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    Coffee Jolt

    Profits are hot in gourmet coffee, but operators must have all their airpots in a row to ensure a program's success.

    By Matthew Enis

    Is your chain's coffee shiftless and lazy? Does it slouch around in the corner all day, occasionally making half-hearted come-ons at passersby?

    Maybe you should dress it up and make it work for that counter space.

    Coffee has always had the power to draw impressive margins. Even before the gourmet coffee craze lit a fire under the category, it was ounce for ounce one of the top foodservice profit makers in the convenience store industry.

    Profit potential has continued to grow in recent years, but that growth is handcuffed to higher consumer expectations. In order to seize those extra dollars, it's not enough for retailers to brew a better cup of coffee, they must also convince customers that it's a better cup of coffee. That takes marketing savvy.

    Of course, the average Joe in search of a cup of joe may be a bit turned off by the bells, whistles and New Age attitude that seem to define "gourmet" for much of the U.S. population. So it's important that savvy new marketing and merchandising campaigns don't alienate these industry loyalists.

    Dallas-based 7-Eleven Inc.'s new television ad campaign for its "Dark Mountain Roast" coffee is a great example of how to get the best of both worlds. Young actors, quick editing and interesting camera angles give the spots a youthful, hip feel without the use of nose rings. The message of the commercials is straightforward and simple, stating that the chain is dedicated to serving a hot, fresh, good-tasting brew.

    Although a handful of c-store chains are beginning to test the waters of television advertising, it certainly isn't the only way to promote coffee. In order to sell almost 1 million cups of coffee per day last year at its nearly 6,000 locations, 7-Eleven had to be creative inside the store as well. The company's "7-Election 2000 Presidential Coffee Cup Poll," which allowed coffee drinkers to select "Bush," "Gore" and "Undecided" cups for their morning java during last year's elections was another fun, innovative way to convert both twentysomethings and older core customers to the product.

    "You need something that creates a fun and exciting environment and atmosphere," said Jeff Babush, category manager of foodservice at Williamsville, N.Y.-based Wilson Farms Neighborhood Food Stores. "Something that tells customers that you're serious about your coffee, but doesn't scare the typical c-store customer away. Don't get caught in a rut where you're marketing entirely to the Starbucks customer."

    Mocha Merchandising

    There's a fine line between upscale and uppity, but suppliers suggest that most coffee programs can improve performance by simply adhering to a few simple guidelines.

    Prominence: "First, the coffee station should be easy to locate," said Marcia Brashear, director of marketing for Concord, N.C.-based S&D Coffee Inc. "It doesn't matter what kind of signage you have, customers should be able to spot the coffee station as they walk in the door."

    Cleanliness: Both manufacturers and foodservice directors agree, the self-serve nature of convenience store coffee makes frequent policing and cleaning of the coffee bar an absolute must. Navigating through a cluttered mess will turn away potential converts and may turn off even your most loyal regulars.

    "Customers need to feel that the coffee area is clean," said Brashear. "No one wants to buy a food product if the service area is messy."

    Variety: "Use flavored coffees to expand your user base and increase sales," said John Farrar, marketing manager, food products at Portland, Ore.-based Boyd Coffee Co. "Flavored coffee drinkers are a different user group. If you're just selling regular coffees or you're just selling cappuccinos and flavored coffees, you're missing an important part of the whole selling opportunity."

    Appropriate equipment: Glass pots are great for aroma and color; however, direct heat burns coffee quickly. As a result, glass is best for high-volume locations or quick-moving blends. Thermal dispensers or airpots are better for dispensing flavored blends or decafs, said Karalynn McDermott, national marketing manager for Lincolnshire, Ill.-based coffee equipment maker Fetco Corp.

    Clear Labeling: "Flavors and blends should be clearly labeled and marked," said Brashear. "Not everyone understands that an orange handle means decaf."

