Cost of Sales, Sales per Hour, and Average Ticket

[chadao]

So I'm currently doing the arithmetic for a business plan for my dream coffee shop. I have done much research in the past few weeks, and I have most of the numbers straight and on paper. I've hit a sort of snag though, trying to figure out my cost of sales. I thought that this might be a good place to pose my inquiries. If you are a coffee shop owner, barista, manager, etc. I would love to hear your insight and experience.

A little about the products I'm going to offer: they will be the best that can be found not only locally, but worldwide. My coffee supplier will be either Intelligentsia, Conscious Coffees, or Novo. My dairy will come from a local source. My tea supplier will be Seven Cups or Verdant. My sandwiches, pastries, and other food/RTD items will come from local suppliers that are committed to quality and sustainability. My emporium will be located in Boulder, either near the University of CO or near the main tourist/shopping destination. That's just a window into my vision.

Back to the cost of sales. I have figured out the price, per unit, of everything that I am going to need to produce only the finest quality products. My numbers are based upon Intelligentsia Coffee, the most expensive supplier that I have in mind. My problem is figuring out how many units, per week, month, or year, of everything that I will need to buy. Answers to the questions below might help me to figure out this problem.

In your given location, and during your open hours, how many sales per hour do you tend to make on average? I observed a coffee shop from 1:30pm to 3pm near my ideal location, and they seemed to average about 65 drinks per hour, the majority of which were espresso beverages. I assume that they would be busier in the morning, a bit slower from 9:30 to lunch time, and slower from 3 to close. Is this typical, or might it be considered unusually high volume? Might it be safe for me to assume an average of 40 drinks per hour, considering I have done enough marketing, etc?

What is the average $ number on your sales ticket? At the coffee shop that I observed, most people were buying espresso beverages, which are priced from $3-5. With the given number of cheap drip coffee purchases, might I be safe to assume a $3 average ticket?

Finally, how do you determine pricing for you products? Do you have a specific profit margin in mind, or at least a bottom line? Can I expect to make any profit off of food and other offerings? Currently, my prices are based on what I have seen at other coffee shops. Even with me offering a more expensive and higher quality product than they are, it seems that I would be making a large profit.

Thanks in advance for your responses.

 

[Mr Shave]

In your given location, and during your open hours, how many sales per hour do you tend to make on average? I observed a coffee shop from 1:30pm to 3pm near my ideal location, and they seemed to average about 65 drinks per hour, the majority of which were espresso beverages. I assume that they would be busier in the morning, a bit slower from 9:30 to lunch time, and slower from 3 to close. Is this typical, or might it be considered unusually high volume? Might it be safe for me to assume an average of 40 drinks per hour, considering I have done enough marketing, etc?

65 trans/hour @ $4.50 is just shy of $300 / hour. There are cafes that do that, most won't, and most definetly not off the bat. Go look through some off my old posts and I have graphs of sales and trans / hour. Even 40 is pretty optimistic. Search "daily sales" to see how some have started out

What is the average $ number on your sales ticket? At the coffee shop that I observed, most people were buying espresso beverages, which are priced from $3-5. With the given number of cheap drip coffee purchases, might I be safe to assume a $3 average ticket?

Was the shop you visited using local milk and Inteli coffee? Price accordingly.

Finally, how do you determine pricing for you products? Do you have a specific profit margin in mind, or at least a bottom line? Can I expect to make any profit off of food and other offerings? Currently, my prices are based on what I have seen at other coffee shops. Even with me offering a more expensive and higher quality product than they are, it seems that I would be making a large profit.

If you don't plan on making money on an item, why plan on selling it?High volume low margin or low volume high margin are 2 popular strategies, plan accordingly.Price based on market, costs, and quality of product.

 

[chadao]

Thanks for sharing your experiences and insights, Mr Shave. I definitely find it very helpful. My business model definitely fits the higher end as far as coffee shops go. My vision entails a much better, consistent, and conscious quality than what my future competitors offer. It seems to me that pricing on the higher end of the market, especially when I consider cost of sales, is the most reasonable thing to do. After all, the market in the place that I am looking already has a large base of socially and environmentally conscious consumers.

The place that I observed roasts their own coffee, which I am pretty sure saves tons on sales costs. I do not know what kind of milk they use though, I should ask them.

As far as not making money on an item, I would still sell it because it brings customers into the store. I see it as a lure of sorts. Also, if I cannot get good wholesale prices for the products that I want to offer, then I will not make money on them at extravagantly high prices anyway. My bottom line for food is to at least break even. If I can't do that, then I won't sell it. Furthermore, I know coffee and tea to an extent that the quality and service of these products will always outshine that of the food.

Thanks again for your help.