Measuring the effect of business profile, financial challenges, and sustainability practices of the coffee shops on their profitability

Abstract

This study examined the sustainability practices of local coffee shops in Laoag City, Ilocos Norte, and its effect on profitability. A descriptive-correlational research design was used, involving 17 coffee shops that had been operating for at least two years. Data were collected through a structured questionnaire capturing business profile characteristics, the extent of sustainability practices across economic, social, and environmental dimensions, challenges encountered, and profitability indicators, including return on assets (ROA), return on equity (ROE), and return on sales (ROS). Statistical tools included frequency, percentage, weighted mean, Pearson’s r, and Spearman’s rho.

The business profile revealed that local coffee shops are primarily micro businesses, relatively new, minimally staffed, and modestly capitalized, with most generating low monthly sales and limited income. Findings showed a high extent of sustainability practices across economic, social, and environmental dimensions, indicating consistent integration of responsible business operations. Coffee shops face significant challenges, particularly cost and financial constraints and market competition, with moderate concerns regarding revenue, customer willingness to pay, return on investment, and business growth.

Profitability remained high across ROA, ROE, and ROS. Results showed that the number of employees and average monthly sales were significantly associated with sustainability practices, while years in operation and number of employees were significantly related to profitability. Other profile variables, including ownership form, location, and capitalization, showed no significant effect. Economic and social sustainability practices were linked to higher financial challenges, yet profitability remained resilient.

In conclusion, local coffee shops demonstrate that sustainability can coexist with financial efficiency, with workforce size and sales capacity driving adoption more than structural factors. Owners should focus on workforce development, operational efficiency, and leveraging sales for sustainability, while the LGU can provide training, incentives, and knowledge-sharing. Future research should explore long-term impacts on growth, customer loyalty, and resilience and compare practices across regions.