losing about 14 years of savings. Gave it a go for 5 years. At least for you staff are trying!

  • thatonethere on 09/03/2023 - 07:21
    +2

    Perhaps look at catering for parities and office workshops.

    I wouldnt recommend Uber.

    We are hitting the straps in the econony so discretionary funds for cafes would now go towards mortgage, rent, power and day to day food.

    • ModBot on 09/03/2023 - 07:29

      We are in a very residential area, catering opportunities are very limited but we are already trying this!

      Thanks for the suggestion! :)

      • od810 on 09/03/2023 - 16:08
        +2

        This is probably the problem… I know local cafes did amazingly post covid when people just didnt have to go back to office that much. Now people tend to go back to office more, money spent somewhere else i.e. CBD instead of suburbs.

      • Minimum chips on 11/03/2023 - 14:19

        Limited for sure, but don't underestimate the potential of catering for personal/non-business events. If you cater a wedding or birthday, every person who liked the food is a potential new customer.

  • Melencir on 09/03/2023 - 07:24

    Maybe the customers were loyal to the previous owner/s - did they retire or start another business or something? Were they a visible presence in the cafe?

    • ModBot on 09/03/2023 - 07:28
      +1

      They did work at the cafe. But they retired due to family commitments! They did have a local fan base but we've lived up to expectations as well..

      • Jimothy Wongingtons on 09/03/2023 - 08:24
        +8

        Can I just say when it comes to loyalty base, it’s definitely not an overnight thing, and consistency is key. Eg I notice at my local cafe the barista is largely always the same person and knows the names of the frequent customers and will have a chat with the customer while making the coffee, the price is largely irrelevant I imagine as an iced long black for example is $6.50(!!!) - as it’s about the relationship that’s been built. If that barista goes there’s not much to make that customer go back.

      • Rappix124 on 10/03/2023 - 09:55
        +1

        Who replaced them at the cafe? Sounds like they were a couple so that's 2 extra staff working for *free.

        Considering you mentioned you all have full time jobs have they been replaced with paid staff? Or is the business just operating with 2 fewer employees?

    • CheapandUsed on 09/03/2023 - 08:22

      Oh, that could be a point.
      If they advertised or staff mentioned new management / owner it may have turned away that group of people, or made them feel like they can now expand their options and try the other places for a while.

    • Seraphin7 on 09/03/2023 - 10:48
      +6

      This is a very common (and often overlooked/understated) factor.

      Many customers become attached to one of the coffee shops more through habit than anything. This strange phenomenon then takes over where they feel the "have to" keep going to the same place due to some sense of loyalty.

      When the ownership changes, it's like those people are then freed from their "loyalty contract" with the first place and start trying the other ones.

  • WreckTangle on 09/03/2023 - 07:24
    -3

    Don’t approach school kids or give them flyers btw, that’s not cool.

    • ModBot on 09/03/2023 - 07:27
      +4

      We don't give the flyers to school kids, it's usually the parents who come to pick children up we give it to. We do that when the school gates are about to open in the afternoon!

    • Drakesy on 09/03/2023 - 14:59
      +3

      Agreed, flyers are frowned upon these days (sustainability) and generally push people away due to desperation.

      IMHO the impending recession is going to hit your business hard. Previous owners may have seen this coming and bailed.

      • Nillionaire on 10/03/2023 - 22:37

        flyers are frowned upon these days (sustainability) and generally push people away due to desperation.

        Generally yes but not when there's a real good deal on it. I remember in high school a new pizza place opened up nearby and they handed out flyers (front of their shop, not the school) and everyone at the school started going there because they had large pizzas for $12 vs every other places having them for $20+.

        • Drakesy on 11/03/2023 - 01:39
          +1

          But the question is did you ever go back there without the discount coupon?

    • mavis30551 on 09/03/2023 - 15:00
      +8

      Dont listen to him, approach the school kids and ask if they want to buy candy…

      • Kangal on 09/03/2023 - 22:36
        +2

        Storing the candy in your white van is helpful

      • I like freestuff on 10/03/2023 - 15:13

        Like the bus driver that gave kids laced with something yesterday in Bluewater (near Townsville QLD).

