Business very slow

cafe112

Hi Guys,

I've notice my inner city cafe and others around me are complaining that sales have been dropping since May. I've spoken to alot of different types of business owners and they stating the same thing.

I am not sure what's going on, thought only the retailer sector was affected.
My guess is alot of consumers are going overseas because of the high $AUD and spending their cash there and on top of that higher living cost forcing people to spend less.

Any Cafe owners out there noticing the same thing or have a different view?

mycuppa

I was just crunching numbers the other night looking at 3 & 6 month trends. Our business is spread across cafes, office/business accounts, private label and online sales. The cafe portfolio is about same as per March and Jan quarters, so we have'nt seen the same spike as per winter season as years past. Most cafes are still ordering about the same kg's per week, some are ordering more, but it's not that same 20-30% increase we normally see during the colder months. Cafe owners are telling me it's tougher trading conditions, particularly since March. Some of the traders in shopping centres are doing it tough. Office/Business accounts is up about 30% - I just attribute that to increased demand in that sector, especially those seeking a better quality bean. A lot of that business is bundled with equipment (which we don't actively pursue), so we are generally engaged after the first few months once they work out the beans they were getting from the equipment supplier were .........you know. Some businesses I talk to are starting to focus more on their internal coffee as a means to keep staff in the office more as they are paranoid about lost productivity from workers spending long periods in cafes. Private Label volumes are up about 50% - perhaps a little more. Online sales up about 150 - 200% from Jan and Mar quarters. Not seeing any sensational trends here, very tough competitively and considering the huge $$ spent advertising to attract online buyers. I don't think the increased numbers are a case of people abandoning traditional retail and buying online as many of our online customers have been purchasing online for quite a few years.

Dry_bean.

Welcome to the forum Cafe 112 Surely the retail price rises we have seen over recent months have also had an impact. We know that discretionary spending is way down, combining this with rising prices must have an affect. 

cafe112

I do notice alot less traffic in shopping centres now days, I really feel for the cafe owners in there as their rents are rediciously high. The jump in businesses offering staff better quality coffee is not good for us as office workers are our main customer base. The trading conditions are very bad, we've drop 20% since May. This is not normal. The suppliers are also telling me their struggling because the Cafes are ordering alot less.

mycuppa

on 1309318602:

The jump in businesses offering staff better quality coffee is not good for us as office workers are our main customer base.

There are a lot of companies aggressively pushing into the office/business market with "free" or low-cost rent auto-machines. These are your "corporate office machine" specialists that have active sales force running hard hitting campaigns and generally are sometimes doing the loss-leader trick in the hope of locking in supply of consumables and servicing. At the other end, you have Pay-per-cup which I had thought was pretty much a saturated market in Aus, but there seems to be this new 2nd wave of non-franchised operations springing up everywhere. I probably receive at least 1 new enquiry every week from a new PPC operator somewhere around Aus looking to startup - not sure how many of them actually get it going though as the marketing costs and capital outlay are jaw-dropping. There are still a significant portion of people who will always opt for the cafe experience. For some large offices I supply whilst the staff love the coffee, a lot of them want to get out of the office for "other" reasons.

RichardM

on 1309323270:

I am also noticing a lot more Coffee Vans in Brisbane and some seem to be out on the weekends and at a lot more events. There is a No name cart that attends the local sports grounds on Weekends and some evenings, just down the road from us...  I hear that the Quality is not there but it is convenient ? A family friend also now has a two group in her corner store / newsagency as many customers were wanting a coffee on their way into the city for work (she opens at 5:30 / 6.00am and closes at 7:00pm - 7 days a week).  Her turnover has increased to the extent that they have had to change the shop layout to cater for clients. Thus while her turnover has increased, I am sure that others have lost some trade. In my local area, there is now 4 Coffee shops and another about to open...  The place is becoming saturated and to some extent the Quality is also suffering.  Starts out OK and then drops off as they can not keep it up. The good will survive, those "In for a quick buck" may not be so lucky...

