OPINION: Identifying high margins

It is always good to find a product that is both popular and high margin.

In our case it is coffee and hot food in the form of pies, pasties and sausage rolls.

I recommend offering quality ‘bean to cup’ coffee in your store. We have a Tchibo machine that makes as good a coffee as you will find anywhere and we sell approximately 50 cups a day. Our machine is fully automated and the customers serve themselves, which they all like. Coffee can offer you margins in excess of 300% so it does not take too long for it to start paying for itself.

We also offer coffee to local residents and regulars for 50% less than other customers and this creates much goodwill. In addition to the 50% discount, we often give regulars free coffee which has a high perceived value but is not too costly for us. So it is a great low cost way to generate mountains of goodwill.

Coffee also smells great and many people comment on the lovely smell as they enter the store. If you ever wondered whether coffee loyalty cards work, they do. We have a card that offers every 7th cup free and almost everyone uses it.

In the colder months we have a food warmer to provide hot pies, pasties, slices and sausage rolls. This is incredibly popular amongst builders and the like and also provides high Profit on Return margins. Sometimes in the order of 100% plus.

This post is an extract from the e-book ‘So, you want to run a convenience store?’ by Peter Lamb. It is available for free download here.