  • TheMindsetTraveller on 09/03/2023 - 07:33
    +18

    I want to congratulate you and even thank you for getting out of your comfort zone and pursuing something that carries a bit of risk and probably a bit more fear. Often, we learn a lot about ourselves in these periods, giving us meaning. Most of the time, most of us are on auto-pilot, seeking comfortable-ness than exploring risk and taking chances in life, but more importantly, taking chances AND believing in ourselves that we can progress and succeed.

    As a consumer, I can be pretty fussy. Despite the same offering, the tiniest changes to staff might mean I would slowly withdraw from that business and go elsewhere. I could easily make a coffee at home/work etc., but the local cafe serves as a social experience. I get out of the office, have a quick chat with the workers in the cafe, or the odd customer. When change happens, sometimes the original dynamic is lost and hence the withdrawal.

    • ModBot on 09/03/2023 - 07:39
      +1

      Thank you so much for taking the time out for that perspective! I would've never thought of that!

      • Handsoff on 09/03/2023 - 23:30

        To this point, not only has the cafe changed dynamic, it's constantly changing (4 partners rotating in and out + workers). Customer rapport is built over time with consistency. They want to walk into a coffee shop and the workers to know 'their regular'.

        I'd hazard to guess that the other cafes don't have a rotating model.

        If you gave a bit more detail about how you split your duties we might be able to give more direction.

  • Mokr on 09/03/2023 - 07:41

    Get on tik tok and start making a series about this. Hopefully you build a following etc

    Get the most charismatic person to do it.

    Are you on the local Facebook groups.

    I'd say you gonna need to work more.

    Lots of restaurants have people who work bascially for free sadly.

    Maybe you could get staff to push more drinks and upsell. Risky though as

    Do you do community outreach slash donate as well

    • ModBot on 09/03/2023 - 07:45
      +2

      Thanks, will add these to my list !

      Edit: except the one where we ask people to work for free!

    • Nillionaire on 10/03/2023 - 22:38

      Maybe you could get staff to push more drinks

      How to make sure I stop going there lol

  • payless69 on 09/03/2023 - 07:43
    +2

    Operate under a false name, sell dope, pay the right cops off but do not forget to read the history books….

    • Clear on 09/03/2023 - 10:10
      +2

      If you're going to do money laundering you open a fish and chip shop. At least in my experience.

        • Clear on 09/03/2023 - 10:28
          +1

          Another one? Take all the cash to Crown Casino and it's clean again 😏

          Now you know how I own a Tesla.

          • MITM on 09/03/2023 - 16:28
            +1

            @Clear: Name checks out.

      • Vanceer on 09/03/2023 - 23:08

        Nail salon and/or massage. Preferably in a shopping centre. Doesn't matter if the centre already has 6 of them.

        • Clear on 09/03/2023 - 23:13
          +2

          They also have the added benefit of visa farming as I call it so there's more $$$ in it.

  • bemybubble on 09/03/2023 - 07:53
    +5

    Please do not suggest to cut on wages / staff!

    To be honest if you’re not realistically open about this then you are on the wrong tram.

    Now before anyone gets triggered - being in business is to ensure the business survives. No business no staff. Whilst I can appreciate that most want to keep their staff on (be it to not lose talent, morally or otherwise) the business must also be able to afford this.

    In all honesty most small cafes as you describe Rely on working partners or family to get by. Then when the business is really screaming for it, they hire staff.

    • ModBot on 09/03/2023 - 07:56

      I agree to an extent.

      However with the average sales that we had calculated and with the wages that we proposed, we felt it would easily be a Breakeven for a worst week.

      We did not expect sales to fall by 30-40%

      • bemybubble on 09/03/2023 - 07:58
        +6

        That’s fine. But expectations vs reality. Gotta be real my friend.

        Can’t control the income. Can control the outgoings.

        This is business. If decisions were easy everyone would be doing it. Don’t look at it personally. It’s dealing with a situation

        • ModBot on 09/03/2023 - 08:19

          Post covid sales - in comparison to same month last year / AVG sales last year , etc

          • cloudy on 10/03/2023 - 06:13

            @ModBot: Was last year covid affected? Some businesses reported last year they had a covid reopening bump, this year is more normal.

