Peace, Love, and Coffee

A diary of the wonderful and wacky goings on at Coffee to the People, an independent coffeehouse located at 1206 Masonic Avenue in the Haight Ashbury neighborhood of San Francisco, California.

Wednesday, February 15, 2006

Coffeeshop Campers & the Honor System

One of the first decisions any coffeeshop owner has to make is what to do about the people who hang out all day studying, using the free wireless, and lounging on the couches, but don't actually spend any money. Sure, they spend $1.50 on a small coffee from time to time, but they nurse it for hours and take up room that might be used for other, paying customers.

If you're not a coffeeshop owner you might think that this is no big deal. After all, it's not like the person is using up costly products. They aren't eating free food or drinking free beverages. It doesn't cost any more to provide ten people with wireless than it does to provide one. And, they aren't using up a bunch of dishes that then have to be washed.

But, from the perspective of a coffeeshop owner, this is a huge problem. Here at CTTP, we need to bring in on average $100 PER HOUR simply to cover our costs. That means, if all of our customers were people who stayed for three hours and spent $1.50 for coffee, we would require 200 people in our shop every hour we were open, 7 days a week, just to stay in business.

Fortunately, not all of our patrons are quite so thrifty. We have lots of customers who buy more than a small coffee and many of them just drink (or eat) and run. We even have a large contingent of people who get their coffee and food to go. Nonetheless, at this juncture, our paying customers are not making up for the money our other customers don't spend, and this is a concern for us.

We have looked around a lot at how other coffeeshops deal with this problem and, for the most part, we aren't impressed. One strategy frequently employed is to disconnect the free wireless. Another strategy is to require a minimum purchase for every hour spent in the store. Some places even cover their electrical outlets, so people can't plug in their computers.

We can't imagine using any of these strategies at CTTP because they are fundamentally at odds with the spirit of our shop. When we opened our doors we wanted to be a warm, inviting, and inspirational space where people could come to get their work done, hang out with friends, and drink great coffee. Putting restrictions on what people can do while they are here would undermine that mission.

Beyond that, CTTP is well aware that the people who come to our shop represent a wide range of socioeconomic strata. Some are students living off of loans. Some are professionals. Some are homeless. Some are middle class American tourists visiting from out of town. Some are parents. And some are seniors living off of fixed incomes. As a result, there is a great diversity in what our patrons are reasonably able to pay for our services.

Since the last thing we want to do at CTTP is restrict who can and cannot come to our shop on the basis of income, we are determined not to introduce a mandatory minimum. However, that doesn't mean we can't expect our better-off customers to contribute their fair share of our revenues. For now, we are working off the honor system, trusting our patrons to do the right thing.

Which brings us to the question, what is a reasonable amount for us to expect a person to spend at our shop? After some thought, it seems to me that if every student or senior spent $3/hr, every working person spent $4/hr, and every professional spent $5/hr, we would be a lot closer to meeting our monthly costs without placing an undue burden on our customers.

What do you think? Do you have any ideas for addressing the freeloader problem that are in keeping with the spirit of CTTP? How much do you think is reasonable for a person in your situation to spend per hour spent at the shop?

Postscript: Right after I posted this blog entry, I stumbled across a post by one of our regulars, Kevin Burton, on the subject of free-wifi in coffeeshops. He makes some terrific points about how businesses should stop trying to discourage laptop users and start offering them other useful paid services to defray overhead costs. I think this is a great idea, but I would like to hear some suggestions about how to do this at CTTP while still remaining accessible to our lower income clients. What kinds of services could CTTP conceivably offer that would be of value to the laptop brigades?

38 Comments:

At 2/15/2006 09:26:00 PM, Blogger Kevin said...

I'm amazingly sympathetic. I have similar issues running my company (TailRank). It's an online site but we have similar issues. How do you monetize your users so you can stay in the black to continue to provide an amazing service?

My advice is to think outside of the box. Approach the problem from a different angle.

For example, free wifi is really the only way. Dealing with paid wifi is just too much of a hassle.

Charge for other things. I'd really like to have a small office to make phone calls from. Charge me $5.00 to make a call for 10-15 minutes. I can't go outside because its cold and noisy. I also don't want to take my laptop with me.

This at the very least might be a good experiment.

