A short post on a very important way to save A LOT of money if you scoop,weigh and sell coffee by the pound. Every scale has a margin of error which is posted on the front of the scale. Typically a scale might be accurate from 0-30 LBS x 0.01, or 0-60 LBS x 0.02
If you have a wholesale order of 50 x 1 LB and you weigh the bags individually each time you fill a bag, you need to multiply the margin times 50. On that single order, if using a scale with a margin of 0.02, you could potentially give away 50 x 0.02 = 1.00 LB
If you are a coffee wholesaler and do this many many times per year, with a volume of say 50,000 LBS/Year, you could be giving away 1,000 LBS/Year in scale margin error. If you sell your coffee for say $10/LB, you have given away $10,000.
The only way to weigh out an order of more than a single unit is to calculate the weight of the whole order, weigh out the complete order, and subtract the individual weight of each item as you package it. In this way, the margin of 0.02 is divided among 50 units, (50 x 0.02/50) instead of multiplied by 50 units. (50 x 0.02)
It is very important to remember that the scale doesn't know whether you are weighing out an 8, 12, or 16 ounce bag and therefore the margin of 0.01-0.02 is applicable to each unit if weighed individually. This means the potential loss/savings is greater if you package 12 oz bags and roast 50,000 LBS/Year because you would multiply the margin x 66,666 units and therefore have a cost/savings of 66,666 x 0.02 = 1333.33 LBS.
Try this packaging method even if only packaging 5 bags at a time and you have cut your potential loss significantly.
Thursday, March 21, 2013
Friday, November 23, 2012
SquareUp
The SquareUp system simply requires an ipad, a Star TSP143LAN receipt printer, and a cash drawer which engages off the impulse sent wirelessly to the printer. SquareUp recommends a Vasario 1416 or 1616 drawer. It is wise to also include an ipad stand capable of rotating to face the customer for signatures (done on screen). All included the complete cash management system should cost less than $900 with NO MONTHLY FEES. While Square requires a wireless internet connection, the ability to go mobile and run the transactions from your iphone or android device is a useful option should internet become unavailable for short periods.http://www.squareup.com
The SquareUp system generates revenues by charging an industry best $2.75% per credit card transaction, which in many cases, can save the business owner thousands of dollars per year. The processed funds are normally deposited into the business owners account within 48 hours, confirmed by an email from SquareUp. The only downside to the SquareUp transaction model is it's lack of a debit card capability, which in Canada represents approximately 40% of all transactions. Even so, for the new business owner the benefits derived from the free software and backup, inexpensive hardware, traceability by remote, and back office real time programming, makes the choice of SquareUp Register cost effective and sensible.
Finally, by registering with SquareUp, each business is listed online in the Square Directory where businesses can post their menus, hours of operation, photos and a store locator. Square has also launched a new Mobile Phone Cashless Payment System named Square Wallet. At checkout, Square Wallet recognizes your mobile device and your name and photo appear on the register screen. The cashier simply confirms the photo is of the purchaser and the transaction is completed.
I know I appear to be a little biased here, and I even believe my company was the first to perform a Square transaction in Canada, but this blog is dedicated to helping businesses to save and make money in the coffee business and I am truly impressed with the product and service. That said, I feel the need to declare that I have not been paid or compensated for such a glowing review, but after running SquareUp in our own cafes for the past month, I highly recommend SquareUp for new and established businesses for its ease of set up and use, cost effectiveness, relatively cheap hardware, free software, industry leading processing rates, quick deposits, remote tracking of sales, robust reporting options, and marketing potential through the directory, loyalty program management and ability to delight customers. For now, SquareUp is only available in the United States and Canada, but the company indicates that they plan to launch in many new countries in 2013. *Note: All of the photos included in this post were taken directly from the SquareUp site http://www.squareup.com
Wednesday, October 31, 2012
The 5M's Redux
While roasting away the hours there is a period of time after the next roast is loaded and ready, and before first crack, when I can divert my thoughts to things that interest me. After I completed and published my last post I contemplated the limitations of my binary declaration that each of the 5 M's plus Water be declared as either acceptable/unacceptable. As I described in my previous post, this yields the equation 2^6=64 different possibilities each time a barista approaches the espresso machine.
