Zero Profit & Complete Transparency; Founding Lessons From The Cost Price Cafe

What would happen if the things you bought had no profit in their price, and the price breakdown was transparent?

This rather idealistic question is what Cost Price Cafe revolves around. There simply is no profit, meaning coffee costs about half as much as everywhere else. Cost of goods, wages, yearly repairs, insurance et cetera go into the price, and every two weeks there’s an updated bar graph with how much was made and spent.

The evolution of Cost Price Cafe started like a snowflake of an idea that slowly clumped into a snowball and has gradually begun rolling downhill with the intent of it becoming an avalanche.

Would profits be better dispersed amongst customers or is this a utopian dream?

Years before opening, it was just a fantasy, and I’d take months in between making steps in the business planning stage. Slowly the periods in between action and procrastination became shorter. In January last year I had a business mentor help me get realistic about the details of an action plan. I read the Incorporated Associations Act, heaps of online literature and found a truly inspirational website called Impact Boom where I got to read articles by everyday super heroes. Fast forward a year, and here I am writing an article about the lessons I’ve learnt.

In December 2017, we held our first board meeting (consisting entirely of friends and family) and became an official nonprofit two months later. Two weeks before opening in March, I tried to assemble everything myself but the custom made trailer wasn’t ready on the opening day so I had to cancel the opening event.

In the first few months two horrific things happened. First, the badly made trike fell apart, and equipment was consequently broken.

It was a great failure, costly but great.

The rear carcass was hanging by a broken gas pipe, white milk was flowing, white coolant from the fridge was in the air. An engineer friend of mine advised me on how to give it more structural integrity. Then about a month later the brand new silenced generator was stolen. I had to learn quickly about volts, amps, batteries and inverters. Starting with the cheapest solution and working up to meet the power needs of the machine. Even though it was inconsistent, people kept coming back and telling their friends, and sales doubled in 6 months.

One lesson this has taught me is commitment. Before starting, I knew that it could take years before I am able to replace myself and let the concept run on its own. Until then I have the responsibility of getting things done no matter what.

Even if someone steals a generator, even if it’s uni holidays and sales are down, even if I’m terrified of interviews and photographs.

People have offered to volunteer for free, but I always decline because the Cost Price Cafe model is designed to pay people for their work.

Another big lesson has been to accept some help.

An engineer friend helped to diagnose and solve the early power problems after the generator was stolen. When the gazebo blew over, a regular customer gave me some spare sandbags. (Fun little story about this same customer: he always has a suspended coffee for people who can’t afford it, and one day he was waiting in line and a young lady offered to pay for his coffee. She had no idea that he had already paid for so many other people’s coffees!). One lady even brings a sign in when she knows I’m about to pack up. It’s great being so connected to the community, saying, ‘hi’ to everyone, every morning. I love people and I love hearing their stories. Also, recently the board secretary convinced me to delegate tasks to the executive committee instead of trying to do all the work myself, and we plan to replace members on the board with people who are interested and/or experienced in the nonprofit sector. Accepting help isn’t selfish, people want to help other people and it’s a nonprofit so there’s no one on the top reaping all the benefits.

Looking forward, the plan is to fundraise for a cafe with a kitchen. The funds will pay for purchase of the cafe and it will be self sufficient after that (similarly to how I paid for the setup costs of the Kelvin Grove site). Eggs Benedict shouldn’t be $17 and I think we can make sandwiches for $1. It would be great to affordably feed people en masse.

Providing jobs to people who have trouble getting one will be a fun thing to do.

How crazy is it that people with disabilities and single mums have trouble getting hired? After or during that, the plan is to trademark Cost Price Cafe and license the brand; kind of like franchising, but without any money. People can just sign the license and start their own Cost Price Cafe.

While it is impossible to predict what kind of impact the Cost Price model could have and how many sectors could take it on, I certainly think that dispersing profits among customers is better than where it currently goes.