I'd also put up a policy WRT free wifi access. Free per one hour purchase.

A lot of students and anyone who hasn't had experience starting a company before is blissfully ignorant about the economics behind the thing. Just explaining things in a clear manner can go a long way.

With our economics 95% of our users don't contribute anything. We have 5% of our users that actually reward us economically so we try to cater to their needs.

Onward!

Kevin

 
At 2/15/2006 09:35:00 PM, Blogger Nick Douglas said...

It's great to hear you won't cut wifi or power.

I occasionally work at CTTP, and I probably only spend $1.50 an hour, tops. But when I'm in the area, CTTP becomes my default spot to grab a cup to go.

But customers should be smart enough to start spending if they want a table during a busy period. Otherwise, it seems fair to somehow intimate that they're taking up space.

 
At 2/15/2006 11:24:00 PM, Anonymous Anonymous said...

How would you communicate to your customers how much you expect them to spend? That seems a lot ickier to me than blocking access to the power. Laptop batteries last long enough for an average visit for me, but I guess I'm in the minority here. Anyway, I don't think it's going to be one solution but a bunch of little ones. A slight increase in take-out business plus a decrease in average time spent plus more food purchased plus ? Also, there are probably a few people who are the worst offenders in terms of hanging out and not buying anything. One little heart-to-heart like you posted here in person with them might make a difference.

What about selling stuff that isn't just for consumption on the premises? People will spend more on things they get to take home. The big guys add to their bottom line with CDs, gifts, you name it. You have books, games, etc. for the store that you could also sell for people to take home. Local zines? Copies of the posters on the walls?

 
At 2/16/2006 01:28:00 AM, Blogger Kevin said...

Yeah.. the overflow window is a good point.

One issue I have is I can only have SOOO much coffee and food. If the place I'm hanging out at is getting busy I make sure to either leave or buy something else. I don't want to be hurting any paying customers just because I'm in heads down coding mode.

Kevin

 
At 2/16/2006 05:20:00 AM, Anonymous Ray said...

I think that you are looking through the wrong end of the telescope in some of your analysis. Having people sitting at the tables at CTTP is good for your business. All of those bodies create a warm, inviting human environment and advertise that CTTP is a good place to get a coffee or a bite to eat. This has to bring in more people than an empty storefront, especially tourists and passers-by.

Take a look at your predecessor at that site, nobody ever went in there because, in part, because nobody ever went there. (It was also an odd store.)

I'd agree with the other suggestions here, add other goods and services that people would pay for, maybe more communication about the situation, and some limitations at some times of day.

I don't come in regularly on week days, but on weekends and when I have been in during the week, I haven't noticed that you are having to turn away people. Are there times of day when you do?

The other thing that you could do is to extend your hours. (What are your hours anyway, they aren't on your website?) Increasing the hours that you are opened lowers your $100 per hour, but it also increases the odds of someone coming in at another time.

There have been a couple of times on my way home when I thought about dropping in but you were closed. The $3-5 you might have gotten on that visit wouldn't have been worth it, but your problem is that since then there have been another 4 or 5 times that I considered coming in and thought, "No they're probably closed." I'd guess I'm not the only one.

 
At 2/16/2006 05:49:00 AM, Blogger Karin said...

Ray-You bring up some excellent points. You're quite right that having the place full is an important part of our appeal, and that's one reason why we haven't done anything to discourage laptop users. At the same time, however, we've started to observe a certain "stop at the door" phenomenon during our busiest hours, where people approach the store, open the door, peer inside at the packed tables, and leave. Perhaps we could address this problem by restricting our services during these periods, but I'm not sure that is in keeping with the CTTP spirit.

As for staying open longer, we actually tried that at first and had to abandon the idea because our business drops off so precipitously after 6 pm. We may try it again during the summer when the days are longer, but for now we close at 8 pm every night except Friday (our open mic goes until 10). (BTW, thanks for the tip about our hours. I'll make sure they get posted here somewhere.)

I really like what everyone is saying about offering more paid products and services. The trick, of course, is to find a way to make these changes without compromising our most fundamental mission, which is to provide superior coffee.

I also like the idea of doing more to let people know how much it costs us to make all of our free amenities available. There must be a way to do this tactfully and it's a heck of a lot better than instituting a mandatory minimum.

