'Business owner doesn't know math': Coffee shop owner bans cakes, loses money

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Remy Millisky • Writer and Editor
Mar 20, 2024 3:00 PM EDT

One business owner is getting fleeced, and she doesn't even realize it. 

Local coffee shops are a great place to get some work done on your laptop, meet up with friends to talk, or grab a quick bite to eat. While some locations only carry coffee and tea, a lot of them carry food products---and they aren't afraid to mark up prices quite a bit. The new owner of one coffee shop is still trying to figure out her profit margins. 

The owner of the baked goods shop she's buying from noticed that she's stopped buying cake, and this person isn't about to tell her to do otherwise. In the comments, people thought the owner was foolish for these business practices. As one person wrote, "I see a new owner on the horizon." People sometimes make the wrong choices when trying to save money---some places will get rid of a fan favorite just to save a few pennies, for example. If all the customers who loved that food stop coming into your store… that's not really saving any money, is it?

Check out the complete story below. Then, read the tale of one new car owner who got sold a lemon, and decided to file a lawsuit against the car dealership that sold it to them. 

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  • 01
    'The new owner tells me to stop bringing cakes'
    via Jacob Thomas on Unsplash
  • 02
    Business owner doesn't know maths
    via u/TioBaldicia
  • 03
    I sell baked goods to a local coffee shop. I have been doing it for over a year. They recently got a new owner and they are trying to make some changes.
    via u/TioBaldicia
  • 04
    The new owner has made some questionable choices already, but it's really none of my business. I just show up a few times a week and drop off various items for them to sell. At the end of week I drop off an invoice and they pay me. All is well.
    via u/TioBaldicia
  • 05
    For a while I was bringing a cake each week. Each cake is pre-sliced so the staff has no work to do.
    via u/TioBaldicia
  • 06
    A couple of relevant details: One, the cakes always sell out. Two, the cakes have the highest margin for her. I sell her a cake that is 12 servings for for $40. She sells it for $5.25 a slice.
    via u/TioBaldicia
  • 07
    So she makes about 1.90 per serving. Most of the other items she is only making .85-1.00 per serving.
    via u/TioBaldicia
  • 08
    Recently, the new owner tells me to stop bringing cakes. She says they are too expensive.
    via u/TioBaldicia
  • 09
    So instead, I've been bringing cupcakes. They sell for $4.00 a piece and I bring 12 of them, I charge her 3.15 each. Now she only makes .85 cents a serving. No cakes though, so she is happy!
    via u/TioBaldicia
  • 10
    zephen_just_zephen. Maybe she finds your cake irresistible, and eats all the profits whenever you bring one? 4.0k Reply TioBaldicia OP I like this theory
    via u/zephen_just_zephen
  • 11
    00 brothertuck. Years ago I worked at a pizza shop with an owner who was just as good In math. We used to sell potato chips, he stopped because every week he paid "too much" to refill the rack.
    via u/brothertuck
  • 12
    CMDR_Zantigar Offer to sell the cakes for $3.75 a slice instead of $40/cake. Be sure to point out that she's making an extra $1.25 on the $0.60 price delta. Don't mention that you're making an extra $5/cake with that pricing. Everybody wins. :)
    via u/CMDR_Zantigar
  • 13
    litsalmon. Most times you just can't fix stupid.
    via u/litsalmon
  • 14
    enigmaticrose4 I have a feeling they may not be your customer for long with those math skills...
    via u/enigmaticrose4
  • 15
    sardonicAndroid2718. Not necessarily. You don't need to be the best businessman to run a successful business. So long as income is enough to cover expenses, you can continue to operate.
    via u/sardonicAndroid2718
  • 16
    gCKOgQpAk4hz This sounds that the new owner is focusing on costs, without regard to profits. This is very common with inexperienced business owners, especially during the initial period. Coffee shops, like restaurants, run with certain margins on their products. An inexperienced owner will tend towards cost management, looking for lower cost items. Unfortunately, lower cost items also tend to be less desirable, so the margins are smaller and you have to make it back with volume.
    via u/gCKOgQpAk4hz
  • 17
    Either the new owner needs to learn to seek out more profitable items, or they must sell more. As mentioned, 12 cupcakes are just under $40. Perhaps OP could point out that the cake slices cost $3.33 each slice and are sold for $5.25, while the cupcakes cost $3.15 and sold for $4.00 each. The owner has not made the transition to costing the cake on a per slice basis. Or, could simply say that you don't make enough money on the cupcakes and need to increase the price by $0.15 each.
    via u/gCKOgQpAk4hz
  • 18
    ShelteringInStPaul I watch these restaurant redo shows on TV and it's amazing how many restaurant owners have no clue as to food costs or profits.
    via u/ShelteringInStPaul
  • 19
    9lobaldude I see a new owner in the horizon
    via u/9lobaldude

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cake baked slice bakery malicious compliance malicious-compliance-reddit finance profit cakes coffee business math malicious compliance reddit money
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