      • payless69 on 09/03/2023 - 11:44

        If you come from the IT field:
        Write a greyball algorithm.
        Instead of fish and chips fry your competition!

  • AustriaBargain on 09/03/2023 - 07:58
    +4

    What I personally have done for some cafes is help them make a menu pdf, put it on their website, and then print them magnets with QR codes on them for people to stick on their fridge. I don't think it brings in much new business but I know from firebase records people do use the magnets to check the menu fairly often. The advantage of doing this over printing actual menus? You can change prices and add or remove menu items whenever you want.

    Social media is important but ads aren't exactly cheap and you'll just be passing your ad money into the wind if you don't do them right. Without social media people won't know you exist. Social media is the today version of newspapers people used to read. 30 years ago you'd have put ads for your cafe in the local paper and a lot of locals would read it. Now your locals use Facebook and Instagram and TikTok instead of reading the paper.

    Website SEO is important too. Again my numbers say that local cafes and such don't get gangbuster visits on websites, but it adds up over the years. And I know when I make a mistake on a website there's always a loyal customer who spots it instantly.

    All the little things you can do to help your business add up. Each coffee or sandwich you sell is worth more than the last one to you so you should be doing it all imo. 10k a year to a social media company isn't a lot, but if that social media company isn't giving you 20k+ a year in extra profits then something is wrong.

  • caramellokoala on 09/03/2023 - 08:01
    +7

    How many cafe have you seen around that have been open with the same name for ten years?

    Not many. Cafes are money pits which are turned over from one sucker to the next.

    Get out now while you still can.

  • Sinnerator on 09/03/2023 - 08:15
    +2

    ASK YOUR STAFF.
    Some may be idiots without a clue, but others may have useful information.
    Ask them what has changed and how they would fix it.
    The fact you gave them payrises should put you in good standing with them.

  • Overclocked91 on 09/03/2023 - 08:22
    -3

    Only things that really work: Google Ad-words, a decent Website including SEO and small amount of paid advertising on social media. You can still create awareness for free on your social media pages to show your active. SEO will create organic ranking on google (better long term)

    • websterp on 09/03/2023 - 22:47

      Sure. You forgot to mention free meals to influencers.

  • EightImmortals on 09/03/2023 - 08:25
    +6

    "Yes, we have seen a 20-30% decrease in foot traffic."

    Are you friendly with the other cafe owners in your area?
    Have you asked them if they are experiencing the same drop?
    It might be something completely unrelated to what you are doing, maybe some large nearby offices closed down or something like that?

  • Trying2SaveABuck on 09/03/2023 - 08:35
    +4

    honestly speaking most cafes struggle the barrier to entry is low and the competition is everywhere - cafes are usually over-priced in everything so unless they are really good i doubt the majority of them make money

    from what you are telling me though the big change is the ownership' the last owners did they work there? i lots of places where the owner is the heart and soul of the business they knows their regular customers by name, what they do and other small details about their life ie what football team they support etc these customers get an extra level of service in the warm conversation perhaps that is what you are missing

    my local muffine break used to have an old Maltese guy who was a mad Collingwood and F1 supporter i dare so 50 his regulars came on a monday just to chat to him about footy you would see him chatting to everyone about the game/races etc he gave a 'good service' but the day he retired and sold up most of his regulars left as the new owners absolutely had no people skills and did not engage in any 'chat'

  • Ricky Jones on 09/03/2023 - 08:43
    +5

    Have you considered posting an Ozbargain deal like "free coffee"? This would surely send you broke.

  • dogboy on 09/03/2023 - 08:44
    +8

    A lot of people I know have cut the cord on Cafe coffees over the last 6 months to save money. It is the first thing to cut back on as there are easy alternatives available that cost very little.

    • dasher86 on 09/03/2023 - 09:58
      +1

      also need to mention a lot more people are back in the office.
      So the local cafe gets replaced for the one near the office.

    • aliam on 11/03/2023 - 17:09

      Probably this… interest rates going up and maybe people cutting down discretionary spending?

