Every cent counts when it comes to maintaining your cost of goods (COG) and ultimately, your bottom line.
Reducing, reusing and avoiding packaging is a great way to improve your COG. We’ll show you how.
COST OF GOODS CALCULATOR
Firstly, have a look at your current COG.
We’ve based this calculator on coffee, but you could adapt it to any F&B product you sell.
Use our calculator below to input your current costs and prices, and see it calculate profit outcomes.
See the effects of a reusable discount – this can help you decide whether to offer one.
Aim for a 20 – 25% COG, giving you at least a 75 – 80% profit margin.
SET INPUT COSTS
Enter how much your inputs cost you. Include GST.SET COSTS PER DRINK
Enter the amount of each ingredient and packaging item used in one drink.IMPROVING YOUR COST OF GOODS
Improving your COG comes down to reducing costs, and/or increasing prices.
Reducing costs
You can reduce any of your input costs (e.g., by shopping around, asking for a bulk purchase or COD discount), but reducing and avoiding single-use packaging is one of the most effective and easiest ways.
Just try inputting ‘0’ for cups and lids in the COG calculator and see the effect it has!
Plus, it can improve the overall dining experience and foster customer loyalty.
Ideas to consider:
Encourage customers to BYO cup or dine-in – no takeaway packaging required.
Switch to a different product, e.g., from double wall to single wall cups (note: be careful simply looking for a cheaper cup – consider quality, environmental costs, your brand, responsibilities and reputation).
Ask the customer if they need a lid (a sign can work wonders).
Implement a cup library or swap system.
Below, you can calculate the overall savings for every single-use cup and lid you remove (adjust the cost if you only want to look at lids).
SAVED PER YEAR
You can find more ideas below to boost reusables, and follow the links to more information to hekp get you started.
Increasing prices
If you’re considering increasing prices, know your customer and what they’re willing to pay.
Are they price or quality driven?
Are they loyal and feel like they’re part of your community?
Cafes that attract a loyal following are rewarded by increased sales and less price sensitivity.bConsider the following ideas to build loyalty (and boost reusables at the same time).
Sell Branded BYO cups – Make $10 – $15 profit per cup
A branded cup reminds customers of your business and promotes loyalty.
Upsell at POS
Offer a free coffee with purchase.
Build Loyalty Through Shared Values & Engagement
Promote BYO on social media – only take photos and videos of reusable packaging
Promote your achievements and impacts
promote your environmental values
Promote BYO and dine in specials in store – signage and visual reminders
Share pictures of customers with their BYO cups on social media
Promote how many cups you and your community have collectively saved.
BYO Loyalty Cards
We’ve all used a loyalty coffee card program before: Buy 10 coffees get 1 free. Try a BYO loyalty card instead: Buy 10 coffees in your BYO coffee cup and get 1 free. Encourage the card in conjunction with selling branded cups.
Dine in and BYO deals (get creative)
Morning muffin discount (ensure you choose an item with a high margin around 15% COG). Receive a discount on the morning muffin when you BYO cup.
Staff Training
- Add prompts to your POS system via instructional modifiers. E.g., BYO cup. Dine in.
Provide staff with POS conversation tips. E.g. ‘Have you brought your BYO cup today?’, ‘Great to see you’re using your cup Jane!’
- Run a special such as the morning muffin discount, track staff sales and provide incentives/rewards to encourage staff to sell the special.
FOR MORE INFORMATION
-Find more detailed information on reuse options, including costs, time and resources required in our companion guide, Cost Benefit of Reusables.
-Our Guide Library is a great place for more assistance to implement reusables.
