Coffee Takeaway Pricing

[dhruvc94]

Hi guys,

Only my second post on this wonderful forum. As mentioned earlier, I take care about of a caffe in Melbourne and since the change of management, we have been looking at ways to increase our focus on coffee (as previously it was only on food).

Not to blow our own horns but we are pretty popular for our coffee and have a great deal of regulars but coffee sale has been around 40kg mark for quite some time.

We have changed our house blend to Diablo by coffico which has 11 coffees including 2 estate coffees and is really being appreciated by some of our customers.

I wanted to know what would happen if we decrease our coffee price from $3 to $2 for regular takeaways ? Seems to be a very risky proposition as price is often perceived with quality but if we were able to negotiate a good deal with our supplier and lower the price, do you experienced guys think it would make a difference in sales?

[magnafunk]

If it increased your takeaway sales by 50% you'd still be taking the same amount of money for a lot more work, doesn't make a lot of sense to me

[Jonathon]

Some cafés in Sydney go for a reduced price in the afternoon. Depending on the demographic in your area, it's something worth considering. Some of the $2 afternoon cafés in Sydney can have queues of 5-6 people at 3:30pm, but these are surrounded by office buildings.

The comment about a 50% reduction is spot on, but if you're also selling food with coffees then the equation changes considerably. A cafe next to my office (Melb CBD) does coffee and high quality toast for $5.50 and they do very serious volume in the mornings. Their coffee is fine, but not the best in the area. But the toast deal drives huge volume to them.

[Journeyman]

By 'regular takeaways' do you mean regular customers with takeaways or latté/capps for takeaway?

If the former, I'd go for loyalty cards for regulars. Every 10 (or 5 or whatever number you choose) they get a free one. Rewards the locals, can bring in new regulars and lets you keep making reasonable markup on most of your work.

[richard_m_h]

In Europe it is often cheaper to drink coffee at a bar rather than sit down. This is sort of a version of that. Take away is not using your table space so perhaps you are on the right track. But why not go further and do the European bar thing?

[Rocky]

I'm reflecting on two very different 'cafe models' I saw in Sydney CBD last time there. Both going gangbusters.
One was a 'hole in the wall' with excellent coffee, focused on 'take-away' trade.
The other was Bistro focused with good but not excellent coffee.
Maybe it's more about choosing a 'niche' rather than a price strategy?

[Andy]

You can buy $1 takeaway coffees from a convenience store... and I certainly don't see queues at any I drive past.

I would suggest looking at going the opposite route, amazing coffee made well and charge a little more for it while telling your customers that adding 20 cents a cup improves their coffee grade roughly 100%

Heck, you could even offer two different levels of coffee side by side at different prices and see what the feedback is... it's only going to cost you another grinder to try it out.

[MrJack]

Normal take away price in Perth (CBD) is $4 - $4.50 for a small/medium. Doesn't generally correlate with quality either.

I noticed a while back that one streetside stall started selling $2 coffees before 7:30. I tried it once, but didn't rate it (so haven't been back).

Halving my (considerable) annual coffee spend is enticing, but not enough to make me substitute great coffee with mediocre coffee. But I'm more picky than most.

Might be worth considering a reduction for "off peak" periods only?

[dhruvc94]

By regulars i meant regular customers.

Makes much sense to not reduce the price as not being in a business district, reducing the price won't increase the foot traffic or anything so the same amount of sale but less revenue.

As mentioned previously, we are improving upon the coffee itself starting from the beans to equipment plus training etc. though obviously it will only show its impact in the long term.

[Rocky]

In an industry where there is a lot of poor quality product, high quality is always a strategy worth trying.
There's a coffee business tucked away in West End in Brisbane that emanates a huge amount of passion from the staff & management and always seems to be going well.
It's the sort of place people walk/drive a bit longer to get to because it's worth the effort.
The best cafe locally was characterised by a focus on quality at all levels that was immediately obvious in the attitude of the staff.
The customers you lose because you charge 50cents extra a cup are replaced by the ones that recognise quality when they taste it.

[elbeano]

Hey Rocky,that wouldnt be ''Rouge'' would it?They do the best ''iced'' coffee in Qld, apparently.......sorry in advance for my bad taste in humour.Back to the topic,
my local cafe does not offer discounts,loyalty cards etc,only the best coffee,food and service and they are always busy.Quite a simple recipe really.Every cafe that opens in the area lasts around 6-18 months before folding.These guys are the last ones standing.

[Rocky]

Ha! Yeah, good 'ol Rouge. You had to know what to order when you went in there.
The place I referred to is a 'standout' and well known in that neck of the woods.
I do think it is a bit encouraging in terms of where we are going as a coffee-drinking society that when a particular cafe is getting it right they are invariably doing well.
Sure there are plenty of bad or mediocre ones that serve the less discriminating but it tells you that there is a steadily increasing proportion of folks who know good coffee when they find it.

[dhruvc94]

Hey Rocky,that wouldnt be ''Rouge'' would it?They do the best ''iced'' coffee in Qld, apparently.......sorry in advance for my bad taste in humour.Back to the topic,
my local cafe does not offer discounts,loyalty cards etc,only the best coffee,food and service and they are always busy.Quite a simple recipe really.Every cafe that opens in the area lasts around 6-18 months before folding.These guys are the last ones standing.

Certainly, I agree. Good product is tantamount and improving the coffee and the whole coffee making process is priority and is well underway. We have been here for almost 17 years now but given the changing trend of the industry and increase awareness / appreciation of coffee, we want to increase the stagnant sales. Let's see how it goes..