It’s no secret that most coffee shops fail. Some people mistakenly believe a coffee shop is an easy source of income. It can be when you’re passionate about the coffee industry. Unfortunately, without passion, you’re doomed to fail from the start.
Passion is vital, but it’s not enough. You need to be meticulous with the way you run your business. If your coffee shop is treading water, here’s what to do:
- Start with a reality check
You can’t rescue a failing business if you don’t know why it’s failing. Your first order of business is to pinpoint exactly why your coffee shop is failing. Using analytics tools to capture and analyze data (sales, inventory, labor, etc.) will help you see what’s really going on.
At first glance, lost sales and a dwindling customer base are easy to attribute to “the economy,” competitors, or a bad location. Those are possibilities, but plenty of coffee shops thrive despite a down economy, Starbucks moving in next door, or being in a challenging location. When you look deeper into the matter, you’ll probably find something else at the root.
Consider how you’re running your business. Are you slow enough that you only schedule one barista from afternoon until evening? It’s possible that afternoons and evenings are slow because you only staff one person.
One person is never enough to run a coffee shop, no matter how skilled they are. One person means you’re providing poor service to a handful of customers every day. While your morning customers get top-notch service, your afternoon and evening customers will be subjected to subpar service. Over time, those customers will drop away, and you’ll be permanently left with slow afternoons and desolate evenings.
It costs money to keep two people on staff at all times, but it’s a necessary component for success and customer satisfaction. Using HR analytics tools will give you the data necessary to justify those extra workforce expenses.
- Ask customers for feedback – and listen
Customers will tell you exactly what they like and don’t like – if you ask them. Give customers an incentive to provide their feedback. Offer free or half-priced drinks for filling out a comment form. If something has changed, your regulars will let you know.
There will be some things you can’t change (like prices) but sift through the feedback with an open mind. Put your investigator hat on. Why is your business failing? You will find clues in customer feedback.
- Start a secret shopper program to uncover hidden issues
The benefit of using a secret shopper program is being able to check on the execution of your company’s standards. You’ll prep your secret shoppers with a checklist noting all of the standards you want them to measure. For example, you might measure speed of service, drink quality and accuracy, food freshness, and whether or not they suggested an upsell.
Make sure to measure all promises your company makes to customers. For example, say you guarantee customers a 60-second visit. Hire various secret shoppers to visit your store throughout the week and time your transactions for about fifteen minutes. If your transactions are all in the five-minute range, and you used to deliver on that 60-second guarantee, you know where to start cleaning house.
- Bring in an expert
When all else fails, bring in an expert to evaluate your business. Be cautious of hiring any expert, however. Coffee is a specialty industry. While a general expert in business can help you with accounting and management tasks, they won’t notice what you’re doing wrong inside your shop. You need an expert with a background in coffee.
If you’ve watched Gordon Ramsay’s Kitchen Nightmares, you know you’ll be in for an impactful reality check, but that’s what you need if you want to revive your business.
- Don’t listen to other failed business owners
Failed coffee shops produce bitter business owners. Take their stories with a grain of salt. For instance, one failed coffee shop owner says “pastries are a monetary black hole unless you bake them yourself.” Their belief is based on the fact that they threw away 50% of their croissants.
Pastries aren’t a monetary black hole. The key to selling pastries is figuring out what your customers want, and avoid providing “acceptable” alternatives to popular items. For instance, don’t sell a butter croissant and an almond croissant unless there’s equal demand for both. When you sell out of almond croissants and people settle for butter, you’ll think there’s a demand for butter.
Be willing to change
To be successful, you need to be willing to change. If you need to turnover your staff, cut down your menu selections, or get better equipment, do it. Change is a small investment in your future success.