 
At 2/17/2006 06:27:00 AM, Anonymous Anonymous said...

1. I like the idea of selling posters
2. Ray, a bunch of people staring at computer screens and not talking to eachother is NOT warm and inviting. That's what cubicles are for, not coffee shops.
3. I think making the wireless work better should be the first priority for CTTP, then worry about the people using it.

 
At 2/17/2006 07:34:00 AM, Anonymous Anonymous said...

oh.

one word:

advertise.

 
At 2/19/2006 07:48:00 AM, Anonymous hOllaBacK Grrl said...

I'm likely guilty of staying too long and not spending as much as i "should". But its not because i'm some freeloader trying to get the most coffee shop experience for my money. More likely it's that i've lost track of time and fallen into an oblivious trance of typing, reading, writing, etc.

However, if things in there weren't so borrring, and the staff were a bit more lively in their interactions with patrons, it may just make people more aware of their surroundings (and the fact that they've been sitting in the same chair for 2 hours after only buying a cookie).

Consider traditional japanese sushi restaurants - everyone is made to feel welcome by having the entire line of sushi chefs holler "How are you?!" at patrons when they enter.

Simple & effective way to let other patrons be more in tune with the traffic flow of the place - there will be people that start to ship off when they "hear" these new customers filter in and empty tables are scarce.

 
At 2/20/2006 04:19:00 AM, Anonymous Anonymous said...

RE: the last comment

i think the service at coffee to the people is fantastic. and to say that the place is boring is only an insult to yourself... a coffeeshop is only as exciting as its patrons make it. this place has provided everything from games to books to decorations that can easily spawn political conversations. what do you do instead? you sit on your computer, as you said. There's NOTHING this place can do in order to change how you use the place, that's up to you to do.

also, as a whole, when the staff at restaurants are required to do silly things like chanting things all at once or singing or any other form of "excitement", it comes off as ridiculous and contrived 99% of the time. I don't know anyone who looks for a fucking Broadway show every time they go to a coffee shop. the people working at this place are more than proficient and kind to the customers, and i don't see how you could want or expect anything more.

 
At 2/21/2006 01:38:00 AM, Blogger Kevin said...

More on this thread... you guys seriously need to fix your Wifi.

At the VERY minimum *please* tell the guys if they have to reboot it to NOT leave it offline for 5-10 minutes at a time. This is maddening :-/

All you have to do is reboot it to loose the DHCP table. Even one second will be fine. There is no magic in reboot it and leaving it offline for 5 minutes...

Onward!

I'll ask Bob if he wants me to take a look at it.

 
At 2/21/2006 01:41:00 AM, Blogger Kevin said...

Also. can I seriously stress that you extend your hours and add more chairs?

There are hoards of geeks in SF looking for places to work late at night.

If you were open late you'd be the ONLY place in the Haight that could/would do that.

I think if you publicized it you'd do awesome! I'll help... I'll blog it (I have 600 subscribers and a majority of them live in SF).

You could try it for a week or so and see what happens.

Again you'd need to monetize it but there's potential here.

 
At 2/21/2006 07:35:00 AM, Anonymous Anonymous said...

God, Kevin, HOW DID YOU SURVIVE WHEN THE INTERNET WAS DOWN FOR 5 or 10 MINUTES? YOUR LIFELINE WAS CUT!!! Thank god the internet came back on so you could post on this blog.

If having no internet for 10 minutes makes you mad, I think you need some anger management. Oh, and an internet connection at your house. That might help too.

 
At 2/21/2006 06:06:00 PM, Blogger christopher baus said...

I'm one of Kevin's 600 subscribers and I'm following this thread via his blog.

A lot of us make our living on the net, and if we can't have access then we can't leave the confines of our work environment. If you are in the middle of admining a live server and the net goes off for 10 minutes it can be maddening, or potentially disasterous.

Wifi is what coffee shops are selling these days. Honestly it is the reason I patronize places like the Canvas.

Better wifi + better power + better place to work = more customers.

baus

 
At 2/21/2006 09:30:00 PM, Blogger Karin said...

Apologies to anyone who has experienced trouble with the wifi. We are trying to work out the kinks, but right now we can't adjust the settings. Based on our conversations with the manufacturer it appears that there is a mechanical problem with the reset button, but the company is refusing to either fix or replace it.