  • coffeeinmyveins on 09/03/2023 - 08:48
    +4

    Is the coffee crap?

    I've had a local cafe change owners in the last few months and we stopped going because the new owners can't make a decent cup of coffee.

    Honestly if you can't identify why such a huge drop in revenue is occurring, maybe you aren't cut out for this? Seems like you 4 took a huge risk doing this and it's starting to crumble..

    There are internal and external factors. If you say you haven't changed anything then it's external. Has a big business shut down nearby? has another cafe opened up?

  • meowmeowmeow on 09/03/2023 - 09:00
    +9

    People are going back to the office much more regularly this year - perhaps a lot of the customers were working from home and are now in the office 2/3 or more days a week, so get their coffee near work. I think residential area cafes did well during covid due to work from home but may now see a change in sales as people return to the office.

    Something to think about :)

    Plus people are cutting back on spending due to interest rates. I know a few people who have bought their own coffee machine to make at home.

  • lostgoat on 09/03/2023 - 09:05

    To follow up especially with the 30-40% drop : Revenue in the Online Food Delivery market is projected to reach US$10.10bn in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 10.98%, resulting in a projected market volume of US$15.32bn by 2027. The Grocery Delivery segment is expected to show a revenue growth of 16.3% in 2024.

    a) I'd be focusing on a model directed solely at catching your share of this growth and stay away from focusing on foot traffic .
    b) As bemy said I'd be focused on lowest cost of staff for this model . I'd axe any staff not required . If successful needed staff can be employed later . No point in not doing any tough love and everyone eventually will be unemployed.
    c) Research what products are successful on the platforms in your area and that can help you with your starting point .

  • skid on 09/03/2023 - 09:05
    +2

    Is it correct that the 20-30% drop is based off sales from 12 months ago and you have owned the business for 3 months? If so, ignore the drop as that is based on circumstances that were outside of your control (another owner was running the business, the sales weren't seen with your own eyes, different economic time - covid and interest rates). Take the November sales as the new baseline and work from there. If you do not have one already, start tracking your customers by giving out loyalty cards (buy 9 coffees and get the 10th free) and track how many free coffees you are giving. This way you'll know your customer base - are they randoms or repeat customers. If they are randoms (you aren't giving away many free coffees), the low sales are due to economic times. If the customer base are mostly repeat customers, the drop in sales is due to the change in how the business is run.

  • Porker on 09/03/2023 - 09:13

    These days, it's all about the 'cool' and 'social' factor. As example, I have a friend that blogs about food and is often invited by restaurants to come take photos of their items and experience it.

    My friends followers view her content, like and visit and re-take the same photos for their social pages, who have friends that like re-take photos for their friends and social, and so on….

    It seems that your establishment might not be on that 'radar' and you could try to do what you need to get on it. As example, I've been cafes/restaurants that have numerous social posts about having 'best meal or drink' but the food has been mediocre. I acknowledge taste is subjective but your business is really about getting people through the door.

    The other local competition may have done the above better(?)

  • 2jzzzz on 09/03/2023 - 09:13
    +3

    People have less discretionary spending. I've stopped spending money on things I don't need.

    If you're in a posh suburb, you need a cool and funky "insta worthy" style cafe. Needs to be funky and look good in photos

    • coffeeinmyveins on 09/03/2023 - 09:25
      +1

      If you're in a posh suburb, you need a cool and funky "insta worthy" style cafe. Needs to be funky and look good in photos

      That doesn't explain why doing nothing has resulted in such a drastic drop in sales.

      • 2jzzzz on 09/03/2023 - 13:18

        Nothing to do with the cafe, people choosing to not spend?

        • ModBot on 09/03/2023 - 14:55

          We are very much insta-worthy with all our dishes. The interior is also insta-worthy! However, I feel the cafe is in an area where the average age group is in the high 30s / min 40s.

          • airtime on 11/03/2023 - 12:24

            @ModBot: If this is your main demographic then it is very likely that your customers have reduced their discretionary spending. That is the age when many people have recently bought their first home. Large mortgages + interest rate hikes = drastically reduced discretionary spending.

