When you have a great product, offering other complementary products can take your business to the next level.
That's the realization the owners of Cleveland Bagel Company recently had. On the latest episode of the CNBC reality business show "Cleveland Hustles, " the bagel makers discovered that selling coffee with their bagels would add almost $50,000 worth of annual profits to their business.
Co-owner Dan Herbst joked, "It's crazy. It's a little risky. But it could work."
The idea was simple: Team up with a local coffee-maker to create a custom blend and private labeling, which they could then sell as an add-on item to increase the purchase of each customer.
That led them to Dominic Caruso, CEO of Caruso's Coffee, with whom Herbst and co-owner Geoff Hardman toured the facility and tasted the different blends.
Hardman explained, "If we can offer a straight cup of coffee that lets the bagel be the star and still draws people in, this could be a money maker."
Caruso helped Herbst and Hardman break down the finances. All in, a 12-ounce serving would cost about $0.20. This would include the actual cup, the lid, and the coffee. Cleveland Bagel would sell that cup for $2.00, earning them a 90 percent profit margin of $1.80 per cup.
After they open their new storefront, they expect to serve around 150 customers a day, and they predict that half of those customers will also buy coffee. That's an additional $135 a day in profit. Annually, that's just shy of $50,000.
Of course, the product has to be good and pair well with the bagels. Cleveland Bagel wants their blend to have mass appeal, but also be unique enough so that people know it's their coffee.
They hope Caruso's can help them do that, since they have a robust enough facility that will allow them to grow and scale with Cleveland Bagel as the business tries to expand nationally.