Harvest Roasting
October, 2009 Newsletter
By Don Eckles, President
It’s been a couple of months since we were able to get our last newsletter out. We have been VERY busy as we come into a pretty good time of year for the coffee house business. But still, for those of you who enjoy getting this letter, I apologize. I generally try to get one out every 6 weeks or so. I’ll try to keep to that schedule.
Since I last wrote, a strange and disappointing thing has happened. We have received as “undeliverable” 150 or so newsletters from coffee houses that have closed. Now, I know they haven’t all closed within the last 60 days, but apparently, many of them have. Also, the post office has begun returning mail that is undeliverable, on a more regular basis than they did before.
It would be very helpful to know if you enjoy getting these newsletters in the mail, or, if you would read it if it came via e-mail, or, if you’d rather not get it at all. It is obviously incredibly expensive to mail several thousand of these out every few weeks, but the response we’ve received from many of you has been very gratifying.
After the first of the year, we are going to send the newsletters out, via U.S. mail, only to those who have asked to receive it. We will also post it on our website. If you want to continue to receive it, please let us know. You can e-mail us at accounts@harvestroasting.com
I’m not sure why, but business has never been better…both, in our wholesale distribution business and our coffee house business. I think some of it has to do with the fact that we expected the economy to go into the tank; therefore, we really focused on our four core principles. They are:
· great drinks
· great (over the top) customer service
· a clean, well lit store
· amazingly fast
In addition to our operations people focusing on these principles, we have also focused on cost control. Remember, at the beginning of the year, we thought that there would be quite a few business that didn’t survive this down cycle. We were determined “not” to be one of those companies.
Our group has been preaching these principles to our store managers. But of those principles, I think the “amazingly fast” part is the hardest for people to get. EVERYBODY THINKS THEY’RE FAST! Well, maybe they are…but they’re not fast enough.
Let’s talk about these last two points…
Costs:
As many of you know, I consult. A couple of weeks ago, I visited with several new customers about their businesses. Most of these stores are doing enough volume to succeed, but they’re not succeeding. The owners are very frustrated, and they don’t understand what they’re doing wrong. As an aside…it’s much easier to help people fix this kind of problem, than it is to fix the lack of customers.
The common denominator in most of these stores is cost of goods and cost of labor, and the self denial that either of these things could be the problem. Many store owners think their cost of goods is just fine, when in fact, they don’t really know what their cost of goods is. And almost without exception, cost of labor is an area of opportunity for most operators, too.
On cost of goods, I hear…”I am behind in my bookwork, so I haven’t had a chance to do my P&Ls for the past few months”. “But, I’m watching my costs, very closely”. You have to know these numbers! It’s impossible to run a successful business without knowing (for sure) your cost of goods.
On labor, it’s “I’m working 60 hours a week myself; there is no way to cut labor costs”. Wanna Bet?
In one of the stores I went into, there were 4 people working in the morning, and, the owner was sitting in the corner working on her computer. That’s fine if you’re doing $350.00 hours. But if you’re not…4 people are not needed. 2 people plus the owner would be more than enough. Learn to work smarter, and thus, faster.
In another store…I went in at 3:00 in the afternoon. There were 3 employees working. The husband of the store owner was frustrated that he had to continue to put money into the store (their store volume is close to $30K per month). I told him that his store was already making money; they were just choosing to spend their profit on payroll.
“But I get big rushes between _____ and ____”…“I have to have _____ people in here”. Again, are you making those decisions based on facts, or is that more of a feeling? If you do hourly readings in your store, that will tell you when you need to staff up or staff down. I have seen very few stores that need 4 people working in the morning, and fewer still that need 3 people working in the middle of the afternoon.
Amazingly Fast:
What is “amazingly fast”? When you’re busy, it’s under 1 minute per customer. When you’re really good, it’s 40 seconds per customer (again, that’s when you’re busy). “We’re doing that”. Really? How do you know? “I’ve watched my people…we really do a good job of getting the customers through”. Have you ever timed them? “Yes”. How long is it taking, when you have a line? “I think we’re in that “minute” range”. (Deniiial).
Don’t think…know. Time your people when they don’t know that you’re timing them. It’s not to beat people up; it’s to recognize whether or not you have an opportunity to get better. Also, the faster you get… the fewer people you will need to serve your customers. More customers…lower costs. Now that’s a good combination.
I think we all tend to not fully understand the difference that speed of service makes to our bottom line. Customers will simply not come back if it takes too long. Or, they won’t come back when they’re in a hurry. They may not say anything about it (they probably won’t), but they will not come in when they know you’re busy. That costs you money in lost sales. Add an extra customer every 5 minutes during your rush, and that could mean extra 10 – 15 customers a day.
Look at it this way…If you get customers through faster, but don’t gain any additional business because of it, what have you lost? If that happens, you’ve at least learned to do more with less.
One of the big misconceptions is that “if I’m busy, I need more people”. That’s only true to a point. Having too many people can actually slow you down. You can actually become less efficient. How about that? Now you’re spending more on payroll, and actually slowing the process down. Geez!
Well, that’s about it for now. Please check out our web-site, harvestroasting.com. We will be a supplier you can count on. And don’t forget to let us know if you’d like to continue to receive these newsletters.
Sincerely,
Don Eckles
Harvest Roasting