            For many people cafes are all about the experience more than the food or drink. Most can make a great or good coffee at home. Instead, it is a break away from less enjoyable daily activities. It is a social connection. Having a cafe owner or the barista know your first name and say hello is a huge value proposition for many people today. It builds custom, customer habits and revenue. Really work on that aspect. If you have a large WFH demographic within walking distance, you want them to see your cafe as a human connection point during their disconnected day.

            I think your onto something trying to attract parents from the nearby school. Many WFH fathers and mothers are super time poor in the mornings and school drop offs are the entry point to their working day. It's an attractive time to have a coffee; you are already out of home, the cafe is there and convenient. You need to get that cohort of potential customers making it their daily habit to drop their kids, and have a moment with your cafe. I would be actively marketing to them in a respectful and appropriate way. If you are across the road, market school drop off specials for the parents. Personally I'd avoid getting in their faces around the school premises - I'd put up large signage at the cafe. Consider reaching out to the school's P&C with a support offer. Eg. for every coffee purchased between certain times and you identify as a school parent, $0.xx is donated to the school P&C. The P&C will start advertising for you. Make the per coffee donation attractive enough for this to work.

            Best of luck.

        • coffeeinmyveins on 09/03/2023 - 15:07

          I think OP has mentioned that similar cafes in the area haven't seen a drop, but I'd take that as anecdotal evidence only.

          Also if the foot traffic dropped immediately after they took over then that's a big coincidence. Seems unlikely.

    • shroomish on 09/03/2023 - 15:09

      interest rates go up, up, up

  • juzza87 on 09/03/2023 - 09:17
    +1

    They were money laundering.

  • ForkSnorter on 09/03/2023 - 09:20

    Update interior to make it super interesting, beautiful, quirky. If it were me, I'd give it a traditional look, with heaps of beautiful wooden furniture, plants, old books, beautiful wooden framed photos/paintings on the wall, nice antique (yet clean, bright and beautiful) decorations. Perhaps some Persian rugs on the floor. Then play relaxing instrumental (not electronic) music in the background. Arrange the tables, decorations and plants to make each table feel like it has a bit of privacy. Nobody likes a sterile, boring interior.

    • ModBot on 09/03/2023 - 14:56

      we have a great interior! I can say that it is one of the things that is working in our favor.

      • ForkSnorter on 09/03/2023 - 16:47

        Very subjective. There are 200 cafes in the city near me, but only one of the has an interior that is nice enough to be memorable. The other cafes are successful because of their location, but the one with the nice interior is a cafe that people seek out because they remember how interesting/beautiful it is. They would remember it 20 years later.

  • djsweet on 09/03/2023 - 09:24

    Nothing you have said about your cafe sounds particularly interesting to me, so I would likely never go there. Here are a few examples of places people like me will go to:

    1. Excellent coffee (not middle of the road. not even good - I can have that at home)
    2. Specialty coffee (interesting pour overs, fresh moccamaster (refreshed at least once per day or Im not going there)
    3. Something interesting to eat. Either something especially high quality or something novel. If its a croissant, it would have to be the best in town. If its something novel - unique salad bowl, or taro pancakes with matcha icecream - then it doesnt have to meet quite the same standard.

    I will go places which fit into any of the above categories. Additionally, pleasant staff and quick service are important. I'm not saying this is the case, but perhaps your cafe just doesn't excel at anything. Doing lots of things medium level is not as good as doing one thing super well imho.

    • zyj494949 on 09/03/2023 - 12:53

      I will go if it's the only cafe nearby. No need to be special
      However op has other cafes nearby, need to have something different or better.

    • coffeeinmyveins on 09/03/2023 - 15:07

      but perhaps your cafe just doesn't excel at anything

      Did you even read the post? The cafe was functioning just fine with the previous owners so all of your points don't even come into consideration assuming everything is the same.

      • djsweet on 09/03/2023 - 15:19

        I think the key word here is was. Shake things up, do something better than everyone else. Differentiate yourself in the market. Maybe the way the old owner was running things worked with their existing client base, but the new owner now needs to recruit new customers. This is beyond retaining existing customers. They left when the old owner did.

