Coffee has great gross profit margins however you The Peanuts Snoopy drinking coffee shirt don’t pay the rent in percentages – you pay it in dollars. Cafes with a coffee only/mostly strategy can be very busy all day, but still not generate enough gross profit dollars to pay for all the costs. A cafe must have a ‘coffee plus’ strategy at the outset if it is going to secure sufficient turnover to be sustainable. i.e. coffee plus bakery item or food item that is conveniently located to the coffee service area. Cafes are already struggling with industry prices that make the establishment of a sustainable business difficult. Add to this some poor pricing strategies and you set up a guaranteed failure.
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