The Pricing in a Coffee Shop, Cafe or Tea Room will have a major effect on customers and profit
When you run an Independent business, how do you decide what to charge? Most business owners are in one of 3 camps, those that charge the same as their competitor up the road, those that are the cheapest around and determined to offer the lowest prices in town and those that will charge a premium on everything.
If you are the cheapest then unless you have a large premises or a very high passing trade you will not benefit enough from the extra sales to make significantly more profit.
If you are the same price then you may not be maximising your return as being an independent will almost always mean your service is better than the chains.
If you are more expensive then you need to carve out a your own niche, and provide products and services that cannot easily be price benchmarked by your guests.
Most of our products are in the ‘Known Value Item’ bracket, ie everyone knows what the price should be, like a loaf of bread or a pint of milk in the supermarket. In order to justify selling at a higher price then you must make your offer different in as many ways as you can, and publicise the benefits to your guests.
Recent research from the NPD Group suggests that 25% of people now choose based on low prices and 21% on good quality food so the chains benefit automatically as there is a consumer perception that independents are more expensive.
There is a lot of research into consumer behaviour as you can image and offering vouchers to increase loyalty is a proven way to fill a restaurant or cafe, you just need to look at what Ask, Pizza Express, Zizzi, do. If you are on their list you would have had a weekly voucher delivered to your in box and they use this very effectively.
The independent coffee shop or cafe has to ensure that it can compete on lots of levels and it’s never been so important to ensure that your offer is great on perceived price as well as quality.
Cafe Success can help you with setting your prices get your free guide to making money in your coffee shop by completing the form on the right.
About the Authors
Andrew & Claire Bowen are the authors of ‘The Daily Grind – how to open & run a coffee shop that makes money’ Available on Amazon, and Founders of Cafe Success cafesuccesshub.com – the ultimate resource site for coffee shop, cafe and tea room owners worldwide.
To buy The Daily Grind on Amazon Click Here