    • plastic spoon on 10/03/2023 - 23:26

      Points one and two are exactly my criteria for choosing a cafe. Point 3 is exactly my wife's criteria. We will drive a few suburbs over when all 3 criteria are met.

    • airtime on 11/03/2023 - 12:51
      +2

      The challenge with this approach is that there isn't a large enough cohort of coffee lovers in the suburbs for this to generate enough revenue. The extra costs associated with producing excellent specialty coffees eat up that revenue very quickly.

      Specialty coffee cafes used to be profitable in highly trafficked city centres where the high concentration of foot traffic mean that the percentage of speciality coffee lovers equaled enough custom and revenue to justify the higher costs and return a profit. With COVID/post COVID WFH shift, foot traffic in these areas is still significantly down on pre-COVID levels. It's is not going to be a strategy that pays off.

      80% of cafe coffee sales are going to be cappacinos, flat whites or espresso shots. Not enough people care to make the specialty alternatives a big source of revenue.

      • djsweet on 11/03/2023 - 14:47

        I love a great flat white. I’m sure lots of people do. Sounds like there are competing cafes around, so doing a better flat white and cap is going to give a huge advantage imho. If a full moccamater setup is not economical, pour over would be a good offering specialty coffee wise, as you don’t need to make a batch. I think point 1 and 3 still stand regardless, and I think you can make point 2 work economically even with a small consumer base. That said, I only think it’s necessary to hit one of the three point I mentioned.

  • Cheaplikethebird on 09/03/2023 - 09:26

    What's your area like and when are you busiest?, is it mostly residential types i.e. mornings and weekends are your busy periods, or do you get a few workers coming in for midday coffees?

    What are the other cafes in the area like? Are they all fancier cafes? Also how much are you charging for coffee?

    If it's all nicer cafes in your area are you able to take advantage of the 80/20 rule and drop quality a little to undercut all the other cafes?

    In my area there are quite a few trendy cafes but the busiest I find is the IGA who does barista coffees which are 80% as good as the cafes but 50% cheaper.

  • GG57 on 09/03/2023 - 09:26

    I may have mis-read, but:
    - You added a dinner service = increased costs
    - Foot traffic has increased, but sales are down = customers cutting back on purchases

    Have you considered engaging with your community more, and not via social media. Is there a local sporting group you can engage with, or something at the school that you could do to build the engagement. Become members of local community groups or similar.

    • skid on 09/03/2023 - 09:50
      +1

      Yeh, didn't notice that about the foot traffic vs sales. What the OP said is that foot traffic is down 20-30% and sales are down 30-40%. People usually walk into a cafe and at least buy a coffee, they do not wander in and wander out again. I'd read this data as people are downgrading their purchases, as in instead of buying a large coffee, they are buying a regular. They would do this as their budgets are getting tightened.

      Agree with you on the outcome of the dinner service.

    • ModBot on 09/03/2023 - 15:05

      We are regularly posting on FB groups on specific days when it is allowed. Most of these posts do not have much traction when the businesses posts them. In the past, I have seen many of our customers posting on the same group and telling everyone that they had a great time at the cafe. There are 100s of comments and then a couple of weeks are great!

      Please note all of this is for the dinner service. At least 50% of our customers were requesting us to open for dinner and hence we did. The previous owners were retiring and were not able to handle the dinner service alone - they tried that in the past.

      This place was also previously a restaurant.

  • Fergy1987 on 09/03/2023 - 09:41
    +4

    Re-use the coffee pucks.

    Pretty sure thats what Zarrafas do.

    • nwa on 09/03/2023 - 13:18

      If you mean reusing the ground beans, McDonalds do that from time to time.

      • airtime on 11/03/2023 - 12:55

        Eww. No. Just no. Surely they don't. Perhaps that is why I have never like any coffees I've bought in desperation at a McDonalds McCafe.

  • mbck on 09/03/2023 - 09:55

    Is there a new cafe that opened up recently? You mentioned there are 3, maybe one just opened up and that's taking your business away. (People like new things)

  • DannyC on 09/03/2023 - 09:57
    +6

    Just my 2 cents: i've only managed restaurants and cafes so I haven't got the ownership lens on:

    If it an established cafe already, you are wasting time and money with flyers. It should have already established a regular clientele. Cafes should not need to advertise via these means as a lot of people will just junk the flyer as junk mail.

