Case study: How a cafe with slow business made a comeback

by Yin on October 12, 2012

in Entrepreneurship or Small Business

When there’s a will, there’s a way. Too many businesses give up too soon before they can see results.

Today, I want to share with you a case study of a cafe in Malaysia- on how I have seen it going from a dying business till having business picking up. Hopefully you can draw some ideas from how a spunky cafe is able to pick up on its business against some odds….

Location of the cafe

This cafe is not from one of those cafe chains. The price range is slightly lower than the price in chains like PappaRich or Old Town Kopitiam. The cafe within a secluded office block building- and its primary customers would be only the staff working within the office block. During weekends, there is no point of opening as there would be only very few people working. It is not near any shopping complex or consumer area- in fact the location is quite hidden.

Initial business working strategy & competition

The cafe started operating by offering some standard menus- similar to what you can find in Old Town Kopitiam such as coffee, tea, milk, soya drinks. Limited dishes such as nasi lemak or curry mee was being offered- and come even in lunch set.  Workers including the cashier consist of foreigners.

The office block already had a food court which provides a large variety of food ranging from mixed rice, Malay, Indian, Chinese, Western, vegetarian and mini bakery stores. A bowl of curry mee costs only about RM4.50 at the food court whereas at the cafe is more than double the price.

Closing time is also early- the initially close about 3pm. By 3pm, most of the stalls in the food court would have been closed as well, with the owners washing up.  But two stores- one selling drinks and another snacks like cakes, nasi lemak and bread remained opened till after 5pm.

So how did the cafe fared initially?

Very soon the initial buzz (of having a new cafe with air con compared to the non air conditioned food court) quickly wore off. Customers who found the food choices limited and expensive stopped patronising the cafe. During lunch hour, you can see only about at most 10 0r slightly more people eating there- unless there is an external function where outsiders come and eat. Else, the place is quite deserted- and you can gauge by lunch because it’s the time where visitors are supposed to peak.

I honestly had thought that the cafe would probably close up due to bad business and what a waste after all the money being spent on renovation, furniture, equipment and raw materials.

Challenges and food taste…..

I had really underestimated things. Challenges faced by this little cafe:

  • limited target customers- only can rely on the staff near the small office building blocks
  • competiting with the food court which offer much lower pricing and better variety
  • even though not open during weekend (lack of customers do not justify having the pay their staff extra to work) still have to pay rental

Even though their food choices were limited, but of course the food and even nescafe and milk tea taste good. Just like a well organised business operation, in order to ensure consistency in taste, specific measurements are being placed into making drinks and food:

  • specific measurement of tea leaves are used to make specific cups of tea. Measurement of milk, sugar are presize – therefore the taste is consistent…. thick and delicious enough
  • the toasted kaya bread- 2 thin slice of butter which have been precut to consistent thickness and dimension with fixed amount of kaya spread are used

 

The Rise of the Spunky Cafe:

However, when I visited the cafe recently, I was surprised at the number of customers it had. This time, most of its tables have been filled. And according to some, there have been many customers.

1. Increase food variety

If you are serving the same group of customers, variety is the key. Because people would get bored after eating the same kind of food everyday. And people don’t just eat alone- they usually eat in group. So if one person is bored with the food, he/she may be able to influence the rest to eat somewhere else.

By adding variety- not that much, and need not necessary be main dish but tid bits or pastries, people would want to come in to look and having to stand to decide what to eat (instead of being bored with the limited offering).

2. It is okay to charge more but make sure you work on the ambience and taste

Why would I pay more than RM10 for a cup of coffee from Starbucks when I can get a thick cup of Nescafe from the stall at RM1.80? The answer lies in the ambience and the taste.

Compared to the food court, the drinks churned out from this cafe has  quality and taste good. In fact, it is delicious and even though for lower income earners, it’s a once a week or once every 2 weeks’ worth to treat and indulge. If you have about 2000 staff and about 50% of the staff visits the cafe at the average of only once a week and spend about RM10 in the cafe, you are talking about total gross sales of about RM2000 per day. Not bad for a small cafe with about 5 workers. And this is only a very modest estimation.

City folks now work in very high pressured jobs. Often, they want a place they can relax and have good food- and they are willing to pay more for that. A good cafe also have to charge more to raise the ‘standard’ because for some reasons, when people pay too little, they feel the place is sort of ‘cheap’.

3. Quick service and system to enable waiter to deliver food to waiting customers systematically.

You would often see in crowded food court where a stall helper would be searching high and low amongst the sea of noisy talking heads for that particular customer who had ordered the dish.  That will cause delay and by the time the food arrives, perhaps the customer’s friends have almost finished eating already. Else, the customers may have to stand near the stall and wait for their food to be prepared.

In the cafe, they have a system- the customer pays for the food first and then was given a waiting number (many eating place practices that). The customer can then sit comfortably and chit chat or play with their electronical devices while waiting for the food to be served. With the waiting number, you would not find the waiter carrying a tray of food delivering it to the wrong customer or looking around for who had ordered the food. And the food gets prepared quickly- most of the stuff have been prepared- they just perhaps throw the ingredients and heat it up (using specific measurement so you can expect the same number of prawns or fishball on your noodle or curry soup).

If there is a system, customer would not need to wait long for the food even during peak time.

4. Throw in ad-hoc promotions to entice the customer

One thing good about not being involved in a franchise is that you get to customised and decide what to have on the menu or what to offer without having to go through the trouble of getting approval from the franchise owner.  This spunky cafe throw in ad hoc set meals- at first they tried to combine only certain food with one or two variety of drinks at a set price.

Then later, they throw in the offer that when customer order a specific main dish of the day (like fried rice or nasi lemak), they allow customers to buy drinks at half the price. They also increase the variety of their drinks.

Now, you would find then that in order to get the half price drinks,  most would want to take up the set. So, you would find that about more than 80% of the customers would order the same main dish- so you just need to estimate and prepare in bulk, then dish out and put in individual plates with the decos or add-ons. But dish of course, must be delicious as well- and it would spread by word-of-mouth.  So someone calculated that the set meal, which is more delicious (because the drinks are very nice) cost only about RM2 to RM3 more than the average food court meal. People would pay becuase of the ambience and the taste.

5. Extend opening hours

As mentioned earlier, the doors of the cafe are closed by 3pm initially. Now, they extend till about 5pm or sometimes up to 7pm. And even at the time, you can still find a number of customers in the cafe. People like to go cafes to sit down for their tea break- and you would find higher level staff sitting there enjoying their tea (sometimes puffing away as there is a separate section for smoking and non smoking). After 3pm, there can be less workers.

6. Added more tid bits than the traditional food offering

The cafe in fact had added waffles (few varieties) and popcorn on top of their pastries selection- all sold for few ringgit. This is aside from the standard toast bread. And they created a breakfast set deal for customers. So this ensure they have incoming customers even during non peak time. Some customers love the taste of their pastry and someone is known to buy the waffle almost every morning. Again, people willing to pay a bit more if the taste warrants the price.

So, the above are what I can share from my observation of how a cafe with a slow business was able to pick up its business through implementation of a few strategies. If you find your food business in a similar predicament, perhaps some of the suggestions above may work for you. All the best and let me know if you have more ideas and feedback.

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