I counted in my head at least 15 coffee shops in two blocks of the main street without thinking too hard. Over half of them are less than a year old, and I can think of many more that have gone bust very quickly. The competition for coffee business here is fierce, and there are only so many coffees consumed in a day, so I'm guessing roasting is steady, but individual coffee shop business would be down here.

mycuppa

on 1309335603:

I counted in my head at least 15 coffee shops in two blocks of the main street without thinking too hard. Over half of them are less than a year old, and I can think of many more that have gone bust very quickly. The competition for coffee business here is fierce, and there are only so many coffees consumed in a day, so I'm guessing roasting is steady, but individual coffee shop business would be down here.

it's actually a very bad thing for everyone involved in the supply chain. As roasters, we unfortunately (and I say that kindly - an emotive subject for suppliers) tend to get hit up for all the normal freebies (FOL, etc.) and after spending up to $12K kitting out a cafe, for them to hit on hard times, it hurts the roasters just as bad - particularly as the FOL investment does nothing in terms of value-add to your own product and certainly does nothing but take away the potential for what could be in the cup. Used equipment, even if it's only light demo use, is still never good enough for some cafe owners, so it can be challenge. Any reasonable roaster will obviously want their cafes to be successful as we have invested what we generally deem as a "high cost of entry tax" into an ongoing partnership when there is any FOL involved. Granted, a cafe owner normally invests up to 20 - 30 times that amount, but it does'nt take long before a suppliers accumulate a lot of wasted capital and bad debts - just for the privilege of selling your product, so we try everything we can to help them be successful - sometimes that means more investment, ultra-premium beans, funding promotions, incentives, etc. These sorts of value-add can only work if there is a good cafe-roaster relationship - when the roaster can advise the cafe openly on how to improve - and likewise. There are some common patterns I've noticed emerging from those cafes that end up struggling. Firstly, the mindset of the owner (are they cost or value focused - cost focused more often end up failing first), then it's the energy and commitment of the owner (are they worn out, don't care anymore, sick of the long hours and constant routine) and how this influences the culture of all staff to deliver to a service standard and finally the relevance of the cafe - not changing the menu in years, tired decor, stale or boring approach, etc.......... I've seen some absolute classics over the years.......anything from trying to save 1c a cup on dodgy takeaway cups and lids that inflame customers to using the owners school-age kids to be barista with zero experience, training and desire.

beanflying

While I am not in the coffee business fulltime there has been a noticeable reduction in discretionary spending across the economy. My feeling is that partly people are watching there pennies a little more, paying back their credit card debts and this is driven by the media fear campain and talk of another interest rate rise or two before Christmas which will bite hard on those leveraged out to the max on large home loans and or rentals. Most of us have jobs and there is a lot on offer so no problems there so blame the media mainly I reckon. Either that or avoid the debt levels a McMansion creates. Just my potted view anyway  

askthecoffeeguy

I'm finding the opposite effect that sales are better than ever - but its very weather dependent as half my seating capacity is outside - had 100 yes that's right 100 cyclists pull up outside last sunday and ALL OF THEM ORDERED COFFEE AT THE SAME TIME - and did we cope - my word we did! CHef had to run food we were so busy!!! But bring on the sunshine I say as its definitely good for business! P

texx

my wife and i have been in the take away business for over 20 years and this is the trend almost every year as follows . november quietest ..........saving for xmas february  next in line ..........paying back the plastic cards after the xmas spend up june third worst .........leading up to the end of the financial  year ( dont know why though . oh yeah almost  forgot the week after the local show is a quiet one too . johno

FreshCoffee2

The only way is to always seek to grow your market / business. This means being active, dynamic, and to be willing to make changes to suit, whatever it takes. And at the moment, if you speak to the right people, you will find it is generally quiet out there. Oh and of course always be wary of those that tell you they are going gang busters when you are not...its a favourite ploy of foxy salesmen to put the fear of the lord into their competitors.... A.

