We have over 6,000 wholesale customers and the advice I give to our sales force is to understand each business and figure out how coffee will help that business go to market and make money.
Fortunately in cup coffee that is realtively easy. If you buy coffee at $6 a pounds, the cost of the coffee per cup is going to be about 14 cents. If you buy coffee at $3 a pound, the cost of coffee per cup is about 7 cents. If you sell that cup of coffee for $1 then in one case you're making 86 cents per cup and 93 in the other. If you can get 10 percent growth, say from 100 to 110 cups per day, you'll be making 87 cents X 110 cups = $94.6 a day in gross margin.
The raw economics of cup coffee favor growth over cost cutting. If you find a coffee supplier that delivers the quality, has a brand that means something and has enough variety to appeal to a range of customers (light roast, dark roast, flavors, decafs, etc.) Then you'll be able to get on the growth path.
Great coffee doesn't exempt you from good retailing practices - it is additive. Location, other items to draw people in (baked goods, cigarettes, gaslone, whatever), clean bathrooms, etc. Of course you know that.
A couple things about pricing. If you have 4 cup sizes, you'll make more money than if you have 3 cups sizes. Trust me, I've done the math. If you don't trust me, you can do the math, too. It is inescapable. Keep the pricing on the small competitive in your market. People who drink small cups tend to be local and older. As such, they will know the price of every cup of coffee in town. Do not alienate your locals. People who buy large cups tend to be less price sensitive so you can run pricing higher on large and extra large. Just make sure you're delivering the quality coffee and retail experience so people don't feel they are being cheated. Thanks to Starbucks for setting the high end of cup coffee.