Upon further reflection I've decided that declaring something as acceptable/unacceptable is not appropriate since:
Upon further reflection I've decided that declaring something as acceptable/unacceptable is not appropriate since:
- acceptable does not adequately describe perfection in any or all elements
- the spectrum of acceptable may be mathematically described by a differential equation and therefore assigning even 2 extra descriptors to each of the 5 M's plus Water is not unreasonable.
- unacceptable is clearly definable, and once the threshold is crossed, the degrees of unacceptability is moot.
Therefore, what I am proposing is to assign two further designations to each of the 5 M's plus Water that reflect acceptable faults which individually do not fatally flaw the espresso.
For example:
- Grind
- Perfect
- Too course but acceptable
- Too fine but acceptable
- unacceptable
- Water
- Perfect
- Too Soft but acceptable
- Too Hard but acceptable
- unacceptable
- Blend
- Perfect
- Too fruity but acceptable
- Too flat but acceptable
- unacceptable
The others can be fleshed out and debated as to what would adequately describe acceptable opposing variables, but I believe including two extra designations is a better reflection of the possible outcomes when a barista attempts to make an espresso.
If the inclusion of two extra descriptors are accepted then the new equation becomes:
4^6= 4096
This means there are 4096 possible outcomes each time a barista attempts to make an espresso.
This greatly increases the number of possibilities for espresso outcomes but I think is helpful to put in perspective how difficult it is to make a perfect espresso, and even how unlikely it is that one ever gets made. While this statement is no doubt going to raise some eyebrows, remember, that if even one of the variables is less than perfect, then necessarily the beverage is not perfect.
I'm curious to see what others think of this description of espresso and whether it is productive to think of it in these terms.
Sunday, October 21, 2012
5M's: The Odds Are Against You
- Mano dell'operatore (the hand)
- Miscela (the blend)
- Macinadosatore (the grinder)
- Macchina Espresso (the espresso machine)
- Manutenzione (maintenance)
- Aqua (Water: upside down M)
One of the time tested axioms of espresso is the 5 M’s (plus Water) which each contribute to the creation of a perfect espresso. It is understood that a fatal fault in any of the 6 contributing factors necessarily leads to a flawed beverage. Treating each factor as a binary, and declaring it as either acceptable or unacceptable, we can confidently identify through simple mathematics that there are 64 possible unique results each time a barista attempts to make an espresso.
2 represents the binary (acceptable/unacceptable)
6 represents the 5 M’s plus Water
2^6=64
The perfect shot occurs when each of the 6 variables are determined to be acceptable. Any determination that one or more of the factors is unacceptable automatically makes the beverage fall somewhere on a scale from less than perfect (1 factor unacceptable) to horrible (all 6 factors unacceptable). It is understood that assigning a grade of acceptable/unacceptable is decidedly diplomatic in an industry replete with specialty coffee partisans, however it is productive and helpful to know how badly the odds are stacked against you when you approach the machine and how hopelessly unfair they are if your equipment and materials are sub par.
Wednesday, September 19, 2012
Mark to Market
Mark to Market is a term whose frequency of use increased in late 2008 with the collapse of complex derivatives and options based on ill advised mortgages to American home buyers. Basically GAAP (Generally Accepted Accounting Principles) compelled financial firms to reduce the value of paper they held at Book Value (Purchase Price) as market conditions deteriorated and residential real estate values plummeted. The concept of Mark to Market was created to determine the credit/debit status of Margin traders in the Commodity Markets but is important in valuing the contracts and commitments of coffee brokers and roasting companies (less so the inventory of retail companies).
