Why Isn’t My Busy Cafe Making Any Profit?

Your cafe’s busy, has good turnover but you’re not making any money here’s what to do

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It’s incredibly disheartening when you run a cafe which is busy and should be making good profit. Only to find out at the end of the year that you’ve not made anywhere near what you had anticipated, or even worse, there’s nothing left at all.

How do you figure what’s going wrong and come up with a plan on how make a profit?

The best option is to to do a 360 degree analysis of the business. It’s like doing a complete health check of where you are now. As Jack Welch says “Face reality as it is, not as it was, or that you wish it to be”.

It’s is about looking at where you are right now. Like a doctor, the aim is to know the current reality of where the business is. This is important as it gives you a specific assessment of the business as it is now. Then you can create a plan on how you want to move forward over the next 12 months to 3 years.

I would highly recommend doing the analysis with someone external from your business, a coach or mentor who can help to keep you on the right track. The reason is that they will stop you getting bogged down in details rather than keeping to the bigger picture perspective.

As a coach, I look at a number of key aspects that are critical to the business operating successfully.

The first thing I walk through is the profit and loss sheet. I will look at the break down of the numbers on how much was spent on the big three of wages, food costs and the premises costs. I’ll also want to know if the owner share the financial reports with staff? Does she do a monthly stock take? And does she do a weekly P&L so that she knows exactly what’s happening in the business financially.

I would want to find out whether she has cost analysis sheet so she know what to charge to be profitable?

I look at the systems that are in place. Theses are critical as they allow for consistent cohesive approach for staff and customers throughout the business. It also saves a lot of time for staff so they are working the systems that run the business. Doing this allows the owner to work more on the business as well.

I’ll also want to know how the owner spends her time, is it planned, or is she filling in on the floor without any real direction? How owners spend their time is critical to the way to business operates, and ultimately how profitable it is.

In regard to staffing, is there a set spreadsheet analysing the breakdown of how much is spent each day and each hour of the day and comparing it to the average daily turnover. A sheet like this can save thousands over the year and is one of the first places I will work with clients when they come on board.

I would also find out about any staff recruitment policies as well as the operations manual for inducting new staff. This is vital for the business as it integrates new staff into the business culture. It shows new team members exactly what is expected from them as an employee and what they get back as part of the team.

I would want to know if there is an organisational chart in place with specific accountability for tasks that each staff member is responsible. As an owner, the more you can delegate tasks to your staff the more you’ll be able to focus on growing the business, through marketing, training and fine tuning.

The last thing I will want to find out about is if there is a marketing plan in place. Is there a plan on how to get and keep customers coming back? If the owner does have a marketing plan is she able to measure its effect on the business? There is no point advertising if there is no way to now how effective it is.

The 360 degree overview is a great way to be able to take a step back from the day to day. It’s important to have someone help you through this process so you can stay on track and not find that you are wasting you time on the fine details.

Once this is done you are in massively powerful position to start to working on a new vision and direction for how you want to operate the business moving forward. This would end the first session as it takes a lot of time to work on the current reality.

The second session is the fun part, in it I work with the owner on creating a powerful plan for how to make the business profitable. Together we create a 10 year or long term vision, and we then plan the next 3 years, 12 months and three months which the owner then works towards.

I am currently taking on new clients who are committed to earning more money from their business. If you’re finding that you’re struggling to make enough money or that you seem to be working all the time and that the business is totally reliant on you, get in touch and we can do a complimentary 1 hour strategy session.

As a former cafe owner I know how overwhelming everything can become and it’s why my goal is to work with as many owners as I can, to put in place the process to run a profitable business.

If you want to see how I can help you rapidly grow your business, sign up for a free 1 hour strategy session HERE. Simply click the date and time that suits you and I’ll get in touch.

Thanks for reading, Charlie

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