    Consistency: Although varying or limiting the flavor selections at lower-volume stores is often a good idea, developing a consistent look and taste is important. Consistency will generally save money on everything from wholesale coffee costs to the price of branded cups and equipment. Training and standards can be simplified and, most importantly, customers will begin to associate the "look" or name with your chain.

    According to Babush, the benefits of building a better program are simple — customers are willing to pay more if they perceive the coffee to be better. "Our retails are higher than the typical c-store, and we set our price higher to let our customers know that we're serious about our coffee. You can't be scared to charge for quality, and our prices are still a lot lower than the Starbucks of the world," he said.

    Brew Branding

    Developing a brand name simplifies the presentation of that good, clean, consistent image. Yet branding raises other issues. On one hand, developing a proprietary coffee brand offers greater control over partnering, marketing and concept design, differentiating a chain's program from others. On the other hand, going it alone takes a lot of work, and it might be hard to justify the cost.

    "When you create or develop a brand, you have to attract the typical c-store customer while enticing the Starbucks customer," explained Babush.

    The development of the brand helped Wilson Farms launch other programs as well, such as its "Coffee Cash" promotion. The books of seven coupons, sold for the price of six cups of coffee, benefit customers in several ways. "We're giving them a reduction in the cost of goods, we're building brand loyalty and [the coupons] allow time-constrained customers to walk in, get a cup of coffee, leave a coupon at the register and walk out," said Babush.

    This chain's success with coffee seems to stem from staying true to its roots in the convenience business. In other words, there is no reason to reject tried and true promotions such as refillable travel mugs when upgrading coffee programs. Instead, like Wilson Farms, the branding focus should be on serving existing customers a better, more convenient cup of coffee while winning new converts.

    Babush adamantly stated that retailers should steer their own course during this process. "When creating a program, you have to create a brand, and not let a manufacturer determine that brand," he said. "If you let the manufacturer determine your brand, you're ultimately going to be promoting someone else's coffee."

    Aside from the greater control that proprietary programs allow, Babush pointed out that if management ever decides to change coffee roasters, it could be easily done without rebranding.

    Another problem with nationally branded programs, explained Babush, is that a chain might be doing a great job with its coffee, but a less conscientious competitor across town could ruin the brand for your customers.

    Specialty roasters are abundant, and generally have programs in place to help operators develop and brand a unique offering. Wilson Farms currently works with Bensenville, Ill.-based Sara Lee Coffee and Tea's Superior brand roaster.

    However, Wilson Farms has more than 200 locations, giving the chain the critical mass needed to negotiate prices on everything from bulk coffee to branded cups and signage. Designing a brand is also a difficult process, and whatever the marketing message, a good coffee program is a foodservice program, requiring a labor and training commitment comparable to that of a small quickservice restaurant program.

    Partnership Perks

    Many operators would rather outsource the headaches. Several other respected roasters, such as Boyd, S&D and Montvale, N.J.-based Eight O'Clock Coffee, have in recent years seen the potential of c-stores as outlets for quality coffee and have developed turnkey and route delivery programs to answer that need. Several solutions are available; operators just have to make the right choice for their chain.

    "There's a great opportunity for specialty coffee in the c-store environment," said Farrar. "But to capture that opportunity, you need the right combination of product, brand and merchandising strategies."

    Farrar added that suppliers such as Boyd Coffee have well-tested merchandising sets, which create a sense of separation in the store, changing a small section into a miniature coffee shop. "It's very powerful to create a destination within the store that has that environment and feel," he said.

    "We try to look at each customer's unique situation," said Brashear. "If they're a very small chain, they may not be able to support the quantities of cups and bowls needed for a branded program of their own." Although S&D helps support the roasting and branding needs of larger companies, such as Altoona, Pa.-based Sheetz Inc., Brashear suggested that smaller companies might want to opt for a turnkey program, such as the company's Java Lane and Coffee Zone programs.

    Regardless, whether a chain chooses the well-tested brands of a supplier or the opportunities and excitement of building a proprietary brand, good coffee is something that c-store customers are starting to expect.

    By Matthew Enis
    • About Matthew Enis

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