Coffee growers, brokers and buyers typically use the Commodity price for coffee as a baseline to determine specialty coffee prices. An example would be where a Specialty Coffee is determined to be valued "C" plus a fluid amount depending upon quality (ie "C" plus $1.20). This method of valuing specialty coffee is a simple linear equation, easy to understand with a transparent and logical baseline. If a coffee was purchased at "C" plus $1.20 at harvest, and the commodity price falls after the date of the contract, the coffee is worth less and should be reflected that way in your balance sheet.
Most brokers continuously adjust their pricing with the rise and fall of commodity price...most.
One exception is the purveyors of ultra high end coffee. These coffees don't come to market through normal channels, and so there may be an argument to be made that it's value is delinked from the commodity price, however there is very little transparency or logic in this type of valuation. If the commodity price fluctuates freely and the price of ultra high end coffee remains constant, the value of high end coffee is arbitrary and based on purchase price rather than market conditions. Currently many ultra high end coffee sellers would have secured their inventory while the "C" was floating near historical highs in 2011. Beginning late 2011 coffee commodity prices began to deflate, theoretically reducing the value of all coffee under contract. The problem for newer brokers working on bank loans and margin is that they cannot reduce the value of their contracts without jeopardizing their debt to equity ratio displayed in the Balance Sheet. The reality is that the broker uses a formula to determine purchase price, whether it is a simple equation or differential calculus, there is a formula. If there is a formula to determine value at purchase, then the same formula should be used to reduce the value as the price of the underlying commodity deteriorates.
I have been sampling some self declared ultra high end coffees recently whose pricing is completely detached from the realities of our current market. While considering the value gap I came to the conclusion that the coffee was not poor quality but poorly bought, handcuffing the marketability going forward. It is clear to me that some of these coffees are looking for naive buyers who are captivated by scarcity and marketing material rather than realistic value propositions. My advise is to check your coffee prices as they track throughout this past year, if your prices haven't fallen for similar purchases at a rate that tracks the "C", then you are likely paying for your brokers mistakes and you need to make them aware of the inconsistencies. Paraphrasing Benjamin Graham, "Price is what you pay...Value is what you get".
Coffee growers, brokers and buyers typically use the Commodity price for coffee as a baseline to determine specialty coffee prices. An example would be where a Specialty Coffee is determined to be valued "C" plus a fluid amount depending upon quality (ie "C" plus $1.20). This method of valuing specialty coffee is a simple linear equation, easy to understand with a transparent and logical baseline. If a coffee was purchased at "C" plus $1.20 at harvest, and the commodity price falls after the date of the contract, the coffee is worth less and should be reflected that way in your balance sheet.
Most brokers continuously adjust their pricing with the rise and fall of commodity price...most.
One exception is the purveyors of ultra high end coffee. These coffees don't come to market through normal channels, and so there may be an argument to be made that it's value is delinked from the commodity price, however there is very little transparency or logic in this type of valuation. If the commodity price fluctuates freely and the price of ultra high end coffee remains constant, the value of high end coffee is arbitrary and based on purchase price rather than market conditions. Currently many ultra high end coffee sellers would have secured their inventory while the "C" was floating near historical highs in 2011. Beginning late 2011 coffee commodity prices began to deflate, theoretically reducing the value of all coffee under contract. The problem for newer brokers working on bank loans and margin is that they cannot reduce the value of their contracts without jeopardizing their debt to equity ratio displayed in the Balance Sheet. The reality is that the broker uses a formula to determine purchase price, whether it is a simple equation or differential calculus, there is a formula. If there is a formula to determine value at purchase, then the same formula should be used to reduce the value as the price of the underlying commodity deteriorates.
I have been sampling some self declared ultra high end coffees recently whose pricing is completely detached from the realities of our current market. While considering the value gap I came to the conclusion that the coffee was not poor quality but poorly bought, handcuffing the marketability going forward. It is clear to me that some of these coffees are looking for naive buyers who are captivated by scarcity and marketing material rather than realistic value propositions. My advise is to check your coffee prices as they track throughout this past year, if your prices haven't fallen for similar purchases at a rate that tracks the "C", then you are likely paying for your brokers mistakes and you need to make them aware of the inconsistencies. Paraphrasing Benjamin Graham, "Price is what you pay...Value is what you get".
