Daily turnover in cups in a coffee shop

[JohnDoe]

I am going to start a coffee shop in a shopping centre which has the following statistics from last year: approximately 4.8 – 5 million visitors each year, and the turnover/sales in 2009 was 1.85 billion. There are 112 shops, and 4.5 % of the turnover/sales are within food and drink service

What would be a reasonable estimate of turnover in cups each day for my coffee shop? Any idea? I found an estimate of 230 cups one place, but I have really no idea

[beanflying]

Re: Daily turnover in cups in a coffee shop

Anyone got a piece of string, crystal ball or a random number generator  : Welcome too  

[TC]

Re: Daily turnover in cups in a coffee shop

Id say fewer than the last bloke did if any of the coffee, service, food offer or hygiene are sub-standard and possibly more if theyre better and if you refurbish or rebrand.

In shopping centres, youre always working for the man and unless you are really good and very shrewd, you could end up with nothing left for you. Keep in mind that you pay the rent for the big tenants and centre management will always have you by the short and curlies.

Wait until you want to add something to range, make a change to the shop or if they decide they want to build or renovate something....

Having experienced the bad ol days of Gandel, never again in a shopping centre. There is way too little control over your destiny. :

[A_M]

Re: Daily turnover in cups in a coffee shop


BF and TC have said it all.

While some might do OK....

Centre management have it all tied up and trust me, unless you well healed and got high level legal support... Do not ever expect to win / come out on top as to any disarrangements or breaches in the very involved contracts they will have you sign.

The one thing that seems to always pop up is;

Wait until you want to add something to range, make a change to the shop or if they decide they want to build or renovate something....

Opps it was only a scone - Strike 1

[Andy]

Re: Daily turnover in cups in a coffee shop

4.8 – 5 million visitors each year, and the turnover/sales in 2009 was 1.85 billion. There are 112 shops, and 4.5 % of the turnover/sales are within food and drink service  

4.5% of $1.85 billion (American billion not British billion I assume) is $83,250,000 Thats a hell of a lot of food and drink and means that every man, woman, child and baby that went in there last year spent $17ea on food and drink.  Hmmm, seems unlike any shoping centre Ive been to and sets off alarm bells.

an estimate of 230 cups  

230 cups @ $3 ea, take out the price of the coffee, milk, cup, lid wastage etc and call it a round $1 in costs, that leaves $2 per cup margin.

230 cups = $460 and I guess your rent with outgoings is at best $500 a day... so if you can find someone to work 7 days a week and pay you $40 a day you should breakeven.

I guess finding someone to pay you $40 a day to work there is pretty unlikely so you will need to add $500 a day for 2 people for 10 hours bringing the total daily loss to $540, a weekly loss of $3780 and an annual ouch of circa $200,000.  I hope you are well cashed up to pay that weekly loss after spending the $50,000 in fit out.

Feel free to debunk the about guesstimates but you can at least see the logic.

I guess that a gun barista would make 50 cups an hour as long as there was a queue of waiting customers and to do that average they would need someone else serving and taking money.  So in the rush hour in the morning and the afternoon you might make $50/hr toward the rent after coffee costs and wages were taken out.

Of course you also have employ the 2 staff for the whole day in case it gets busy so outside the busy patches the chance of covering overheads is less likely.

If your rent was $100/day and you could staff it with 1 person who could make 230 take away coffees in 10 hours then the $700 takings less the $230 in coffee costs and the $100 rent and the $250 for wages it could make $100 a day but you would be talking about a coffee cart, not a cafe even so it would take a year to recover the $30,000 setup cost of a coffee cart.

I would suggest sitting outside the best positioned, busiest coffee shop with a pen an paper all day (not just the busy hours) and make a note of what was sold.  Count the staff, guess the rent and workout what its really taking and Ill be surprised if the numbers make much sense. It will cost you 1 day of your life to calculate the answer to what could cost you much, much more.

[roknee]

Re: Daily turnover in cups in a coffee shop

a very good reality-dosed post andy

[Andy]

Re: Daily turnover in cups in a coffee shop

Thanks Roknee, I thought so but considering that Johns post starts with...

I am going to start a coffee shop

and ends with...

but I have really no idea

...means that although he posted a query here he wasnt really after advice, just a number of cups figure so he can tell his bank manager how much money this venture will make.
:

Go with your head not your heart JohnDoe.
8-)

[JohnDoe]

Re: Daily turnover in cups in a coffee shop

Thanks Andy for this thorough answer. I do of course see the rationale in addressing all these questions, so I will do my homework more properly. Your last suggestion makes sense. I do not have the time right now to do this myself, the opportunity cost would be too high, but I guess I could get some student or similar to spend a day doing this for a reasonable cost.

[hazchem]

Re: Daily turnover in cups in a coffee shop

I do not have the time right now to do this myself, the opportunity cost would be too high, but I guess I could get some student or similar to spend a day doing this for a reasonable cost.

you dont have the time right now to conduct some analysis on your potential business? I dont think you can (or should) outsource your future.

[JohnDoe]

Re: Daily turnover in cups in a coffee shop

Ok. So you think the data will be polluted if I hire someone? I.e. they will not report correctly?

[TC]

Re: Daily turnover in cups in a coffee shop

This reads like a train wreck waiting to happen to me :

John,

Respectfully, Id suggest you read over Andys figures again and absorb the reality. The only millionaires in shopping centre cafes are franchisors.