    I would scrap dinner service, from your previous comment of doing it only Thurs to Saturday. Employing evening chefs and staff, food costs, additional things like licensing and utilities, additional costs of equipment (plates, cutlery, glassware), stock like alcohol etc,to only do it 3 times a week to recoup these costs is not effective to warrant it. Scrap it, it is a money pit.

    Refocus your opening hours and assess staffing. Finding good staff in this environment is difficult so I would try to retain them as much as possible.

    Improve your cafes social media presence (through FB, insta, your website), nice looking pics of the offerings and being consistent with your content. Though every single cafe under the sun has these super polished pics of their offerings so standing out amongst a sea of same cafe content is something you want to try to differentiate from.

    • [Deactivated] on 09/03/2023 - 12:52
      +1

      So much this.
      Increasing services, menu items, holding additional inventory, both in quantity and variety, etc., adds more overhead cost that is not recovered by income.

      Having to hold stock on hand for the chance of it being used in a purchase is such a money pit as mentioned.

      KISS = Keep It Simple Stupid

      Small, specialised menu that sells, with specific hours.
      I wonder if analytics of menu items etc., have been analysed from the (hopefully) digital POS to see what is and isn't selling and what can be dropped.

    • dtc on 09/03/2023 - 13:32
      +2

      also perhaps see if there is a market that can be targetted - there is a cafe near me that, honestly, isnt very good. But they have a lot of outdoor tables, booths inside that fit 6-8 people (not just tiny tables), encourage dogs and, the big one, encourage mothers groups by having some space for prams and kids to move around (its not a dedicated space, its just that things are not crammed together so every movement bumps into someone). Whether OP has that ability I dont know, but even if a few tables are removed between (say) 10 - 12 and encourage mothers groups to come along, provide crayons and stuff.

      Might be the wrong market entirely for the location, but needs to be something that isnt a generic 'try 100 things and see if they work'. As you say, need to stay out from the same cafe content

      • ModBot on 09/03/2023 - 15:09

        thanks, this is a good idea, and will surely try to implement this.

      • cupcake on 09/03/2023 - 15:20
        +3

        I wouldn't encourage mothers groups.
        The kids make a giant mess and mothers will sit on one coffee for 4.5 hours until it's time to do the school run again.

    • ModBot on 09/03/2023 - 15:23
      +1

      I would scrap dinner service, from your previous comment of doing it only Thurs to Saturday.

      Our dinner service is doing better than the morning service (a lesser number of hours, staff, material, etc.) vs more income / profits. Evening services we do a LOT of alcohol.

      • DannyC on 09/03/2023 - 16:36

        Morning service should be your bread and butter. If it is doing poorly may need to assess this as this should be your core business. Without looking at your figures I can't really comment.

  • Shadowsfury on 09/03/2023 - 09:59
    +1

    Depending on how surburban yours is - last year a lot of people were still working from home so then would have a coffee near home.

    But now I feel trains are chockers and so a lot more people are back at the office/CBD.

    I've been on the trains back to work since Jan 2022 (first 2x now 3-4x a week) - there's been an absolutely massive shift in how many people are on the train now - up until January 2023 I could easily get a seat at my stop - now its standing room only and just reminds me of pre-COVID.

    What I'm saying is maybe your market is drying up as people head back to their offices.

    Could you maybe look at sales on a more granular basis i.e. by hour and compare that? Might show you numbers similar in morning rush but much more dead throughout the day.

  • 87percent on 09/03/2023 - 10:07
    +4

    maybe because of all the inflation, people are just eating out less and spending less money?

  • Witchdoctr on 09/03/2023 - 10:08

    Like others have said, people are cutting down on spending. Covid I got myself a coffee machine…. and found I can make better more consistent coffee at home and don't have to fork out $6 a cup. Personally, there is nothing that annoys me more than being served a coffee in a tiny cup that tastes terrible and cost me a packet!

