The Business Coach Synopses
| Wednesday 1 August 2012 14:51
Episode 6: The Perfect Cup
Michellé van Blerk owns a small coffee shop and roastery in Parkview, Johannesburg. She used to work as a manager in the shop, and when the owner decided to sell the business, Michellé jumped at the opportunity to buy The Perfect Cup. With money borrowed from her parents, Michellé took ownership and has been running the business ever since.
With Michelle currently around R 280 000 in debt, The Perfect Cup is running at a loss. Michellé is still being bailed out by her parents every few months, and is feeling the pressure to turn the business around and be in a position to pay off her debt to her parents.
Themes and takeouts:
Stock management in a restaurant context:
Michellé has staff issues around stock. (although it isn’t featured in the episode, there has been a problem of stock shrinkage in the past. We still deal with issues around stock management, and touch on the importance of being able to monitor stock consumption, without making reference to her past issue with stock theft)
Michellé is another business owner who doesn’t fully know or understand the financials that concern her business.(her mother handles the book keeping entirely) When she is given the task of breaking down her sales, she is shocked to find out that her coffee bean sales are not as successful as she had thought.
Expanding existing revenue streams:
Michellé has two main streams of income in the establishment; coffee shop sales, and the sale of freshly roasted and ground coffee from her roastery. Her long term goal is to expand the roastery side of her business, so Greg takes Michellé to investigate the possibility of importing her own beans, rather than paying a third party. With her current sales, it would not make sense to import the beans herself, as the costs of doing this are prohibitively expensive. She then approaches an import company who can give her a better deal on the importation of the beans by “sharing” their container space with her.
Scalability and the importance of systems:
Michellé’s dreams of scaling her business up are constrained by the fact that she is very involved with the day-to-day running of the business. She feels unable to delegate the running of the business to her staff. To scale up the business, or to even allow herself time to work on developing the business, she needs to work on putting systems in place to make the business run more smoothly in her absence. She tries to leave the business alone in Greg’s absence, but is not happy with the staff’s performance on the day.
Michelle is encouraged to re-evaluate the look and feel of her business, and to develop a distinct image that communicates clearly to customers. She does this and the coffee shop is given a great makeover.
As part of a broader marketing exercise, Michellé is advised to explore “experiential” marketing; that is, to educate her customers about the finer points of coffee. She hosts a coffee-tasting event, and this goes really well. She plans to do more of these in future.
Margins in the restaurant environment:
When Michellé visits a expert on franchising, she is advised that she should aim at maintaining a gross profit of between 58 and 60%, and that this should be monitored almost on a daily basis. (as soon as this drops, then it is an indication that stock shrinkage is occurring) She is also advised that labour should cost around 18% of her sales, and that rent should not exceed 10% of her sales.
Michellé felt her bank charges were quite high, so she approached her bank manager for advice. He advised her to look closely at how many transactions she generally makes, and based on that decide on the best banking package. If she generally does few transactions, then a “pay-as-you-go” pricing package would be best. He also advised her to opt for EFT payments instead of doing cash withdrawals, and to limit the number of cash deposits she does.
The Business Coach will air this Sunday at 14:00 due to the London Tennis Olympics: Men’s Gold Medal starting at 15:00 – 21:30 only on SABC3.
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