Hi, Friend,

Why don't Starbucks have 15 seaters?

The reason is simple: they know that for their high street coffee shop business model to work, they need to seat at least 90 people (covers), and their kiosks only need a steady flow of people.

Your overall sales equals the number of customers x how much they spend. The number of customers in a cafe is driven by how many seats are available and how long people spend occupying the seats. Generally, however, the seats are all full for only a short portion of the day, so the typical occupancy over the week is about 20%.

To project sales, multiply the number of available covers by the trading hours, then adjust for how long they stay and for the % of the time you will be full. Multiply this by an average spend of £6, a 20 seater will average £480 per and a 100 seater £2,400 per 10 hr day.

Of course, this does not include the takeaway and delivery element of the sales. We have noticed a decline in takeaways due to the explosion of self-service machines, and it is hard to make coffee delivery profitable using the likes of Deliveroo due to the service costs.

Kiosks and tiny takeaway sites typically have much lower costs to operate with cheaper rents and the possibility of a one-person simple operation to keep labour costs down.

As you can see, the small coffee shop will struggle to cover labour and energy costs alone. Despite this, too many first-time owners are attracted by the lower rent and fit-out cost and end up with a job rather than a business because the revenue will never cover employing a manager. We call this getting stuck in the middle.

This is an extract from this months Coffee House Magazine to read the full article on Page 18 Click this button