Jack Bendell’s Post

Yes, coffee is a high margin product, but you need to sell A LOT to make money. The gross profit for a double shot specialty flat white is around 80%. BUT, by the time you add all the business operating costs associated with creating this flat white, my net profit drops to 40% (and for many brick and mortar cafes it will be closer to 10-15% due to higher operating costs compared to Dear Coco). At Dear Coco, it costs me 65p per flat white (this includes the double shot, milk, cup & lid). So at £3.30 our gross profit is £2.60 (80%). Layer in all our other costs such as VAT, barista wages, operating costs, etc this reduces the profit per flat white down to £1.30. Many brick and mortar cafes will be making 35-50p net profit per flat white. So back to my earlier point…yes coffee is a high margin product from a gross profit perspective, but net profit tells a different story. Hence, many brick and mortar cafes can struggle financially. Coffee trucks provide a brilliant financial model due to lower operating costs…the trade off is you need an iron will to do it day after day 💪🏼 Happy brewing, friends. @dearcocolondon on Instagram

"The pandemic had a huge influence over consumer behaviour and #coffeeshop operations, as the majority of businesses were forced to switch to #takeaway-only services during the height of lockdown. This only reinforced just how important takeaway is to run a profitable coffee shop." - Perfect Daily Grind To learn why it's important to invest in offering a high-quality takeaway coffee programme, Thomas Wensma speaks to Maxwell Colonna-Dashwood, founder of Colonna Coffee, and Egor Kolpakov, founder of The Miners, who provide valuable insights on how coffee businesses can achieve this successfully. https://lnkd.in/eD-dVxHh

Cafes, why can't you charge more for coffee during busier times? Maybe you should, or maybe you can flip the concept on its head... Pete explains our thinking. Want to dive deeper? Read the full blog post for insights into why the cafe industry should look to other business models that charge a premium during busy periods. ✍️ https://lnkd.in/gkSmRRAs

The Era of the £5 Coffee: Are We Ready to Swallow it? Coffee has always been a comforting constant, but as inflation soars, we might find ourselves hesitating before ordering that morning latte. Could we really be on the brink of regular £5 coffees? Let's explore why our beloved brews are costing more and how this could reshape our coffee culture. The Shock of Rising Prices In London, a large flat white at Black Sheep Coffee costs £5.19, and adding extras can drive the price higher. Jeffrey Young, CEO of Allegra Group, predicts £5 for a standard coffee isn't far off for the rest of the UK. But what's driving these soaring prices? The Perfect Storm Several factors are feeding into the rising costs. Coffee bean prices are reaching new heights due to disruptions like the Red Sea blockage and adverse weather in major producing countries. With looming EU deforestation legislation, prices could climb even higher. Inflation, partly spurred by the Ukraine conflict, Brexit, and Covid-19, has driven up prices of vital café ingredients like milk, wheat, and eggs. The cost of utilities, labor, equipment, and packaging has also surged. "The base costs for a coffee shop have risen by about 20% in the last two years," Young explains. Every aspect of running a café has become more expensive, squeezing margins and leaving independent owners to make tough decisions. Will Coffee Shops Remain Our Go-To? Coffee has long been an affordable luxury, but as prices climb, people may reconsider how often they indulge in a coffee shop visit, turning to home-brewing instead. Independent coffee shops could suffer the most. "If we don't support independent businesses, they will be gone," warns Sharon Henderson, a former coffee shop owner. High-street giants like Starbucks and Costa might navigate the storm relatively unscathed, capitalizing on economies of scale. The £5 cup of coffee is looming, turning our favorite cafes into more exclusive destinations rather than everyday hangouts. Whether our neighborhood coffee shops can survive depends on whether we're willing to pay the price – not just in pounds, but also in the sense of community and comfort these spaces provide.

The Unscripted Café In a bustling downtown area, a young entrepreneur named Mia decided to open her dream café, The Unscripted Café. The idea was born out of her love for coffee and a desire to create a cozy space for the community. She was confident her passion alone would guarantee success. But Mia had no business plan. She leased a prime location, purchased furniture that she thought “looked cute,” and hired staff without clear roles. She relied on her gut for decisions, believing that spontaneity and creativity were enough to run a business. When it came to her menu, she frequently changed it based on trends she saw on social media. One week it was avocado toast; the next, a turmeric latte. Customers often found their favorite items gone, and consistency became a problem. Without a marketing strategy, Mia thought word of mouth would suffice. She hastily threw together social media posts that looked unprofessional and inconsistent, missing the chance to build a loyal following. Worst of all, she had no grasp of her finances. She didn’t track costs, so her pricing was off. High-quality ingredients for her artisanal coffee were expensive, but her prices didn’t reflect that, leading to razor-thin margins. Within months, problems began to pile up. Staff grew frustrated with Mia’s unclear expectations and frequent changes in direction. Customers stopped coming, confused by the erratic menu and lack of reliability. Mia’s lack of financial oversight led to mounting debt. Bills went unpaid, and she was forced to dip into her personal savings just to keep the lights on. One evening, sitting alone in the empty café, Mia realized the gravity of her situation. She had poured her heart into The Unscripted Café, but her lack of planning and strategy had left her business floundering. She decided to seek advice from a seasoned entrepreneur in the area, someone who had built a successful bakery over decades. The mentor's advice was simple but profound: “Passion gets you started, but a plan keeps you going. You need a map, Mia—one that shows where you’re headed and how you’ll get there.” Determined to turn things around, Mia began drafting a solid business plan. She reworked her menu to include staple items alongside seasonal specials, set clear pricing strategies, and assigned specific responsibilities to her team. She hired an accountant to help with budgeting and created a marketing calendar to guide her promotions. Though it was an uphill battle, The Unscripted Café slowly began to rebuild its reputation. Customers returned, drawn to the café’s newfound reliability and charm. Mia learned the hard way that winging it might work for a moment, but a solid plan is what ensures lasting success.

