Monday, January 10, 2011

Measuring decaf sales and gross margin

Discussions with roaster/retailers inevitably seems to come to a point about how decaf is such a small part of the business. X, y and z just don't make sense. X being a focused marketing promotion, Y being a prominent place on the menu and Z being a pricing strategy that ensures good margins, etc. etc. The list could go on with other things that companies routinely do for other product categories, but not decaf coffee, because decaf is "only" 9-12% of the business.

Usually I end up agreeing. My partner in such discussions has usually been in the business 10+ years and certainly knows what he/she is talking about, right? And, unfortunately, I don't have numbers to back up my argument. But then I think, "wait a minute, do they have numbers to back up their argument?"

I would invite anyone who has some numbers for either side of this argument to comment. First, have you measured carefully what % of your revenues comes from decaf? Or is it just an estimate? Do you have costs and revenues for decaf and regular coffee split in your accounting system, so that you can measure your decaf margins separate from the margins you're achieving on regular coffee? If anyone is doing this, it'd be very interesting to hear what you're typically seeing...

Please share!
(or contact Ruth Ann Church, President at Artisan Coffee Imports by going to the website.)

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