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REDUCE PACKAGING TO SAVE ON YOUR COST OF GOODS

12 April 2023

5 min read

Reducing takeaway packaging is a great way to improve your COG. Use our online calculator to see how.

Every cent counts when it comes to maintaining your cost of goods (COG) and ultimately, your bottom line! 


Reducing, reusing and avoiding packaging is a great way to improve your COG. We'll show you how.


COST ANALYSIS


Although it can feel time consuming, a cost analysis will identify where you can save a couple of percent on your COG, and help you increase your margins and profits. 


A cost analysis considers three main factors:


  1. Reduce costs

  2. Increase prices 

  3. Increase sales 


1. REDUCE COSTS


It’s worth looking at your packaging and the cost of each item. The cheapest option isn’t always the best and you will need to consider quality, customer demands, environmental costs and your business brand, responsibilities and reputation. 


Ideas to consider: 

  • Switching to a different product, e.g., change from double wall to single wall cups.

  • Ask your supplier for a better price for bulk purchases or a discount for COD.

  • Can you use less takeaway packaging? Ask the customer if they need a lid.

  • Encourage customers to Dine-In - no packaging required!

  • Encourage customers to BYO drink - no packaging required!

  • Only offer dine in or BYO - ditch the takeaway cup completely!

  • Implement a cup library or swap system.


Below, you can calculate the savings for every single-use cup and lid you remove.


Find more detailed information on reuse options, including costs, time and resources required in our companion guide - Cost benefit of reusables.



2. INCREASE PRICES


One of the easiest ways to reduce costs is to convert your community to reusable cups and dine in service, but while you’re educating your customers, training staff and instilling new habits you may still need a single-use takeaway cup option.


What can you do in the interim? 


It’s essential to check your COG’s on a regular basis to ensure you’re charging enough. Sometimes a small price increase goes unnoticed by the customer but makes a big difference to your profit margin.


Let's check out how:

  • Use our COG calculator below to input different prices and calculate margins and profit outcomes. 

  • Aim for a 20 - 25% COG minimum, giving you a 75 - 80% profit margin.

  • Check your packaging costs and prices regularly - see where you can reduce input costs (e.g. reducing packaging) or increase prices accordingly. 

  • Know your customer and what they’re willing to pay. 

    • Are they price or quality driven?  

    • Are they loyal and feel like they’re part of your community?

  • See the effects of a reusable discount - this can help you decide whether to offer one.

Note: the calculator is based on 4.2 grams of sugar per tsp, and 5.3 grams of coffee per Tbs. If you'd like to keep our online calculator on hand, find the direct link HERE.


3. INCREASE SALES


There are many ways to increase sales, but we're going to focus on packaging. We’ve established that increasing BYO cups and dine-in customers will reduce your costs. Building customer loyalty is an important step to achieving this.


Here are a few tips.


Sell Branded BYO cups - Make $10 - $15 profit per cup.  
  • Upsell at POS 

  • Offer a free coffee with purchase. 

  • Brand Loyalty - a branded cup reminds a customer of your business and promotes loyalty. 


Shared values and engagement
  • Promote your achievements and impacts

  • Promote your environmental values 

  • Promote BYO on social media - only take photos and videos of reusable packaging. 

  • Promote BYO and dine in specials in store - signage and visual reminders. 

  • Share pictures of customers with their BYO cups on social media 


BYO Loyalty cards 
  • We’ve all used a loyalty coffee card program before: Buy 10 coffees get 1 free. Try a BYO loyalty card instead: Buy 10 coffees in your BYO coffee cup and get 1 free. Encourage the card in conjunction with selling branded cups. 


Single-use surcharge 
  • Implement a $0.25 surcharge on takeaway cups. This is a great way to encourage the use of BYO and dine in. 

  • Numerous studies have shown that disposable coffee cup surcharges are more effective than discounts at increasing reusable cup use. 

  • Give customers warning e.g., “on the 1st of March we will be charging a surcharge for single use takeaway cups. We want to give you time to build the new habit of bringing your own cup so we’ve given you a month to prepare for the change”. 

  • Be sure to help your customers understand the environmental benefits and their positive contribution. 


Dine in and BYO deals - get creative!
  • Morning muffin discount (ensure you choose an item with a high margin around 15% COG). Receive a discount on the morning muffin when you BYO cup. 


Staff Training 
  • Provide staff with POS conversation tips:

    • Have you brought your BYO cup today? 

    • Great to see you’re using your BYO cup!

  • Add prompts to your POS system via instructional modifiers. E.g., BYO cup. Dine In.

  • Run a special such as the morning muffin discount. Track staff sales and provide incentives/rewards to encourage staff to sell the special. 


Record, measure and promote achievements.
  • Run a Reusable cup campaign with your Plastic Free Places state coordinator. 

  • Promote how many cups you and your community have collectively saved. 

  • Use the Keep Cup Calculator to measure impact and promote it. 

  • Take pride in your achievements and brag about them! Customers love a feel good story that they can say they’re a part of. 



CONCLUSION


We’ve focused on how to manage the transition to reusables whilst protecting your business’ bottom line. Creating new habits takes time and the benefits need to outweigh the drawbacks.


Understanding “why” making the switch is important to your cafe goals (increase sales and profit) and values (business and community responsibilities) is essential to successfully making changes and sticking to them. 


Knowing “how” to go about this makes it all tangible and helps you get started. By taking small steps towards change, you are communicating your goals and purpose to your staff, customers and community, and promoting shared values that have long term benefits to your business success. 


All brands and products mentioned are for example purposes only. Boomerang Alliance is strictly impartial and does not endorse any particular brand or product. We do not accept kickbacks from suppliers or manufacturers. 

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