It's interesting that the "mood" and "outlook" for the restaurant space has turned so positive, but most numbers aren't backing that up yet... I say "yet" as there are a couple leading indicators like Off-Premise at Full Service Restaurants seeing growth. This "could" indicate some trading up for the first time in a while. Groups like Cracker Barrel and some other public groups are showing sales growth for the first time in a while (more and more are coming out with this), but it's unclear whether this was fueled by margin compression (aka combos/bundle/deals). Foot traffic is still contracting. But every company is saying 2025 is looking positive. Every survey of small restaurants have a positive outlook. The markets are generally up. Interest rates down. Everything on the "sentiment" side seems to be trending up, but very few data points are. It will be really interesting to watch December and January as these are bigger months for things like delivery, but also winter is typically when more business closures happen. This isn't meant to be a political post btw, just observations based on data and earnings calls. #Restaurants #Technology #Entrepreneurship

Are You Charging Enough? The average Australian consumes about 3.5 kilograms of coffee per person each year, highlighting the potential for your cafe. Are your prices reflecting this demand? If you’re unsure about your pricing strategy or how to communicate changes to your customers, let’s connect. Your menu - coffee and food - is a powerful asset that drives success. Get it right, and you’ll set your business up for growth.

As the £5 latte becomes a post pandemic norm, a fascinating read on our love affair with coffee. Post pandemic, we have to factor in higher price v lower stocks of coffee beans, adverse weather in both Brazil and Vietnam exacerbating those issues, increased utility and raw material costs for coffee shops, and the widespread availability of domestic machines which now make very good coffee. Coffee shops disappeared once before from UK shores. In an era of capsules, sachets and worktop espresso machines, with high-quality coffee easier than ever to make at home, whether the neighbourhood coffee shop will survive the modern challenge of the dawn of the £5 coffee remains to be seen. As the article notes: "The best coffee shops are also about atmosphere: the hiss of the milk steamer, the conversation drifting from other tables. “You don’t go to a coffee shop to buy coffee,” says Morris. “You go to the coffee shop to buy the experience of being in a coffee shop... Done well, coffee shops are vital community spaces, where for a few pounds mums with prams and pensioners and office workers can meet and talk. “It’s a hospitality venue,” says Ashby, as the milk delivery man arrives and leaves with a free coffee and a cheery wave. “It’s not a coffee shop, really. It’s about coming in and feeling welcomed. About having a nice place to go.”" ☕️ ☕️ ☕️ https://lnkd.in/ecveirzj

The £5 takeout coffee is here! And, it's not reducing in cost any time soon... So, lets take a minute to break this down. In London branches of Black Sheep Coffee, who a nationwide chain, a large flat white is £5.19. Go into many London coffee shops, add an extra shot to your order, or non-dairy milk or ice, and you’ll easily pay upwards of £4.50 for your drink. And as we know, where London goes, the country follows. It's important to understand this isn't just down to the beans or supply chain, this is a combination of pressures on the coffee industry related to tax, inflation rates, staff costs, premises and more. Now, this isn't just a challenge around brand, or footfall. This is something that effects a element of our modern cultural underpinning. 80% of coffee shop customers visit at least once a week, and socially a lot of people are in a difficult position. Especially, Gen Z customers. Who make up the majority of the coffee takeout business in the UK. So, this begs the question, if your target market is Gen Z customers, how can you build a deeper connection with them. Glad you asked. Coffee Club from Ello Group. With an average saving of £1.15 per coffee, if you integrate Coffee Club within your rewards strategy you are going to be solving a cultural and financial issue. And providing real value to a market that would welcome you. Including Black Sheep Coffee. If that connects with your strategy, DM me. https://lnkd.in/e73x-7mq

"...the last decade brought in many changes. Many new players (small and big) joined the wave. Suddenly, the specialty market segment – still relatively small in terms of demand and market share – became overpopulated and saturated.” In my latest article for Coffee Intelligence, I spoke with Konstantinos Vallianos about how roasters and business owners are navigating the current coffee industry challenges, and learning the ropes of #finance and #investment to stay afloat and grow in a time of crisis.