Harvest Roasting
April, 2010 Newsletter
By Don Eckles, President
In general terms, there are two ways to increase your daily sales. One is to serve more customers each day, the second is to sell more to the ones you already have…either more offerings, or more up-selling.
Many store owners tend to gravitate to the “more offerings” proposition, because, for some reason, up-selling
is not something that many people are comfortable doing…at least, not regularly. But, new product offerings can be risky and expensive. And, unless you really look into your new product options, you could just be trading dollars, while at the same time, expanding your inventory, and inventory costs.
Before we get into a discussion about up-selling, let’s talk a bit about adding new products…the benefits and the risks.
There are certainly some good reasons to expand your menu. They would include attracting new customers, or even a completely different customer base than the one you’re now serving. And, new offerings can sometimes be a great way to sell more to your existing customers. If you make good additions to your menu, you could also add some new spark to your business.
At the same time, there are risks…big ones. One of the most obvious risks would be creating confusion about what you really do. “Are you a coffee house, or a restaurant?” If you’re in a smaller community, it might be OK, even necessary, to have more than one specialty. But, if you’re in a city, there are lots of great coffee houses, and, lots of great restaurants. There probably aren’t many great coffeehouse/restaurants.
Secondly, you stand a very real chance of trading dollars. Instead of a customer buying a cup of coffee and a muffin…they buy a cup of coffee and a coffee cake. In that scenario, you’ve added another item that you have to stock (and pay for) while not growing your sales at all.
Adding new products can be a real plus, if you add items that are truly add-ons, not trade-offs. Maybe a small bag of trail mix at the register, or some healthy snack bars, or some juices for later. I love the idea of adding specialty tea to your specialty coffee line. It’s the same type of customer, but it’s a different customer. You can use the same equipment, and the same cups and lids. Hours of operation would be the same. It’s a natural fit. Check our website for some truly wonderful specialty tea options.
Having said all that…I’d like to have you seriously consider the advantages of up-selling. The financial benefits are obvious, but there are other benefits as well. One of the biggest is the fact that you and your staff are actively and regularly engaged in promoting the success of your business.
Your cost of goods sold (GOGS) is higher, but all up-selling is purely add-on sales. So…if you sell a cup of coffee for $1.50, and your COGS is 22%, your profit is $1.17. If you add a muffin for $1.95 with a COGS of 50%, your overall COGS is 31.3% (up 30%), but your profit is now $2.37(up 100%).
Right about now, I can hear you saying “I know that”. “I know that I make more money by selling more stuff”. “Tell me something I don’t know”
OK, how about this. Up-selling is easy…REALLY easy. You just have to do it regularly. That means, every time. And, the best way to be successful at up-selling is to up-sell twice on every order.
“HOLY COW!” you’re saying. “I don’t like up-selling at all, let alone up-selling twice on every customer”. “Besides, what am I supposed to say…would you like another muffin with your coffee and muffin?” “Or, how about this”… (Me)”would you like a blueberry muffin with your latte”? (The customer) “No thanks”. (Me)”Well then, how about a banana nut muffin?”. J No, that’s not it…although that is funny.
The best I’ve ever heard, up-sells two times on each order. It goes something like this:
“Would you like an extra shot of espresso in your latte?” The customer either says yes or no. Whatever the customer says, the barista says “how about a blueberry muffin this morning…I can warm it up for you?”
I can tell you that, in that store, we sell an extra shot of espresso in 22% of ALL espresso drinks. That’s amazing, and, it’s very profitable. If you’re paying $6.25 a pound for espresso, it costs you less than .17 cents for that shot. If you’re selling the extra shot for .50 cents, that is .33 cents of extra profit on that drink.
Customers not only don’t mind your attempts to up-sell them…most actually expect it.
When was the last time you were in a restaurant or a drive-thru, and weren’t told of the specials of the day…or asked if you want fries and a drink with that? They always ask if you’d like to start off with drinks…and, how about some chips and artichoke dip, while you’re deciding. And, when was the last time they didn’t bring the desert tray around, at the end of the meal?
You were up-sold 4 times during that meal, and I’ll bet you didn’t leave mad. In fact, I’ll bet you actually bought one or more of those items. Your customers will, too.
The interesting thing is that, sometimes, customers didn’t even know you had this item or that item. They may say no every day for a month…then, one day, they’re hungry, and that warm blueberry muffin sounds pretty good.
Here’s one of the real benefits of up-selling extra shots of espresso. Once your customers get used to the taste of the drinks with the extra espresso, they have a hard time drinking it the “old” way. They will up-sell themselves, after a while.
I guess what I’m saying here is that up-selling is important to your business success. You are more than an order taker to your customers, you are a consultant (yeah, consultant…that’s the ticket). The interaction is good, and the extra money will be noticeable.
Be friendly, and non-threatening. This is not the way…(Customer) “No thanks”. (You) “Why not?”. Hee Hee!
Think of ways to up-sell, that you’re comfortable with. Practice it…and, keep at it.
This business is about pennies. How do we bring more of them in the door, and how do we spend fewer of them? Every “little” change you make that improves your bottom line, matters. Sell more stuff to more customers, and spend less doing it. That sounds like an over-simplification, but it’s not. It simply means you should take a look at every single piece of your business. Find your opportunity areas, and make some adjustments. Lots of little tweaks will add up to some real profit falling to the bottom line.
Now…here’s a practical way to improve your sales, over time. Try a “free extra shot Monday”, every Monday for some period of time…maybe for a year. Every Monday, you offer an extra shot of espresso to all your customers, at no charge.
What will happen is that some of your customers will begin ordering it that way every day (if you ask). As time goes on, more and more customers will get used to the taste of that extra shot, and will have to have it that way. But, you need to ask for the up-sell, on all those other days. If you give them a chance to find out how good that extra shot makes their drink taste, and, if you ask them if they’d like an extra shot of espresso in their drink today, you’ll see sales inch up.
Remember, this is “extra shots” only. It doesn’t mean that someone who orders a shot of espresso, get’s it at no charge. It means if they order an extra shot, in whatever they’re drinking, they get that extra shot at no charge.
I hope you are able to find ways to improve your bottom line. If you think about your business regularly, and how you can make a difference, you’ll find ways. You need to be a CEO too, not just a barista.
Finally…you may have noticed that coffee prices have gone up, quite a bit, in the past several months. They haven’t gone up at Harvest Roasting. You’ll find most of our beans in the $6.00 - $6.75 range. And, if you order 75 lbs. of beans, we’ll ship your entire product order, freight free…no charge. Everything…coffee beans, Monin syrups & chocolate sauces, Mont Blac caramel and white chocolate sauces, Maui smoothie mixes, Pixie Mate’, Pacific Soy Blenders…everything.
We still use the highest quality beans in the world. We will never switch to a lower quality bean to save money, and then, hope our customers don’t notice the difference. That is happening out there. But, it’s not happening here.
If we can send some samples your way, let us know. Contact Barb Miller; toll free at 877-494-7004, ext. 4.
Thanks for reading this. As always, if we can help you with anything…let us know.
Sincerely,
Don Eckles
Harvest Roasting