Lots of Margin in a Cuppa Joe
Written by: Paul Knowles
It's not exactly a magic incantation, but there's a single phrase that can turn the investment of a few cents into an immediate ten-fold return. Ready? Here it is: "Would you like a cup of coffee?" For restaurateurs, cups of coffee may hold one of the secrets to better profit margins. Jeff Flanagan, often described as the "resident coffee expert" at Flanagan Foodservice, notes that the raw materials in a cup of coffee cost the restaurant between 12 and 18 cents.
Menu prices vary - higher end eateries obviously charge more for coffee than breakfast restaurants but the math is still obvious; even at low-end prices, the margin on a cup is about 90%. Says Jeff, "Coffee is a very high margin item for restaurant." It seems clear, then, that restaurants should be focusing on their coffee sales. Jeff suggests a simple first step: have the waitperson make the offer. "Ask for the order," he says, adding that he is always surprised to dine in a restaurant and find that the waiter or waitress simply forgets to ask, "would you like a cup of coffee?" at the end of the meal.
It's hardly a new concept. People have been drinking coffee since before 800 AD. It probably took another 800 years or so before the beverage started to become popular in England and Western Europe. But since the first time a servant said; "Would you like a refill?" it has become the staple beverage for millions of people.
Coffees of Origin
The word "coffee" may or may not have its origins in Italian. Or Turkish. Or Arabic. Or Ethiopian. But one thing is sure, Ethiopian coffee, like coffee from countries including Brazil and Columbia, is known as a "coffee of origin," and connoisseurs enjoy these unblended beans. But they may be missing out on something, because country of origin does not guarantee uniform taste. All kinds of factors can change the taste of the bean, much like weather, soil and such changes the taste of wines, year to year. So Jeff Flanagan notes that for a consistent taste, blended coffees are more dependable.
He clarifies, though, that he's referring to blended coffees that use quality beans. There are basically two categories of beans: Arabica, the high quality bean, and Robusta, the lower quality. Flanagan's which supplies coffee to thousands of customers, as well as coffee equipment to a large number of restaurants only uses Arabica coffee in its own Worldwide Traditions blends. Arabica coffee is also used exclusively in the other brands the company represents, including Mother Parker's, Nabob, Maxwell House, and others.
Jeff notes that the quality of coffee served in restaurants and coffee shops is very good. He believes there has been a public perception of poor coffee associated with some fast-food restaurants. But he notes that when those restaurants changed their way of promoting coffee but not necessarily their coffee itself perception changed completely, and some of the once-maligned brew is now praised for its quality.
He points to some trends in the coffee business. Fair Trade and organic coffees are becoming "more and more important," to Flanagan's customers, he says, while flavoured coffees have probably peaked in popularity.
Making a Good Cup of Coffee
Serving a good cup of coffee is not rocket science but a certain amount of basic science is, indeed, involved. Jeff offers four tips to a good cup of coffee:
1) Start with a quality product using only Arabica beans.
2) Be sure there is "good quality water going through the maker." Coffee is 98 per cent water, so "a poor water source is reflected in the cup."
3) Keep the equipment clean and maintained on a consistent basis.
4) Limit the time the coffee sits on a direct heat source to no more than 20 minutes or half an hour. The direct heat source cooks the coffee and it begins to taste burnt. After the recommended time elapses, either discard the coffee, or use air pots or thermal servers to keep the coffee hot and fresh. "They are good alternatives," says Jeff.
Would you like a refill?
When it comes to refills, Jeff says different principles can apply, depending on whether the business is a coffee shop or a restaurant. Because of the nature of the business and the importance of coffee as their central product, coffee shops are unlikely to offer refills.
However, he believes restaurants are wise to have a "bottomless cup" policy. He points again to the high margins, comparing cost of raw materials to the price of a cup, and suggests that there is plenty of room for free refills... and that the goodwill that ensues is more than worth the second cup. "I believe that even at two cups, the restaurant is still making a good margin. Most customers will drink one and a half, maybe two cups," he says, and they will go away with a warm feeling about the service. On the other hand, a restaurant that charges for refills may find that this is the lasting impression the customers take out the front door... not necessarily one that inspires a quick return visit.
The Formula
To sum up: use good quality beans to produce good quality cups of coffee; train your servers to sell coffee to customers; if your business is a restaurant, offer free refills; and watch your margins improve. That's a lot of impact from a simple cup of coffee.