Lets put the numbers in another form for you.

In rough % of takings:

Food/Coffee 25-30%, possibly more if you dont manage wastage well.
Labour 25-30%. Add 9% super and 3% workcover to this as well. Factor in well over 40 hours for yourself.
Rent and Marketing fund 10%
Utilities, power, gas, insurances etc: up to 10%
Repairs, upgrades, say 2-3%
misc. stuff 3-5%

Mandated yearly rent increases >CPI and and if you last 10 years, a compulsory refit of your site.

Now work these figures up from cups/hour and do some math...

Bottom line is that if you can get a 10% nett profit from your takings, you are a magician and you will be cooking a whole lot more than lunch.

Successful cafes run on an average spend of $10+ and you will struggle to get that in a shopping centre.

Nevertheless, with a thick skin and seemingly deep pockets, centre management will love you until you cant afford the rent and you find your site boarded up.

To have any chance of success, do your homework properly and sitting on your culo at your computer is not going to help much.

Get it wrong and you will lose money faster than you ever made it and no uni student who fudged you some figures while at his girlfriends place will care.

Chris

[Randy_G.]

Re: Daily turnover in cups in a coffee shop

.....
Successful cafes run on an average spend of $10+ and you will struggle to get that in a shopping centre.

Nevertheless, with a thick skin and seemingly deep pockets, centre management will love you until you cant afford the rent and you find your site boarded up.

To have any chance of success, do your homework properly and sitting on your culo at your computer is not going to help much.

Get it wrong and you will lose money faster than you ever made it and no uni student who fudged you some figures while at his girlfriends place will care.

Chris

Excellent post, Chris. I had a fried who roasted his own coffee, had no employees (he and his wife ran the shop), bought all his equipment for cash, and leased the building. He made excellent espresso and his wife was a graduated chocolatier (Yummy, to say the least). No trans-fats in the place, tasty lunches, and my little blues combo played there every Friday night for a few months.

They lasted about two or three years I think. The best espresso alone will not keep you in business (but bad coffee will run you out of business). All it takes is a burp in the economy to run costs up and run customer visits down, a bump in rent, and one lawsuit to run insurance up and you are done. It is a business for deep, pockets, top-level business models, and some luck. Its way shops which sell excellent espresso are difficult to find- those that can make it, and train others to do the same often are not business savvy. I have no numbers, but more food businesses fail in the first two years than any other business.

Folks have asked me why I dont open a shop... I love coffee too much to make it into work.

[beanflying]

Re: Daily turnover in cups in a coffee shop

Ok. So you think the data will be polluted if I hire someone? I.e. they will not report correctly?  

Not polluted but if it were me I would want to get a really good "feel for the place". Your average shopping centre customer is not there for outstanding coffee they are there to shop and in a lot of cases coffee is just a hot drink with food where you are competing with fizzy sweet/juice offerings as well. Your average shopping centre customer wont care what they are having, the scalded grannychino or the sryuped bucket of weak swill will be the norm.

If your ambition is to simply open a coffee shop then the last place I would be looking at would be a shopping centre, as mentioned above constraints and restriction high rents etc should be a warning enough to look elsewhere at a stand alone venue making great coffee in a great atmosphere. People will travel for a great coffee!

Get out and drink and dine your way around the speciality coffee venues in your city then go to some shopping centres for comparison, break out the business planning sheets and then decide if it is all worth it.

[Thundergod]

Re: Daily turnover in cups in a coffee shop

Folks have asked me why I dont open a shop... I love coffee too much to make it into work.  

Me too.


I have backgrounds in banking and food retail.

My father was a brilliant food retailer.
Started his first cafe in his early 20s.
When I was older, I worked with him a few times in various businesses and saw first hand how good you have to be to make it work; I couldnt do it.
I also deputy managed a Pizza Hut for a few years so have another perspective as well; still, as to running my own business...I couldnt do it.

Banking: I was a lender for many years in one of the major banks.
Ive seen many small businesses come and go.
Ive seen many a grand idea that fell well short on solid figures and business experience to make it work.

As already stated, most small businesses fail within a few years.
I saw one my father built up, run into the ground within 12 months by someone with no industry experience; just an idea and some cash.

Ill encourage someone if I think they have a chance but with the little info I have at the moment JohnDoe, my experience tells me to warn you to do a lot more homework before jumping in the deep end.

Ill also second the chorus to stay away from a shopping centre.
The only ones to make money there are the owners.
The retailers are screwed left right and centre.

Do you have any food retail experience?
Any retail experience?
Whats your background?

[Justin_Boyle]

Re: Daily turnover in cups in a coffee shop

Your last suggestion makes sense. I do not have the time right now to do this myself, the opportunity cost would be too high, but I guess I could get some student or similar to spend a day doing this for a reasonable cost.

I would suggest then that you dont have the time to run your own coffee shop!!!

When your done on coffee shops perhaps you should open a bar and then start a winery.

Three industries where entrants believe they can make it on sheer inspiration alone.

They are also all industries with lots of competitors and a big threat of new entrants also. Typically industries that have these characteristics DO NOT MAKE MONEY. Blunt I know but................

The other thing that you could be pretty certain of is that in "most" successful coffee shops, if the owners were drawing a wage they wouldnt be making a profit at all.

Just another opinion

People also ask me why I dont open a coffee shop. Im an accountant and I realise that I have to pay the bills!!!