    Cafe's are a tough business, the successful ones I have known have had the owner in the store working their ass off and building loyalty with customers. They build the businesses up make the books look good (by pulling almost no wage) then flip them, this was all pre covid though.

    I wish you luck OP you sound like you have the drive to figure it out. I'm sure you will turn it around and hope one day you can all park your Ferraris (oh wait you work in IT… so Teslas?) out front and a great all your customers as they walk in while you sip your drinks :)

  • MakkhiChoos on 09/03/2023 - 10:15
    -1

    Can you make your coffee cheaper instead? $3.50 a latte? Get some money flowing through for sometime and hope it leads to more purchases or develops a habit. My nearby cafe flyer-dropped coffee vouchers. Else I would have never tried them.

    Have staff greet the customers. Not sure where are you located but staff that belongs to the same demography of the suburb. (There is a reason Grill’d hires more white people than other joints).

  • Bonsaichop on 09/03/2023 - 10:24

    Have a look at the same period last year compared to the same period in the previous year you took over. As mentioned earlier Feb/March is usually a pretty dead period in retail and i'm sure hospitality is no different as they both fall in an indulgent spending category.

    We have an online retail store and it gets that bad in Feb/March every year we started planning all our holidays around that period so that they would not impact in the busier months.

  • RolandWaites on 09/03/2023 - 10:24
    +1

    Pretty rough time to be getting into business I'd expect. You need ways to get people in and make you stand out. Perhaps a Monday/Friday morning special. TVs on showing the news in the morning? Popular radio station/music playlist?

    At cafes people get attached to the personalities. Patrons often love getting to know the owner, being recognised, asked how the family is, how the kids are going etc. Maybe they got that with the old owners, and now a faceless trio has come in and they feel that connection's been lost. Is one of you quite charasmatic? It might help for that person to be at the counter/delivering orders on a Monday or Friday morning.

    You say sales are down 30% and you've opened up a dinner service. How popular is the dinner service? Are daily sales similar to before, but you're losing money paying staff to operate night time menus that aren't generating interest?

    Put a box and some paper by the counter. Ask people to submit anonymous recommendations/comments. Each person who submits one gets a 50% off your next coffee. Run that for a fortnight. You might get a clearer indication of where you're failing that way.

    Just throwing out ideas.

    • Jaduqimon on 09/03/2023 - 10:31
      +1

      Problem with asking feedback from customers is that they are still buying your coffee.. he needs feedback from those who no longer buys from him so the feedback thing you mentioned wouldn't be to effective

      • RolandWaites on 09/03/2023 - 10:44

        Fair. Some feedback is better than none though. Could always ask "What's changed that you don't like" — people might be peeved at something and continue to visit.

  • Juliusdesign on 09/03/2023 - 10:34
    +1

    my background, graphic designer , videograher and did some work in online / social marketing etc.

    Updated website
    for cafe, i see no use in this considering the cost and time to do this. For the long run if your cafe already gained some following it might be ok to strengthen the brand.

    Social media marketing
    Might work with the correct people to handle this. The problem is the good ones charges a lot, if they are good they might as well have their own business and use their skill for their own business. It's all come down with testing and scaling the tested ad

    More signage
    This probably is a great idea. Do some offer and have several of these. Eg have 4 signs, 1 signs runs for 2 days. after one cycle check which ones that generate spike of sales. Analyse why this one works, is it the visual, the offer, the food etc.

    Google / Meta advertising
    Forget google. Facebook ads might work as it has area targeting. Again running this blindly will just cost you money down the toilet. Need someone that knows what he is doing, so you can run a cost effective ads that generate a return on your investment. This might be having 3 different ad campaigns with offers, so you can track which campaign actually generate a return.

    • RSmith on 09/03/2023 - 11:28
      +2

      Facebook has local area groups. So it would be an idea to post in those groups every now and then.

    • GG57 on 09/03/2023 - 11:31

      This info is spot on in my opinion.
      OP's cafe sounds like it isn't probably a destination, for people to actively seek out, but more of a local cafe dependant on locals and adhoc visitors. I'd be limiting spending on social media, apart from building a profile in the community through FB local community pages.

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