The coffee industry is full of good people. Making a difference is part of their DNA. We love that. It’s what we strive to do. Business should build better lives – for owners, the people they work with, and customers. As they say, “Seize the day and enjoy the moment!” To help do that, we want to help you deliver coffee and other drinks.
We started by building our own platform for that. We soon realised we could do more. The entire industry could use our invention. Anyone keen to grow their business can deliver coffee to customers wherever they are, hot and not spilled!
To show the impact on a store, we used the ROAM model, our business scorecard, and discussed how the delivered “Marginal cup” adds sales that lift the ATO. We showed they can have an even higher profit margin (ROS%) than in-store sales giving you a higher ROAM%.
How big will the difference be? All theory? Let’s look at the scorecard. We have numbers from a coffeeshop that started with our CoffeeLIFT platform in 2020 when lockdown first hit us. That’s when tough times followed for many of us.
John Berry, one of the founders of Kauai, said that their deliveries have grown from 10% to 30% of turnover during the pandemic.
Many customers will pay more for convenience, so we raised menu prices for delivery by 15%. This reduces the impact of its cost to the business. Deliveries were about 30% of total sales.
With no drop in the ROS% due to a delivery charge, the big benefit is a higher ATO. Its multiplier effect kicks in and lifts ROAM from 52% to 76%. That’s a 46% productivity improvement any business owner would find very tasty!
The benefit comes from more sales with few or no added assets. Remember the question that ATO asks, “For every Rand of assets how many Rands of sales do we generate?” Instead of R2,53 in sales for each Rand of assets, we now get R3,62 – a 43% improvement.
It’s having your cake and eating it. With good coffee! Your own of course.
The benefit of deliveries is a no-brainer. Sure, there are coffee shops where it might not make sense. From a pure financial viewpoint, deliveries are worth it. Find yourself the right partner and get going.
Here’s a follow-up question: Should you use a third-party platform, or do it yourself? In the next blog we’ll tell you how we enabled our delivery service. Building apps can be expensive. It doesn’t need to be.
Please note: We spilt no coffee writing this blog…
