30 June 2022 - 3 min read
Guest
A 2020 survey by coffee machine manufacturer Mr Coffee found that 70% of coffee drinkers would “considerably reduce” the number of coffees that they would buy from coffee shops even after the pandemic.
Although it’s still too early to know whether these findings have come to be, this sentiment combined with the fact that coffee machine sales for the at-home market have nearly doubled in the last two years, suggests that coffee shop owners should consider how they can diversify their business away from just selling coffee, tea and pastries.
Coffee shops by their very nature have assets that allow them to perform a wide range of services well other than just selling coffee.
Here we will go through four ways that coffee shops can diversify their income.
They might not all be suitable for every shop, so we will also spend some time examining how you can identify which pivots would be best for your business.
One of the biggest threats to the coffee shop industry is that increasing numbers of people are buying the equipment needed to make decent-quality espresso based drinks at home.
However, just having a fancy espresso machine doesn’t mean you can make a great espresso. This means that there is a market opening up for people who want to learn how to use their espresso machines to their fullest potential.
Since coffee shops already have experienced baristas on their payroll, and that they can purchase coffee relatively cheaply on wholesale, they are in an excellent position to run this type of course.
To be able to run these types of courses you need to have the following:
These types of courses are often charged at £20 per hour per person and you can reasonably train up to eight people at once.
The best way to market this type of course is to try to rank in Google for the search term “barista course in [your city]”. There is little competition for these keywords so you can often rank for it just by creating a dedicated page of your website to this service.
Selling alcohol at your coffee shop can be particularly beneficial for your top line if you see a huge slump in customers towards the end of the day.
If you are going to sell alcoholic drinks from your coffee shop the majority of your customers for these items are going to people wanting an after work drink. Therefore you are far more likely to make a worthwhile return-on-investment from this pivot if you are located in an area where there are a lot of offices around you.
Having outdoor seating with heating will also be a huge advantage in attracting customers looking for somewhere to have an alcoholic drink.
Getting an alcohol licence is not that difficult or time consuming, but it is quite a long process. Expect there to be around six months from the moment you put your application together to when you actually receive your licence.
It’s also worth bearing in mind that obtaining an alcohol licence can be significantly harder if you live in a densely populated residential area with not too many other businesses.
The coworking and hot desking industry has boomed since the pandemic with many new remote workers wanting to be able to work somewhere other than their house and office for a few days a week.
Coffee shops with the available space can turn a part of their seated area into hot desks that people can rent either on a pay as you go or fixed term basis.
Since people have worked out of coffee shops without paying fixed rates, coffee shops can only get away with charging these additional fees if they provide workers a comfortable workstation.
This should include:
Coffee shops probably cannot justify charging as much as dedicated coworking spaces, however people will likely happily pay up to £50 per month for this type of membership.
One of the main reasons why people are buying fewer coffees from coffee shops is that these drinks have become fairly easy and inexpensive to make at home.
Coffee shops can adapt to this by expanding their offerings to food and drinks that are not as cheap or as easy to make at home.
One opportunity here is to start selling health food and drinks.
These often contain ingredients that are relatively expensive to purchase in small quantities (think flax seeds and goji berries). Coffee shops therefore make a healthy profit while still offering competitive prices for these products, provided that they can drum up enough demand to sell these them at scale.
The best way to drum up this demand is to gain exposure among people who already demonstrate an interest in health and wellness.
One excellent way of doing this is by offering exclusive deals and discounts to members of local gyms and spas. These people are the most likely to be interested in these types of products (given that they are both local and are willing to spend money on wellness).
If you make these healthy food and drinks well, and have this initial surge of people pulled in from these special offers, then word of mouth will eventually spread about your new offerings and how good they are.
Creating new streams of revenue for your business is all about knowing what your target market wants and knowing what you can create to a high standard.
So long as these two criteria are met, the means by how you meet them is not too important, so feel free to get creative.
Sometimes expanding your offering can involve expanding your team. If your employee management is getting complicated, you can help simplify it with Rotaready’s HR and employee management platform
This article was contributed by Oli Baise. Oli Baise has been helping to run London based coffee shop The Coffee Traveller for the last four years. He write about coffee and the coffee industry on his blog Drinky Coffee
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