Since I spend 95% of my time at the shop using the wireless, I am well aware of what a hassle it can be when the system goes down. We are doing what we can to have this resolved ASAP.

 
At 2/21/2006 11:46:00 PM, Anonymous Anonymous said...

Baus:

if you're working on something so important, you might want to consider using a land connection to the internet, not wireless. wireless is always unreliable, no matter what. even the best set-ups fail sometimes.

i just dont understand the mentality of people who buy a cup of coffee at a shop, and then sit in it for 6 hours and act as if they own the place. Do you really think you have some sort of "right" to sit around and freeload all day, and then COMPLAIN about the connection not being up to par at busy hours? I've been at CTTP when the net goes down, and you know what? I play some fucking solitaire for a few minutes and wait patiently.

If you're running such a successful business on the internet, why not invest some of your earnings on a connection at home? i mean, if a 100% stable connection is necessary.

Don't get me wrong, I think there are some kinks that need to be worked out in CTTP's system, but you people act all indignant and rude about it, as if you're missing out on some god-given right.
-Patrick

 
At 2/22/2006 05:20:00 PM, Anonymous Andy said...

Why not sell space/time in addition to coffee. Yup, it has all gone a bit StarTrek but bear with me.

Think about it in the sense of car parking at a supermarket. The first X hours are usually free -long enough for you to shop - then you have to pay.

So, you could give everyone a little egg-timer (the one with the sand in it) when they get their coffee. The timer runs for e.g. an hour and you are implicitly telling them that that is their 'free parking' limit. After that, they have to come and buy something. Maybe one of your items for sale is simply the right to turn their egg timer over :-)

Obviously, this will be an honour system, but it might be just enough to make people aware of the costs.

By the way, I live in the UK but I do come out to SF every few months, so I will make a point of visiting (and bring an egg timer, just in case)

 
At 2/22/2006 07:45:00 PM, Blogger MattyG said...

Do you want people to use your shop as a substitue office and spend the entire day there? Or, do you want people to treat it as a convenience and stay for a few hours?

If it were my shop, I think I'd lean towards the latter. If that's the goal, I don't think it's unreasonable to block power plugs. Modern PCs can go more than three hours on batteries (longer if using agressive power savings or a bigger/extra battery). Running out of juice is far more gentle a way to turn a table than an arbitrary minimum purchase or a restriction of services. Also, although laptops are low power, I'd bet your electricity bill to run them is not insignificant.

There will always be the hardcore that have lots of batteries or beg to plug in their charger, but I think this would be the exception. You could even consider a battery charging service (and change for it). Airports and malls in Japan offer this, mainly for cellphones.

Matt

 
At 2/22/2006 09:40:00 PM, Anonymous Graham said...

I'm sure a lot of people are proud of the hours they log at your shop. Why not make that an incentive? Maybe people can vie for the resident "genius" or "lifer" title. Maybe someone could get cheaper refills by being "on call" for helping with technology problems. Maybe they get to control the playlist for the next hour.

Also, how about tiered data speeds? The initial setup would require more hardware but could allow for weaning users off the wifi if they've been on too long. How do they reup their speed? By asking you guys. How do they ask? By buying a scone.

Just some random thoughts...

 
At 2/23/2006 05:20:00 AM, Anonymous Anonymous said...

graham, that sounds like a great idea...

how hard would it be to do that? tiring speeds, that is.
-Patrick

 
At 2/23/2006 10:54:00 PM, Blogger Sir Bill, Esq. said...

Glad to see this being discussed! I spend 3-5 hours at a Mission cafe every Friday and constantly worry if I'm paying enough to justify my use of their WiFi.

A friendly "recommended spending" sign will help those of us who do want to pay our way to guage how much we should be buying, and inform others that the WiFi isn't truly "free".

Gently informing offenders of their responsibility could work. You might lose a customer, but it's a customer you're losing money on. I'd worry about patrons getting agitated at the chat, though.

In addition to my spending, I try to tip very well, I also tell all my friends what a great place the cafe is, and I clear out if it starts to get seriously crowded.

