Nemo's Update 4-30-08

Strong sales so far this week…

We exceeded our break even budget for Monday by $120, and we exceeded our break even budget Tuesday by $240. That is based on 167 customers on Monday and 168 customers on Tuesday. I was at the shop this morning, and we had 50 customers by 8:30am, so it may be another strong day…
These numbers are not making us want to go out and buy a BMW, but it is a step in the right direction for sales growth!

Some more trivia on numbers for the first year:
Total labor costs April 2007 to April 2008: $32,498
Highest earnings by one employee: $7510
Lowest earnings by one employee: $99

Total Sales by quarter:
APR07 - JUN07: $20,396
JUL07 – SEP07: $40,241
OCT07 – DEC07: $38,632
JAN08 – MAR08: $$40,070

We were on pace in October and early November 2007 to show growth, but sales took a dive from Thanksgiving all the way through January 2008. I have spoken to other coffee shop owners and other small business retailers, and they experienced the same drop in sales during the holidays. We saw stronger sales building in February and March 2008, resulting in overall similar performance to our second quarter in operation. Provided gas costs don’t get too crazy, I would expect our current quarter to set a new record. We still need to see what today’s final sales will be, but it looks like April08 sales will be around $14,600, which would put us on pace for a $43,800 quarter.

My biggest concerns right now:
1. The price of gas. People don’t like $3.50 per gallon gas, but it is a problem we can deal with, in the hope it is not permanent. I have heard speculation that oil could hit $200 per barrel, and that would result in a significant increase in gas costs. Coffee indulgences are supported with disposable income. If gas hits $5.00 per gallon, or even higher, I would expect to see an impact on our sales. Oil costs have increased approx 125% if based on the Euro currency. Oil costs have increased approximately 320% if based on the dollar. In other words, oil costs have increased, but the weak dollar is the real culprit for the biggest part of the problem. I am hoping our government will do something to improve the strength of the dollar on world markets. Right now, it looks like everyone is spending all of their time watching the Hillary vs. Obama fight. I say stop wasting so much time, money, and effort on an election ‘semi-finals’ and get back to running the country and taking care of business.
2. The economy overall… I am old enough to recognize that the economy gets lots of bad press anytime there is a presidential election with a sitting Republican president. The media way overplays the drama on the economy. I remember the horrible state of affairs of the economy, as reported by the media leading up to the election between incumbent George Bush and Bill Clinton. Within days of Clinton being elected, there was great news in the media with regard to the economy. Everything was looking sunny, nothing was as bad as it had seemed. (some call this lies and propaganda). Anyway, it happens and I am used to it. I think some of this hype may be going on, along with some real economy issues as well.
3. Construction… I know that a new building façade, new parking lot, and new outdoor patio area for us will be long term benefits for Nemo’s Coffee. I also recognize that 10 months of construction can hurt our sales if parking lot access is restricted, and if façade work makes it appear dangerous or difficult to get into our shop. It doesn’t actually have to be dangerous or difficult, but if people perceive it that way, then our numbers will go down.
4. Cost of goods sold… We have seen significant increases in costs of product across the board since April 2007. We have refrained from raising our prices because we thought the increased prices were due to TEMPORARY gas cost increases. I am currently writing a spreadsheet that will allow me to enter the cost of supplies and it will automatically calculate the cost of goods sold, and our margin on all items. For instance, a case of 15 dozen eggs cost just under $17 in April 2007. They currently are running $27, and peaked at almost $30 at one time. I will be able to enter the case cost, and it will automatically calculate the egg cost in a burrito, a breakfast sandwich, muffin batter, etc, etc, etc. Every product that uses eggs will automatically be updated, based upon the quantity of egg used per unit of that product. This will prevent me from doing data entry for every item on our menu when prices change. Once complete, we will need to evaluate the cost of our products to insure we are maintaining the margins we need to survive. For my basic break even budget, I have assumed 40% cost of goods sold. This should have enough room in it for waste, spillage, and employee beverage consumption (each employee gets one free drink per shift).

Upcoming tasks/goals/responsibilities, etc
1. I know I have mentioned this before, but I still need to install the video surveillance system. As I mentioned before, this includes running new electrical circuits where needed, and building a new computer, or refurbishing one of my existing computers. This is probably #1 on the priority list.
2. Hire a book keeper and get our 2007 Quickbooks file ready for tax prep.
3. Install a door from the café to the kids’ room prior to them being out of school for the summer.
4. Spring cleaning. Our shop is much cleaner than most coffee shops and retail food places in town. I want to keep it that way, and it is time to do some deep, deep cleaning. We also need to touch up some places on the walls that have been scraped or banged up…
5. Better organize our admin and management tasks. We have spent a year getting the daily operations down to an efficient system. We now need to set up schedules to include book keeping tasks, admin/paperwork tasks, etc. We end up doing these things on the fly, whenever I work in some time. I want to set up a scheduled system where these things are completed real time, instead of trying to do a month’s worth of admin all at once.

I hope you are all having a great day. We are not able to get away from the shop too much yet. Maybe in a year or two, our revenues will support more staff to allow us to have more time off for a vacation. For this year, Tracy’s parents are taking us to California to Disney World or Land (whichever one it is that is in California, not Orlando). The truth of it all is that they have planned to take Josh, Jonah, and Ethan on this trip once Ethan got old enough. Tracy and I get to go because three boys are too much for them to handle by themselves!! Anyway, we will be in California in June if anyone else wants to go!! Email me for details.

Gotta run,
JD