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    Making Hot Beverages a Destination for Customers

    How convenience stores can upgrade their hot beverage category.

    By Larry Miller, Miller Management & Consulting

    Our industry is constantly changing, and customers' wants and needs are changing at an amazing pace. What all operators must do is take good care of the customers they have and make their store a destination for the regular customer, and to impress and convert the transient new customer. There are many tried and tested ways to accomplish this, but for this article I will discuss only one of the many ways to become the store of choice to your customers.

    I am talking the development and implementation of a successful hot beverage offering. Early in my career I had a mentor who said to me: "The devil is in the details!" This is especially true when revamping the department we will call "The Hot Beverage Destination" as the details are critical to impression, performance and most of all, profits.

    One of the positive changes in making convenience stores a destination is the continued upgrading of the hot beverage category. This includes the addition of products such as iced coffee and frozen coffee beverages, as well as additional program upgrades including gourmet coffee flavors, ample selections of high-quality individual bag servings of tea, energy infused coffees, recyclable and enviro-friendly disposable cups, with one-size fits all lids. Many operators are also offering two sizes of refillable mugs, for regular customers and to promote bounce-back business to their hot beverage program.

    In addition to the actual hot beverage products, today's progressive hot beverage retailers also offer a variety of add-in condiments in the way of flavored non-dairy creamers, chilled fresh half-and-half and high-quality baked goods offerings, and have also added displays of mint selections marketed as "after coffee" mints. There are multitudes of other options for the customer to enjoy while preparing that profitable cup of java. I have even found some shops that package used coffee grounds and offer them free to customers who want the grounds for composting!

    If you are not satisfying your customers' wants and desires, chances are many of them are finding, or have already found another place to start their mornings (no matter what time of day that may actually be: on the way to work, on the way home or many other times during the day and night).

    If you plan to revitalize your business with the goal of making it into a "coffee destination," make sure you consult with your supplier, a coffee company representative or an industry consultant to develop and follow a plan to maximize the profitability. You also need to monitor and justify your costs so you can make the highest return on your investment. As always, the decisions made during the planning stage are arguably the most crucial.

    The presentation of the coffee area itself is very important as it is best to have it highly visible upon entry to the store. Along with program placement and line-of-sight issues, also keep in mind that the view of the menu and pricing, the program graphics, and how easy it is to move from the cups to the coffee, to the condiments and lids while preparing that cup of refreshment -- what I call "flow-through" -- are all equally important and will have a major impact on the category growth and overall profitability.

    Positioning of your hot beverage program in relationship to ancillary products such as bakery and sweet snacks will also affect the ability to grow the size of each transaction, by offering a broader product variety to satisfy the different tastes and desires of all of your customers.

    These items should be arranged in the order that they are used to make for a natural feeling shopping experience. For example, the customer should flow to the opportunity to reach for a cup, serve the coffee, add condiments, dispose of trash, reach for a lid and napkin, and then be provided the opportunity to buy an "impulse" item such as mints or baked goods. This will "feel right" and also will keep the customers moving through the process and not create bottlenecks in the self-serve system that a good hot beverage program allows.

    Additionally, it is always a good idea to provide a small sink for the rinsing out of mugs, especially if you employ a coffee refill program. The placement of a hot water spigot and tea assortment in the flow must also be remembered in a hot beverage offering if you hope to satisfy a majority of your customers' needs. Many customers prefer to have trash holes in-counter as compared to the trash doors that they have to push with their hands. While each of these considerations alone may seem small and sometimes insignificant, the total of all of them makes for a powerful offer that will be well received when implemented properly.

    Chilled dispensers for half-and-half and flavored creamers are popular as are having flavored syrups to make the customers experience even more unique. While all of these additions do indeed add cost to your program, if your location is conducive to high-volume, early morning traffic, your investment will be well rewarded once you let your customers know you want to become famous for your coffee offering.

    Understanding the importance of selecting the right equipment is also critical. Let's start with the construction of the coffee area itself. Keeping costs in check is something every good operator should have as a main goal; however it is important to understand what cutting costs on the construction of the coffee area can do to the longevity of the system as a whole. This applies to the cabinetry and the types of counter tops selected. Metal cabinets and solid surface tops will add minor cost in the beginning but will lengthen the life of the coffee area. Use of wood cabinets and laminates on the counter tops and doors can cause problems and will typically not perform as well when subjected to constant moisture and spills.

    There is also debate in the industry regarding the best way of brewing and offering coffee to the convenience customer. Should we use glass pots and brewers, brewers and air pots, automated espresso machines that deliver custom coffee by the cup, or even the bag-in-the-box coffee systems that offer no waste and true product consistency? Volume potential, labor considerations, operator preference, space availability, competition and most of all, customers' preferences, should be driving these decisions for each location. If you operate more than one store, you should also consider whether you want to build a hot beverage "brand" that you and you alone can lay claim to.

    I also believe that security of our customers' health will become more of an issue in the near future, as open glass pots have been mentioned as a source of vulnerability in passing on pathogens or other potentially lethal contaminants through introduction into the coffee in the open pots.

    Currently in the industry there are examples of success with each type of system -- open pots, closed brewers with air pots, as well as the industrial urn brewers used in some locations. When looking at all the different success stories that abound with hot beverages, I think you will find that they all have one thing in common -- execution. Each successful program offers a clean operation, offers fresh product during all hours of operation and is consistent in satisfying the customers' expectations.

    Visit your competitors to see what they currently offer. This will provide you with opportunities to learn about different programs in your market area. Then you must ask yourself: "Do you want to copy their successes, or do you want to try to offer points of difference to your customers?"

    Understanding your current hot beverage sales volume and your current product mix is important to understand where you started. You need to understand this to be able to measure future successes in the category. If your current offer is weak or non-existent, use published industry averages as a good place to start. You can get these from your state or national associations, or industry trade publications, such as Convenience Store News.

    Remember, there are several ways to differentiate your offer, from the graphics and branding to the product selection and delivery system, and to the layout and design of the coffee area. Implement things that tell your customer you are there to satisfy his or her needs.

    I believe buying a cup of coffee should be an intuitive shopping experience for the customer that is comfortable and does not cause the customer to have to think about where the things are that they need. This can be accomplished by thoughtful design and planning.

    As with any high quality retail program, the "devil is in the details" so gather information, understand where you are now and whatever you do, always: execute, execute, execute!

    As always, good selling!

    Larry Miller is president of Miller Management & Consulting Services Inc., located in Sanford, Fla. He can be reached at: [email protected].

    Editor's Note: The opinions expressed in this article are the author's, and do not necessarily reflect the views of
    Convenience Store News.

    By Larry Miller, Miller Management & Consulting
    • About Larry Miller
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