 
At 2/24/2006 07:30:00 AM, Blogger sarah said...

first let me say that i work at CTTP about once a week. i love the wifi, but on the other hand, i HATE when i visit a cafe for social reasons, and everyone is just laptoping all around. it sucks. it's not inviting.

here's an idea - what a laptop section? when it's full, it's full. perhaps you have to plug in?

the rest of the cafe could be for people talking and reading. that way people might be more apt to police their behavior and spending and turn the tables faster? peer pressure?

 
At 4/07/2006 05:47:00 PM, Anonymous Chance said...

Found this discussion froma link to a lnik to a link. :)

Now I'm up in Sacramento, but do get down to San Francisco fairly often. Never been to your shop, but now that I know about it I will try it.

And one of the reasons I'll try it is because it's laptop friend. I don't need free wifi - I've got an Aircard in my laptop. If I can get cell service, I've got a connection. Broadband in most place I go, actually.

Now I frequent a number of cafes up here. Usually when I need to kill an hour or two before meeting a client. I'll go to the cafe, buy some coffee and a snack, and do some work while wait. If I know there is a place to plug in, and the place doesn't mind, all the better. I've got a widescreen Toshiba laptop. I get about two hours of battery life.

One recomendation, since I know when I am working on something (and since, quite frankly I do adult websites, and I always set my laptop so no one can see what I'm working on) I get into a zone and lose track of time. Maybe have the staff come around every half hour or so and ask if the customer needs anything. Don't just have them stand behind the counter.

You have to balance between seeing if they want anything else and bugging people too often and seeming pushy, but it's an idea. Too often baristas seem to just be standing there, having conversations, when there is nothing to do. Some of the worse ones make it seem like you are bothering them coming up trying to place an order...

 
At 4/27/2006 11:50:00 PM, Anonymous Kirstin said...

Know this has been quiet for a while, but...

What if there were a suggested cost for using the wifi (say $2 an hour, perhaps pro-rated on the honor system according to ability to pay), but the price paid went toward a certificate that could be used for purchasing coffee, treats, etc.? So a person who wanted to hang out and use the connection for 3 hours or so would pay $6 and could put it toward some delicious edibles, during that trip or in the future. Likewise, people who purchase coffee, scones, teas, and so on could rack up wifi "hours" for the dollars they spend that they can use themselves or donate for students, low-income folks, etc. (like "give-a-penny, take-a-penny"). Regulars could have cards kept on site to keep track of how much they've paid and how much they can spend (in hours and dollars).

 
At 12/08/2006 12:57:00 PM, Anonymous Rick Hernandez said...

People provide a warm atmosphere thats not the problem charge $.50 (cents) to dollar extra on everything without it being to much/the bigger the menu the better/leave a tip jar near the register for workers-(happy workers get more customers)also most importantly sell coffee cards for a certain higher fixed price which most people never use up.

 
At 2/12/2007 02:01:00 AM, Anonymous Anonymous said...

A simple suggestion that people not occupy tables for too long during busy periods might go a long way. The coffee shop around here has that on the page your web browser loads when you first connect to their network.

After all, the problem isn't people taking up tables during slow times. In that case people are probably helping your business, by making it look more busy and inviting. But most customers aren't aware when the busy times are, when their presence at a table for hours at a time turns from a net plus to a net minus. People who spend hours in your shop want is to succeed and most will respond to a request to limit their table occupation during peak hours.

 
At 3/17/2007 03:27:00 AM, Anonymous Anonymous said...

I like the idea of charging for electricity best. Pay to Plug. Plug and pay... please feel free to use that.

I have never been to S.F.. I used to work for worldweb.net in ALexandria, Va about a hundred web years ago.

We had and there still exists on the corner of King and Patrick in olde towne Misha's, an artisan coffee shop.

Misha's had two rooms. One with ashtrays and one big community table, and another with no smoking and artsy fartsy decor and little tables.

The grunge crowd, smokers, newspaper readers hung out in the smoking room. The early bedouins (any of you kids remember the ricochet modem?) also hung there.

This old timer used to oftimes go head down with a palm visor, pocket c and a folding keyboard, just to get out of the office, smoke and work.

Since smoking (cigarettes) is frowned upon in your area you could modify the Misha's concept.

If there was an internet cafe near me, I would most certainly go there to do the do. If they charged me to plug in, that would seem reasonable.

If I ever get out there, will have to check you out. I am a big fat (sorry, individual of size) so I will definitely "earn my keep" purchasing snacks and drinks.

