14 June 2020
From the JoinPAY archive. Information reflects the original publication date.
Ruslan Kolobov
Owner of Monster COFFEE.
The coffee business is no longer just a capital story. And this is not surprising: coffee is one of the most high-margin products, who will refuse to earn money on it? Let's take a closer look at how to earn money on coffee and how the business created on the hipster story " walk along the Nevsky, shiver, go to a cafe and drink coffee " went to the regions and what it transformed into.
In the capitals, there is a large flow of buyers – more residents, as well as tourist traffic. People came to see the sights, get emotions and impressions. The task of those who earn money on coffee in the capital looks like this: to divide this tourist flow among themselves with the help of a special atmosphere, original taste and additives, and a coffee list variety. Latte, mocha, espresso, americano, cappuccino, macchiato – all these magic names fascinate, promise new taste sensations and emotions. And today, as you know, people pay for emotions in the first place and pay well, so coffee, which is a great reason to get such emotions, is more than a cost-effective product - when it is sold, a seven-fold markup is possible, and it pays for itself! That is, the marginality is through the roof. For example, the price for the same popular cappuccino in large cities can vary from 150 to 350 rubles, depending on the type of grain, type of milk and the choice of additional additives, and if you look at the cost price, the figures there are quite different. The cost of a cup of coffee is about 30% of the price, on average, a cup of cappuccino comes from 20 to 50 rubles.
In terms of paying for emotion, coffee becomes not only the product that actually earns money but a product that generates traffic and contributes to additional sales. People go for it, and the rest of the goods (pastries, sweets, food) are added. Therefore, the specifics of the Moscow or St. Petersburg coffee business is a specialized coffee shop or bakery, with a cozy design of the room, pleasant waiters and a barista. Coffee here looks as expensive as possible and costs accordingly. And of course, the location is the best in the places of the most intensive tourist flow.
Coffee sales are also affected by a factor such as seasonality. Coffee is really a seasonal product, and its sales are higher in the cold season, when the consumer is looking for something hot to warm up. The observation about the seasonality of demand for coffee is confirmed by the research service ROMIR, which conducts research in the field of simple pleasures and publishes monthly special statistics: It is called "Coffee with milk" index. This indicator is calculated based on the dynamics of prices and consumption of 4 categories of goods: coffee, milk, bottled water and chocolate. According to these statistics, traditionally, the "Coffee with milk" index begins its decline in April and falls until the middle/ end of summer, after which it begins to grow.
Customers in summer replace coffee with summer pleasures such as fruit, ice cream, soft drinks. But it is worth noting that no one refuses coffee at the same time. Therefore, in the summer, the most enterprising coffee shop owners expand their range of cold types of coffee drinks: frappe, bumble, ice latte, coffee glasse, etc. And also they increase the role of coffee as a traffic generator and think about additional sales to it: for example, they introduce ice cream to the range and thus attract not only tourists, but also strolling parents with children who go to the cafe to take a child ice cream, and themselves – coffee ice.
The most obvious example of earning money on coffee outside the capital is that the sale of coffee at gas stations along highways throughout the country, today brings them almost more profit than the gasoline itself. The story about "Oh, gas station, stop for coffee, and at the same time – fill up" is becoming more frequent. Coffee becomes a magnet here. It plays a vital role in generating traffic and increasing profitability in bakeries, cafes, booths in the format of "food on the go" or even especially - "coffee on the go", as well as in other establishments where a coffee machine is simply installed. But it works here in a different way – it should be just coffee, at a reasonable price, quickly and available for everyone. It is still profitable, but its profitability is already gross, not so much from the margin size as from the flow. Here, other parameters come to the fore: not to make it expensive, but to make it as cheap as possible without losing quality. Indicators that help to ensure profitability in such a situation is supply co-ordination, form of presentation, speed of retrieve, reduction of costs for manufacturing – they help to make coffee cheap, affordable (massive). For this reason, mobile coffee shops, coffee shop chains, and coffee booths are more popular in the regions. One thing is obvious: whatever the region and whatever the form of implementation is, coffee, without a doubt, is the second "black gold" for the entrepreneur of our time.
Life hack: you can earn money not only on the sale of the coffee itself, but also on the coffee grounds that remain after cooking. It can be sold to beauty salons for cosmetic procedures.
The so-called smart cash registers can provide a huge help in earning money for coffee both in large cities and in regions.There are quite a lot of solutions that differ in functionality and cost. I use the JoinPay Smart Cash Register in my coffee shops, which allows you to not only make purchase receipts but also analyze sales. Information about sales is transmitted to cloud storage, where you can generate a report on sales for any period in the context of revenue, average receipt, number of receipts, calculate the marginality of any product, think about cross-sales and additional sales. The JoinPay Smart Cash Register also helps automate the process of interacting with suppliers. Based on the history of previous sales, the Cash Register can predict how much stocks will last and recommend that you re-order the necessary components in time for uninterrupted coffee sales.