How does a coffee make any profit

Discussion in 'Accounts & Finance' started by Tonys1, Jun 1, 2017.

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  1. Pish_Pash

    Pish_Pash UKBF Ace Free Member

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    Since when did anyone who makes hot beverages gross £30k per annum?

    There's massive profit in coffee...but it's not just about the coffee...have you seen the price of a piece of cake in these places - seriously kerching. You can crunch numbers all day long, but the plethora of coffee shops tell you there's good money in it.
     
    Posted: Jun 1, 2017 By: Pish_Pash Member since: Feb 1, 2013
    #21
  2. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    There are many cost I just done some basic sums
     
    Posted: Jun 1, 2017 By: Tonys1 Member since: Feb 6, 2015
    #22
  3. Mr D

    Mr D UKBF Legend Free Member

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    It may be the wrong way to look at it but its the only coffee shop I ever use these days.
    Never a costa where I want a drink... they do a nice hot chocolate.
    £90k to pay staff - look in your local town centre. Look at how many places have considerably more than that in staff costs for a small operation.
     
    Posted: Jun 1, 2017 By: Mr D Member since: Feb 12, 2017
    #23
  4. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    That's a lot to just pay staff and Costa was voted best coffee shop or something my business will not have as much pulling power regards as to how cheap I can get my coffee etc and how many people I can get through the door so I am looking at other independent coffee shops to see how much money I can make as it will take long to get established and recommend by word of mouth

    That's why I am starting with the staff cost as if I don't make enough to cover the staff cost what does that mean for the amount I pay my self I need to get paid enough to live and need to be paid more then my staff myself otherwise why start a business.
     
    Posted: Jun 1, 2017 By: Tonys1 Member since: Feb 6, 2015
    #24
  5. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    So I am posting this to really see if it's possible to make that much money from a coffee a shop or if people just get by hardly making much money
     
    Posted: Jun 1, 2017 By: Tonys1 Member since: Feb 6, 2015
    #25
  6. Mr D

    Mr D UKBF Legend Free Member

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    Can often find business owners starting out are paid less than their staff. You won't just quit, you won't leave after finding a job with more pay, you will also work usually far longer hours for the take home pay. If business cannot pay you and the bills and the staff, its usually you who is easier to cut pay on. Much harder to cut staff income without you having to work longer.


    You start a business so at some point (often its quite some time in the future) you will have the job security / pay / dividends / capacity to take time off etc.
    People set up a business for whatever reason. Paying yourself more than your staff can be made to work. Eventually.


    Your pulling power can be whatever customer need you have identified that you can satisfy with this business.
     
    Posted: Jun 2, 2017 By: Mr D Member since: Feb 12, 2017
    #26
  7. Mr D

    Mr D UKBF Legend Free Member

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    They probably won't do a 70 hour week either. Even at £18k cost per staff member per annum (which is probably closer without overtime) 3 staff for a 70 hour a week operation may be too small. 4.5 or more staff more realistic?
     
    Posted: Jun 2, 2017 By: Mr D Member since: Feb 12, 2017
    #27
  8. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    I have based it of 3 staff all the time everyday at 9 per hour, staff can't work everyday but i will still have 3 staff on shift each day. it was easier just to keep it simple

    3 staff @9per hour it was easier to write that then write how many hours they would work and when
     
    Posted: Jun 2, 2017 By: Tonys1 Member since: Feb 6, 2015
    #28
  9. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    i
    i do understand that but i still need to pay myself and to actually pay my own personal bills outside of my business

    i don't no what figures coffee shops earn i am just using my own maths to work out what i need to earn in order to make a profit. I am not getting into business to struggle to make a profit. This is why i am researching it first before and i can i way up the risk of a coffee shop business
     
    Last edited: Jun 2, 2017
    Posted: Jun 2, 2017 By: Tonys1 Member since: Feb 6, 2015
    #29
  10. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    NI + Pension + Holiday pay and no shop would pay anything apart from slightly over the minimum wage for part time staff except in central London

    Please don't use the word Barista for Serving assistants we are not Italian
     
    Posted: Jun 2, 2017 By: Chris Ashdown Member since: Dec 7, 2003
    #30
  11. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    Unless you buy an established business (and pay a premium for it), then you probably won't be in profit for the first few months.
     