 
At 4/24/2007 06:58:00 PM, Blogger Amster said...

First off, I love CTTP. I spent a lot of time last year there having lunch and enjoying awesome mint matcha lattes! You guys are the best!

I also loved the fact that power sockets were easy to find. I probably would not have lunch or would not visit as often w/out them. Of course, that also makes me a bit of a camper, spending on average 2-3 hours in the same spot.

So, back to the problem at hand...

Maybe during peak hours politely asking people to limit their computer usage? One cafe in Palo Alto, Coupa Cafe, has little signs requesting people to be considerate.

To attract more students, sponsor college organizations and give them discount cards good for certain days/times? (Back in college I was a club officer and negotiated with local businesses to give maybe 10-15% off on certain items at certain times in exchange for advertising the business.) You could also host longer-term events like student photo galleries, art shows, etc.

What about teaming up with the Red Vic and doing CTTP movie nights?

Just ideas!

 
At 5/26/2007 06:19:00 PM, Blogger Sarah said...

Fascinating discussion ... I'm opening a shop in downtown Kansas City this week. In researching the "honor system", I came across this thread. I really appreciated reading everyone's comments! Sarah @ http://kafekiskeya.blogspot.com/ .

 
At 7/23/2008 12:22:00 PM, Anonymous AnnoyedGirl said...

umm.. wow.. i've just been reading all these comments and i'm astonished at how some of you people think this coffee shop owes YOU something other than the $1 coffee you paid for! you're lucky they're even providing you with free internet access! did you know that you have to pay $10/hour at Starbucks? in the city where i live (toronto) you'd be REALLY lucky to find an internet cafe with free wifi, and they're usually only at large cafe's that can handle the "freeloaders".

i understand that some of your jobs rely on an internet connection, well guess what? so does mine! you know how i solved my problem? I GOT AN INTERNET CONNECTION AT HOME!

i think the best way to solve this problem would be to have an hourly fee for the internet, even if it's something as small as $1.50. if these guys are relying on YOUR BUSINESS to keep THEIR BUSINESS running, i don't see why you need to provide that service for free. if these are students, i'm sure the colleges/universities provide free wireless internet access on campus. mine did.

i know that you wanted a solution that still maintains the atmosphere you were looking for, however from what i have read it seems as if people are trying to take advantage of the fact that you are offering free wifi access and for some odd reason demanding more, like a broadway show and constant babysitting of your router.

 
At 9/28/2008 09:28:00 AM, Anonymous Corey said...

In response to AnnoyedGirl, remember that a $2.50 cup of coffee (1 dollar cup? are you joking?) costs the cafe owner about 30 cents (including labor and overhead). You can easily buy coffee at the grocery store and just drink it at home and pay about the same.

So if someone decides to shell out $2.50 -- 4 to 5 times the value of the coffee itself -- that's not just for the cup of coffee. If it's a to-go order, what they're really paying for is the convenience. If it's a for-here order, they're really paying for the opportunity to get out of the house and hang out with a friend or friends in a pleasant environment, or for freelancers like me, they're really paying to sit down and use the shop's wi-fi for awhile.

Frankly, charging per hour for wi-fi usage on top of what was already paid for the beverage would be ripping off the customers -- the concept is just as ridiculous and offensive as charging per hour for the chair you sit in while drinking the coffee.

 
At 9/03/2009 03:16:00 PM, Anonymous mountainsan said...

Change the chair, to stool, it will definitely, high chances of the place will be vacant for the next customer to comes in.

 
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At 1/30/2011 02:26:00 PM, Anonymous Jeremy said...

What about offering paid data storage. This would proofs a valuable asset to the customer and monthly revenue for the shop. Maybe 10 bucks a month for 10gig storage.

 
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At 4/17/2011 10:46:00 PM, Blogger Valeen said...

I have one huge problem with this story. Why in the world do you need to bring in $100/hour to break even? I run a coffeehouse myself and we need to bring in just over $100 a day to break even. Maybe you should worry about your expenses first and not who's using the free wifi.

 
At 4/17/2011 10:50:00 PM, Blogger Valeen said...

Oh and Corey, that $.30 does not include labor and overhead. That is purely COGS (cost of goods sold).

 

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