Thundergod

on 1309764899:

foxy salesmen

Pun intended? 

plantation_coffee

mixed bag of lollies .... very very interesting food for thaught for me here as a coffee roaster and supplier in brisbane its nice to know these kinds of dilemmas exist out there i think business out there isnt easy , but in saying that this market is carrying a lot of momentum retail level customers minds have coffee screaming at breakfast lunch and dinner and that is a good thing provided you are in the correct location. for you cafe owners out there , as an independent coffee supplier (me) what would your concern be in changing coffee suppliers weather you're going from a mass market bean to semi-specialty/boutique supplier or from supermarket grade (dirt cheap) dirt coffee to a mainstream blend boutique roasted and my question would be would you prefer an independent boutique roaster that does offer similar pricing to mass market beans but provides a far fresher product ,and more importantly provides expertise in creating an excellent tasting beverage versus a mass market supplier that gives you aged stock , doesnt show you any expert training , just standard training for you and staff . cheers guys

askthecoffeeguy

I enjoy a close working relationship with my independent roaster where we talk about the roast profiles and individual attributes of the single origin coffees, and then work on the blend combinations together And if there's a certain attribute of a blend that I want to introduce, such as relatively low carbon miles as the basis of the blend and / or early aging attributes, we look at a combination of coffee together to generate the desired outcome I also often create spontanous blends at work based upon single origin / single estate coffees, and if I find something that I particularly like I can ask my roaster to bag me up some for the following week Just some of the joys of having a close working relationship with an independent roaster! P

mycuppa

on 1311509151:

for you cafe owners out there , as an independent coffee supplier (me) what would your concern be in changing coffee suppliers weather you're going from a mass market bean to semi-specialty/boutique supplier or from supermarket grade (dirt cheap) dirt coffee to a mainstream blend boutique roasted and my question would be would you prefer an independent boutique roaster that does offer similar pricing to mass market beans but provides a far fresher product ,and more importantly provides expertise in creating an excellent tasting beverage versus a mass market supplier that gives you aged stock , doesnt show you any expert training , just standard training for you and staff . cheers guys

The quality standard provided by most cafe roasters is very high and I believe it is surprisingly far better than most people perceive - and it continues to improve every day. As we have heard many times before, a lot of it comes down to the barista as to the end product. Too many people find roaster bashing an easy sport. It is perhaps a dangerous assumption to think the coffee being supplied by large, higher tier roaster is not as fresh as the coffee from semi-specialty/boutique as is the level of training that can be provided. Some of the larger roasters have barista champions on staff and they are nearly always able to provide better training than a roaster. Customers change suppliers for many reasons and it's not normally the same reasons we think they should. 90% of them will want to have a flavor that is similar to the existing for fear of upsetting the regulars (it's a request I hear often, which is somewhat disappointing). I've found most cafe owners are surprisingly loyal when it comes to staying with their roaster - especially if the service and quality has been good or great. Generally, the relationship is so good you almost become like "family". In most cases, the roaster has "helped out" the cafe owner on numerous occasions when they have forgot or short-ordered......so generally a small pile of kudos get built-up. Primary drivers of change generally occur with new owners/staff, or if an owner wants something exclusive or different to the other brands in the area (yes, they are the smart owners). Secondary factors are when a relative or friend piles on the pressure to the cafe owner to try something new - generally someone knows someone in the industry and they are obliged to do a "favor". Finally, the other ways are via the slick sales person - setting up the cafe owner to think (politely) that the existing arrangement is failing (creating the seeds of doubt, or the burning platform) and then working the angle to create the vision of exceptional value in the future promise with them as the supplier. Over-worked, exhausted and opportunistic cafe owners looking for a big bundle of new freebies generally fall prey to this scheme quite easily. Some even do it dishonestly by staying contracted to another roaster and mixing stock.

FreshCoffee2

couldna said it better maself. A.

plantation_coffee

I will agree on that mycuppa , some of the high volume roasters do have fresh stock being used out there and provide a lot of service and training and yes i didn't mean to assume but, take an example maybe one that was a little to the worst scenario side of things thank you for some insight , I think ive pondered on those things mentioned and its nice to see them being validated as much as I would like to stay away from the machine grinder and umbrellas deal .... and as reluctant as I am I think in the near future its something that i as a supplier will have to do , I think its a filthy habit to be the norm , every man and his dog wants one but they dont want to pay for it