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5 keys to opening
a successful café
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quality

Quality

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When you open a cafe, you only have one chance to impress. if you fail the first time, it will become much harder to regain your customers. So get it right the first time, don't rush things. Now on to our first point- quality. Nobody likes to pay for bad tasting food. All successful cafes have
  • A well designed menu filled with quality offerings for their price point.
  • A unique selling point tied to their menu or shop space.
  • Great coffee.
  • Create a quality menu based on your customer's opinion, not yours.
  • Define and write down your Unique Selling Point.
  • Continuously refine and improve your menu based on your customer feedback. This is not a one-off job.
No customers yet or not sure who they are? Need help defining your USP? Take a look at 6 must-haves to run a profitable cafe

Consistency

A great menu is important. So is maintaining consistency of all your menu offerings daily. It doesn't matter if your chef is sick, or your barista is on leave; your customers don't care. You must implement systems to ensure consistent quality regardless of any situation. Failure to do so will almost definitely result in losing your customers.

  • 1. Create a product fulfilment/recipe system that any employee can easily follow. Think Mcdonalds or KFC.
  • 2. Ensure quality control systems are in place and constantly enforced.
  • 3. Supplier management. If your suppliers aren't helping you to achieve your goals, change them.
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Repeatability

Successful F&B businesses sell you an experience that makes you want to come back and dine there again. Dozens of new establishments open every other week. If you cannot provide a memorable experience that would warrant a return visit, it is almost guaranteed that customers will forget you due to the multitudes of fresh and new dining concepts available to them. Alternatively if you have millions of dollars of spare cash, you can open tens of outlets across the country, to constantly remind customers of your existence and retain a top of mind recall.

Repeatability

  • Check your menu, do you have a sufficient variety of staples and best sellers?
  • Does each dish leave you wanting more or is it overly rich and heavily seasoned? Do you feel weary trying to finish the dish?
  • How repeatable is the menu? Can I eat it two days in a row? Will it work in a different location?
location

Location

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There is a reason for the age old adage "Location, Location, Location". Having the right location is crucial in targeting the ideal audience that you have carved out. If you are in the wrong location, you will never be able to reach the intended target audience regardless of all your efforts.
Similarly, if you don’t know who your ideal target audience is, you will not know where is the correct or most suitable location for your business that will allow you to reach as many of your intended customers as possible. Your search for a location will be based on a gamble and you don’t really want to be gambling with your business, do you?
  • Figure out who is your ideal target audience.
  • Strategize the best approach for reaching out to them.
  • Shortlist the best locations for executing your strategy, compare levels of competition and concentration of your audience. Don't commit to a lease if it doesn't make financial sense.
Need help defining your target audience? Want to know how to reach out to them and sell to them? Take a look at 6 must-haves to run a profitable cafe

Pricing

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Knowing how to price your products correctly is the difference between a struggling business and a profitable and sustainable one. Many owners make the mistake of pricing their products too low in a bid to attract more customers, or to please complaining customers. Doing this only attracts the wrong kind of customers and what I call “price shoppers”. “Price shoppers” are constantly looking for the next bargain or the next promotion or the next cheapest product. They are rarely, if ever, loyal and are not the kind of customers you want for your business. Remember that your price will never be low enough, especially since it is possible to buy a full meal for S$4-$5 from the local hawker centers. Cafes need to avoid competing in the same space as the hawkers, as your business operates on a different scale.
  • Textbook formulas dictate a minimum gross profit margin of 66%. Are your prices meeting this criteria?
  • Margins vary based on each business's costs and location. It is important to know your numbers so that you can adjust and price accordingly based on your own business needs.
  • Need additional help with your numbers? Get in touch with me and I'll help you ascertain your figures. It'll only take less than 10 minutes.
  • 01
  • 02

Pricing

Knowing how to price your products correctly is the difference between a struggling business and a profitable and sustainable one. Many owners make the mistake of pricing their products too low in a bid to attract more customers, or to please complaining customers. Doing this only attracts the wrong kind of customers and what I call “price shoppers”. “Price shoppers” are constantly looking for the next bargain or the next promotion or the next cheapest product. They are rarely, if ever, loyal and are not the kind of customers you want for your business. Remember that your price will never be low enough, especially since it is possible to buy a full meal for S$4-$5 from the local hawker centers. Cafes need to avoid competing in the same space as the hawkers, as your business operates on a different scale.

Pricing

  • Textbook formulas dictate a minimum gross profit margin of 66%. Are your prices meeting this criteria?
  • Margins vary based on each business's costs and location. It is important to know your numbers so that you can adjust and price accordingly based on your own business needs.
  • Want additional help with your numbers? Get in touch with me and I'll help you ascertain your figures. It'll only take less than 10 minutes.

About me

Kenneth is the Founder and Head Roaster at Compound Coffee Co., a specialty coffee roaster which sources and roasts only the highest quality coffees in the world. Our long-term partnerships working closely with other businesses have placed us in a unique position to observe and consult on the best practices to ensure your business success; a support system which we happily provide to all our customers.

6 must haves to run
a profitable café

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