Tuesday, May 29, 2012
Garden Hose Water
I wanted to post a quick thought on situational appreciation. As many of you who share a northern climate I am engaged in Spring garden preparations, yard work, and lawn maintenance. The past weekend was seasonally warm in my part of the world and I had worked up quite a thirst while moving some soil. As I am conditioned to do, I turned on the garden hose and quenched my thirst the way I had since I was a child. I can honestly say that often I consider cool water from a garden hose to be the finest water I have ever tasted...because I am particularly thirsty, I have fond memories of childhood summer days, the weather was beautiful, I was having a great day etc.
This started me thinking of how we within our industry disregard and demean customers who enjoy corporate coffee etc without considering how we ourselves lower our standards or disarm our prejudices in favour of situational or conditional factors which eclipse taste. Sometimes a Big Mac tastes as fine as a Prime Rib, sometimes a snickers bar tastes better than a Pain au Chocolat, sometimes garden hose water tastes better than Perrier and sometimes grandma's commercial coffee seems better than Esmerelda. Not always, just sometimes.
This started me thinking of how we within our industry disregard and demean customers who enjoy corporate coffee etc without considering how we ourselves lower our standards or disarm our prejudices in favour of situational or conditional factors which eclipse taste. Sometimes a Big Mac tastes as fine as a Prime Rib, sometimes a snickers bar tastes better than a Pain au Chocolat, sometimes garden hose water tastes better than Perrier and sometimes grandma's commercial coffee seems better than Esmerelda. Not always, just sometimes.
Wednesday, May 9, 2012
The 800 Pound Garrulous
Ok, the title is a groaner but it was either that or "Garrulous in the Missed".
The following is my attempt to expand on my previous post and offer some suggestions to create discussion about bringing focus back on the consumer, or at least adding some programs so that all of us agree there is a focus on the consumer. Some of these ideas are things I've stewed about for some time, some have been inspired by comments on my previous post and some from conversations with interested parties. I'm not going to flesh out the ideas and describe how they would fit into SCAA systems because there are others better suited to that task.
1. Re-establish the Retailers Committee within the SCAA leadership group. I see this as a way to represent a company perspective to counter the barista/competition view that drives strategic planning currently. Barista/Micro Roaster input is invaluable, but we need balance. Coffeefest has established a program to reward great cafes presumably because they recognize there is too much focus on the individual.
2. Establish a Consumers Committee within the SCAA leadership. Stocking this committee may be problematic but if they can represent the full spectrum of consumers effectively they can also reduce resentment and provide some perspective on how we are serving our customers needs.
3. Add an additional component to EVERY lesson plan written by the SCAA in all its branches to apply lesson knowledge into how to better serve the customer. Asking course participants to articulate how they would leverage course material to better serve each customer would remind us all who we should be pleasing. If customer service is a component of every lesson plan and not just an online entry level course, it would no doubt improve service across the industry.
4. More effective and balanced use of conventional and social media by SCAA. Re-tweeting and publishing by the SCAA of individuals is perceived as an endorsement (like it or not). That endorsement damages the SCAA when the "endorsed" lash out and behave unprofessionally online or elsewhere. There are many within the Specialty Industry who are routinely criticized and demeaned simply for expressing an opinion. That has to stop and the offenders called out until it stops. There are too many knowledgable and kind coffee people (as Colleen reminded me in my previous post) who have no voice because they are afraid of ridicule or having their head photoshopped on Sprudge or some other form of cyber bullying that characterizes a very small minority of our peers. Having access to SCAA resources comes with responsibility and the beneficiaries can't always claim they were wearing their company hat when they offended some of our community. If it's mean, make it stop and make your voice heard.
