Managing a variable income

Business Accounting | 3 Actions To Take When Your Café Is Losing Money

Running a café requires talent and hard work, but sometimes these are simply not enough when you notice your bottom line starting to sink deeper into despair. Go back to the drawing board and sneak a detailed peek at your business numbers because you're probably making avoidable mistakes. Here are some actions to take when your café is losing money.

Re-Look At Your Daily Sales Report

A re-look at your daily sales report will give you an indication of what your customers are buying and what they aren't. This report empowers you with adequate knowledge to make changes to your menu based on customer preferences, but many café owners take this for granted and overlook the importance of paying close attention to what this report is telling them. For instance, is there an increased demand for chai latte in your café, while coffee numbers are declining? You may want to hold back on the stock inventory for coffee to control your outgoing expenses. The daily sales report will offer you these comprehensive insights that you may have overlooked in your eagerness to stock all items on your menu. You'll also be able to determine pricing based on demand to help you push up your profit margins when necessary.

Control Your Outgoing Labour Expenses

You obviously need to pay hourly wages to your wait staff, dishwashers and chefs. Australia is one of the most expensive countries in the world for paying labour wages, with the minimum rate prescribed at $17.70 per hour. You need to pay close attention to the number of staff you employ, so that you don't end up having an oversupply of labour and an under supply of customers. While engaging adequate staff is vital, paying wages should not compromise your profits. You may notice that you're employing more than you need. Some smart and efficient changes to the way you employ labour can help you bring your café profits back up.

Re-Think Your Utility Payments

More often than not, small changes to the way you run your café will make a big difference to your profit. Apart from rent and inventory, utilities end up eating a significant chunk of your profits because you're paying for running coffee machines, air conditioners, heaters, refrigerators and other appliances in your café. In some instances, you probably have an out-dated utility plan and have not taken advantage of new discounts available, which means that you're paying more than you should for electricity and gas. If you have different providers in Australia, consider bundling all utilities with the same provider for deeper discounts for your café.

An accounting professional can help you take a look at your books, but these initial actions are smart when you're trying to stop your café from losing money.