    Posted: Jun 2, 2017 By: STDFR33 Member since: Aug 7, 2016
    #31
  12. Cafe Course

    Cafe Course UKBF Contributor Full Member

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    You can make money with coffee but as mentioned above its through turnover. You have to make a large amount of sales. And run a very tight ship.
    However there are lots of variables that will make the difference between making money and not.
    £9 ph is about right and you will need at least three members of staff.
     
    Posted: Jun 2, 2017 By: Cafe Course Member since: Mar 1, 2017
    #32
  13. Mr D

    Mr D UKBF Legend Free Member

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    Or indeed first year or two.
     
    Posted: Jun 2, 2017 By: Mr D Member since: Feb 12, 2017
    #33
  14. Mr D

    Mr D UKBF Legend Free Member

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    Then starting a business may not suit you.
    Besides having a cushion of cash to cover while not breaking even - 6 to 12 months worth perhaps - its a good idea to have a personal amount of savings for months when you cannot pay yourself at all.

    You cannot get round paying your staff and your business bills - if you can afford to pay yourself what you need on top then great. But realistically can you expect that to happen in first few months or even the first year?
     
    Posted: Jun 2, 2017 By: Mr D Member since: Feb 12, 2017
    #34
  15. consultant

    consultant Your Business Community Staff Member

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    Using your simple £90k staff costs, you need to sell about 130 drinks a day - 13 an hour (based on your 10 hour day.

    When you start adding in other costs, it will be well over 200 (more like 300+).

    This is an area where failure is common. You need to look at all of your figures and get it back to what you have to sell to break even to understand the risks.
     
    Posted: Jun 2, 2017 By: consultant Member since: Jan 21, 2008
    #35
  16. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    All the big coffee companies like Costa, Starbucks etc have closed down hundreds of their branches as not profitable so even they get it wrong
     
    Posted: Jun 2, 2017 By: Chris Ashdown Member since: Dec 7, 2003
    #36
  17. Pish_Pash

    Pish_Pash UKBF Ace Free Member

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    I think they are probably playing a different game though...in my opinion with the likes of Costa, Starbucks etc, it's all about the 'market' (aka share investors) perceiving growth (hence aggressive expansion), which makes the share price go nuclear & allows the board to extract $$millions in share options (at least while the illusion continues). Once the game is up (& the directors have sold/trousered their share options), branches start closing.
     
    Last edited: Jun 2, 2017
    Posted: Jun 2, 2017 By: Pish_Pash Member since: Feb 1, 2013
    #37
  18. STDFR33

    STDFR33 UKBF Big Shot Free Member

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    Starbucks and Costa are both franchises.

    It's the franchisors that have lost out.
     
    Posted: Jun 2, 2017 By: STDFR33 Member since: Aug 7, 2016
    #38
  19. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

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    But they still have the large mother to see them through the first years and costs calculated to ,01p which is not available to independents
     
    Posted: Jun 2, 2017 By: Chris Ashdown Member since: Dec 7, 2003
    #39
  20. Tonys1

    Tonys1 UKBF Newcomer Free Member

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    Some more basic maths again if I sell
    4 drinks every 10 mins at £1.50 profit (cost of the drinks is added in just not labour cost)
    That's £6
    6x£6 =36 profit per hour
    £36X10 (Hours I may be open) =£360 a day
    £360x7 (a week) =£2,520 a week
    £2,520x4= £10,080 a month

    Profits look good
    But minus the staff cost you get £2,520
    That's poor

    I mean that's with out the rent cost witch a rubbish place would be about £400 a week

    Sums are very rough but even if there rough no other cost are added in like Internet,rent,lighting,water,coffee machine repair contract and stock re purchase much more as well
     
    Posted: Jun 2, 2017 By: Tonys1 Member since: Feb 6, 2015
    #40
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