Just 25g of this household name product can transform the profitability of your breakfast menu
If you don’t own a café or foodservice business, you’d be forgiven for thinking they are incredibly profitable businesses. Most people compare the cost of what they’d pay at home for a piece of toast and a coffee and assume the profit margins must be through the roof.
What people don’t take into account is that so much of the gross profit is wiped out by things like rent, wages and the cost of operating assets. According to ATO industry benchmarks, the gross profit margins of cafes in Australia average at 65 to 70 percent.
But for most, net profit is nowhere near that.
Take a look at a cup of coffee, in the past 15 years the cost to consumers has only increased slightly. Some coffee shops, cafes and breakfast outlets are often struggling to reach 5% profit margins.
So, what can you do to transform the profitability of your venue? It could be as simple as taking a look at your menu…
Add high perceived value items
You already understand what it costs to make each item on your menu and can identify the profit margin of each. Something worth considering on top of that is the perceived value of each item. For example, perhaps jam and Nutella cost the same when purchased in bulk? But which is perceived as higher value among your customers? Just 25g of Nutella is enough to excite and delight breakfast crowds. (If you don’t believe it, see which portion control pack is always first to run out at the breakfast buffet). Consider adding Nutella to your breakfast menu. Its high perceived value and loyal fanbase means you can charge more for breakfast items with Nutella. Croissants, pancakes and doughnuts are all a good place to start.
Add bundles
Another great way to increase customer spend is to bundle items. If you’ve got a loyal base of takeaway coffee customers coming through each morning, consider bundling some of your higher margin menu offerings alongside their morning cuppa joe. Do your sales records show that many items are often bought together? Create a special deal with some of your high-profit items (such as a coffee and a muffin) which will encourage the items to be bought together more frequently.
Toast and croissants are also no-brainers here and savvy café owners will throw in a portion control pack of their favourite spread so it’s still just as quick as pouring the long black and no one needs to be late for work.
Add upsells
When Ferrero Foodservice launched the Mini Nutella Jars we had no idea how popular they would be. Not only are they a perfect accompaniment for buffet and grab-and-go breakfasts, but they are popular in their own right. One café simply puts them on the counter and sells them standalone for a great profit. Capturing your customers as they are paying and heading out the door with a last minute upsell is sure to increase your margins.
Ultimately, however you attempt to increase your profit margins will depend on your specific venue and customer base. Whether it’s crepes and bombolini or toast and waffles, by shifting the focus to high margin products, and working out where you can refine your business practices, you may find things begin to improve quite quickly.
Nutella Foodservice is on a mission to make cafes owners’ lives easier across the country. World NUTELLA Day is fast approaching (February 5th). Check out Nutella Foodservice’s facebook page for tips on how to turn World NUTELLA Day into a profitable day for your business.
