Should I Buy Cheaper Coffee For My Cafe?

As a Melbourne-based specialty coffee roaster, we’re well-versed in the nuances of coffee economics, especially when it comes to selecting the perfect blend for your discerning customers. We also understand that business isn’t always that easy and that sometimes you need to make some tough decisions with supplies. A common conundrum cafe owners face is “Should I buy a cheaper coffee for my cafe?”. At first glance, opting for cheaper coffee might seem harmless, but as you dig deeper, this seemingly benign choice can pose significant drawbacks. In this blog post, we’ll explore some of the downsides to choosing a cheaper coffee and outline essential considerations you should make when faced with these big decisions.

 

Boosting your cafe’s profitability boils down to two pivotal actions: trimming down costs or bumping up revenue. While slashing costs may seem like a quick fix to enhance your profit margins, you need to consider – how will my customers react? Downgrading in quality, and you might compromise on the very soul of your ‘specialty’ coffee cafe.

The beauty of specialty coffee lies in its distinctiveness. Each bean tells its own story; they’re not just interchangeable commodities. Swapping out your artisanal blend for a bargain bin substitute is no sleight of hand. Your patrons will likely perceive the downgrade.

 

Before making any brash cuts, zoom in on the impact of coffee costs on your beverage ensemble. Sometimes, the milk (especially the trendy plant-based varieties) can overshadow the coffee in the cost department. By drilling down to the cost per cup, rather than fixating on the raw price per kilo, you’ll get a much clearer picture of how each blend tweaks your profit margins.

In our industry insights, we delve into the repercussions of reducing your coffee costs by $5 per kilo or by 15%—a substantial markdown to consider. For a dainty takeaway cuppa, the coffee component’s cost shrinks by a mere $0.05. Seems negligible? Maybe. But there’s more to this story.

 

Choosing a cheaper coffee might resonate with your customers, but not for the right reasons. This perceived decline in quality could lead to two unwelcome scenarios:

Customer loss: Coffee aficionados might turn their backs on an inferior blend.

Devalued perception: As your coffee’s quality declines in the eyes of consumers, you might be forced to lower prices to keep the register ringing.

These potential outcomes could trigger a troublesome cycle where cost-cutting leads to quality dips, customer loss, and diminishing returns.

 

If you’re confident that you can dial down blend expenses while keeping the quality consistent (and your supplier’s service stellar), then you’ve hit the jackpot. But if there’s even a whisper of doubt that you could alienate your patron base, it’s time to crunch the numbers. Assess the threshold for customer loss against the increase in profit margins.

Consider this, paring back coffee costs by 15% translates to savings of $0.05 per cup, shaving down your expenses by a mere 1%. However, lose more than 1% of your customer volume, and you might wish you’d never ventured down the cost-cutting path.

 

As a Melbourne-based specialty coffee roaster, we’re passionate about sharing wisdom that keeps your cafe bustling and your patrons enthralled by every brew. So go on, weigh your options with care, and whatever you choose, let it be a decision that protects the unique coffee culture that our city adores.

Cafe profitability calculator