Tip 20 – How to Break the whole process down to make it better
and this week I’ve been thinking about…
Why you must raise prices.
It’s been an interesting week. The Caterer reports (via purchasing company Beacon) that there has been a 267% growth in price rise notifications between September 2016 and January 2017. This, I would imagine, has you nodding your head in a “Oh yeah – tell me something I don’t know” fashion.
Additionally we have another National Living Wage increase coming in April. Analysis by S4Labour shows that NLW has added a staggering £900 million to the hospitality sector’s wage bill since it was introduced in April last year.
Both of these factors are going to put huge pressure on the profitability of your business.
For the past couple of years I’ve been saying that the general public is going to have to slowly grasp that we simply don’t pay enough for our coffee and shift past the “rip off prices” mentality that still exists. The sums, in ALL parts of the country, are simply not adding up.
Thankfully most independents have shifted past the mentality of pricing at or below the Starbucks/Costa/Nero level and are exhibiting some bravery in terms of cracking the £3.00 barrier for many drinks. But very often the end consumer still uses the big three as a yardstick for what they’re prepared to pay.
Thankfully Costa have “cracked” and are increasing the prices of all their drinks. A large cappuccino is increasing from £2.70 to £2.90.
So now is the time to crank out your costed spreadsheet and be brave. It’s vital that you are proud of your product and make sure that the customer fully understands just how expensive it is to run a cafe or coffee shop and why you must make a profit!
John