5. Reform the barista competition format to make it more closely represent a customer interaction rather than a performance. Maybe it could be based on a sort of "iron chef" type format where signature drinks are based on a unique list of available ingredients for each barista and they are able to construct something blind, or simply shaking up the drink orders so they are not served as a flight, but random like a normal order sequence. There are no doubt many obstacles to this happening, but making the barista demonstrate "working barista" skills rather than performance craft would greatly expand the limited possibilities of the current format. What we would see is a more personal and edgy competition that would both thrill an audience and test the barista's ability to think on their feet, like a normal bar situation.
6. Establish a committee or working group to examine how to recruit more visible minorities into Specialty Coffee. This I think is long overdue. Minorities bring unique perspectives that are vastly under represented currently. I don't know anything about consumer habits within minority communities, but I do know that if the distribution of attendees at SCAA events is any indication, there is a massive amount of business to be gained by engaging with ALL of our society.
Those are my initial thoughts. Please know that these are not intended to demean or diminish anyones past contributions to the coffee community, but my personal suggestions for addressing what is a sore point with many within the industry.
The following is my attempt to expand on my previous post and offer some suggestions to create discussion about bringing focus back on the consumer, or at least adding some programs so that all of us agree there is a focus on the consumer. Some of these ideas are things I've stewed about for some time, some have been inspired by comments on my previous post and some from conversations with interested parties. I'm not going to flesh out the ideas and describe how they would fit into SCAA systems because there are others better suited to that task.
1. Re-establish the Retailers Committee within the SCAA leadership group. I see this as a way to represent a company perspective to counter the barista/competition view that drives strategic planning currently. Barista/Micro Roaster input is invaluable, but we need balance. Coffeefest has established a program to reward great cafes presumably because they recognize there is too much focus on the individual.
2. Establish a Consumers Committee within the SCAA leadership. Stocking this committee may be problematic but if they can represent the full spectrum of consumers effectively they can also reduce resentment and provide some perspective on how we are serving our customers needs.
3. Add an additional component to EVERY lesson plan written by the SCAA in all its branches to apply lesson knowledge into how to better serve the customer. Asking course participants to articulate how they would leverage course material to better serve each customer would remind us all who we should be pleasing. If customer service is a component of every lesson plan and not just an online entry level course, it would no doubt improve service across the industry.
4. More effective and balanced use of conventional and social media by SCAA. Re-tweeting and publishing by the SCAA of individuals is perceived as an endorsement (like it or not). That endorsement damages the SCAA when the "endorsed" lash out and behave unprofessionally online or elsewhere. There are many within the Specialty Industry who are routinely criticized and demeaned simply for expressing an opinion. That has to stop and the offenders called out until it stops. There are too many knowledgable and kind coffee people (as Colleen reminded me in my previous post) who have no voice because they are afraid of ridicule or having their head photoshopped on Sprudge or some other form of cyber bullying that characterizes a very small minority of our peers. Having access to SCAA resources comes with responsibility and the beneficiaries can't always claim they were wearing their company hat when they offended some of our community. If it's mean, make it stop and make your voice heard.
5. Reform the barista competition format to make it more closely represent a customer interaction rather than a performance. Maybe it could be based on a sort of "iron chef" type format where signature drinks are based on a unique list of available ingredients for each barista and they are able to construct something blind, or simply shaking up the drink orders so they are not served as a flight, but random like a normal order sequence. There are no doubt many obstacles to this happening, but making the barista demonstrate "working barista" skills rather than performance craft would greatly expand the limited possibilities of the current format. What we would see is a more personal and edgy competition that would both thrill an audience and test the barista's ability to think on their feet, like a normal bar situation.
6. Establish a committee or working group to examine how to recruit more visible minorities into Specialty Coffee. This I think is long overdue. Minorities bring unique perspectives that are vastly under represented currently. I don't know anything about consumer habits within minority communities, but I do know that if the distribution of attendees at SCAA events is any indication, there is a massive amount of business to be gained by engaging with ALL of our society.
Those are my initial thoughts. Please know that these are not intended to demean or diminish anyones past contributions to the coffee community, but my personal suggestions for addressing what is a sore point with many within the industry.
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