Café of convenience

Serving quality coffee and food can give sales a big lift

The public's expectation of the products and services on offer at their local convenience and impulse outlet is forever changing ... and it is therefore crucial that operators continue to move with the times.

The way of the future

As a new decade dawns, it is becoming ever more apparent that the in-store café concept is the way of the future for many outlets. The average C&I hot food and fresh bakery offer has been transformed in recent years, but it has really been coffee which has spearheaded the in-store café revolution.

Year on year, the Italian coffee culture that has swept the world, and Australia, continues to grow massively. Incredibly, it is estimated that coffee consumption in this country has increased 65% in the past 10 years. And with coffee now the world's second most traded commodity behind only oil, it is no wonder the number of outlets selling it continues to increase rapidly.

When you combine coffee's ever-growing popularity with a culture that is heavily reliant on the convenience market for delivery, it is clearly vital for C&I outlets to be able to offer coffee to their customers. Put simply, if they don't, consumers will get it elsewhere ... and that is not a desirable outcome.

And, it is not just a matter of missing out on the initial coffee purchase ... there is also the small matter of the value added sales that will go elsewhere. Coffee drinkers are habitual, social and loyal, and therefore often buy associated products such as reading material, snacks and cigarettes.

"The in-store café allows customers to purchase café-style coffee conveniently and I believe it will attract customers who might not generally use convenience outlets, who need that coffee fix after a hard day at work, when cafés are closed," said David Downing, the Australasian Sales Manager at Franke Coffee Systems. "The in-store café can generate additional sales by good marketing and prominent positioning of the coffee concept, driving additional sales in hot or cold food, confectionery, newspapers or magazines."

Leon Beattie, Marketing Manager at Espresso Essential, one of Australia's leading suppliers of espresso machines to C&I outlets, is equally convinced by the case for coffee.

"Coffee has a very attractive nature ... people either see it or smell it and feel compelled to get their fix, and an in-store coffee solution is for people on the go who value convenience and that also love quality," he said. "Any time a coffee customer goes into a C-Store they are opened to further sales opportunities and this works both ways ... so you could for example up-sell coffee to a customer purchasing a morning newspaper."

In theory then, the in-store café concept – and the sale of coffee in particular – should be a guaranteed winner for C&I outlets, but are consumers responding as operators hope?

Andrew Murray, the Managing Director of Avem, has no doubts.

The coffee experience evolves

"The in-store café offer is of significant importance to these outlets as it provides a destination for shoppers that enhances their purchasing mission," he said. "Whilst the consumer may not stop at the outlet with the principal intention of purchasing from the café, it will influence their decision to use one convenience outlet rather than another."

It's a point picked up on by Leo Stanners, Marketing Manager at Global Coffee Solutions (GCS).

"Obviously I'm a little bit biased but I would definitely say that a coffee offering in all convenience stores is essential and expected these days," he said. "I'll even go one step further and say the consumers expect and demand a fresh ground bean coffee and, if your only offering is instant, I doubt you will turn over a profit."

The issue of the quality of coffee consumers now expect, and the price they are prepared to pay for it, is an interesting one. Certainly, the Australian coffee lover's palate is becoming ever more refined and a coffee is certainly no longer just a coffee.

"Customers now want the ability to purchase good quality coffee whenever and wherever they shop, socialize or work," said Franke's David Downing. "Convenience outlets need to seize the opportunity, adapt and promote their own unique coffee blends and programs … convenient shopping isn't dead, and it simply needs to evolve with the mature coffee drinker."

There are clear signs that convenience outlets are indeed evolving and 7/11, for example, is developing a new coffee experience concept for its customers.

"Simply installing a coffee machine on the bench with a sign saying 'hot coffee' is simply lazy and unimaginative, and insulting the consumer's intelligence," said Mr Downing. "The convenience outlet must now merge around the in-store café.

"In Europe you sometimes wonder if you're in a convenience outlet or café as they have managed to combine the café experience with convenient shopping, merged into one."

So, what are the essential components of a successful in-store café? The right location is obviously critical. Operators must also ask themselves: will the existing outlet be competing with numerous cafés in the area? Is it located close to tourist hot spots or major highways? Is it close to railway stations, bus stops or sporting venues?

The size of the outlet itself is also important, as is its ability to stock a decent hot and cold food range. To attract the right customers, the outlet must also be inviting, clean and bright, and have its café style coffee offering in a prominent location. Most coffee equipment and coffee bean suppliers would also agree that easy to operate coffee equipment for staff or self service is vital, as it the reliability of the equipment, the quality of the coffee being sold and some effective marketing efforts.

"In-store promotional programs will add additional sales," said Franke's David Downing. "Everything needs to be considered to ensure your coffee program will be profitable ... cheap equipment and coffee will never guarantee profits as the Australian consumers are mature coffee drinkers."

For that reason, the choice of coffee bean and brand is as important as the purchase of the coffee making equipment. A high end machine filled with cheap, inferior beans is a wasted opportunity that may send potential customers elsewhere.

Promotions count

Among the best way to maximise returns is to firstly for operators to actively promote the fact they have a real coffee solutions and, secondly, by offering value adding with deals like buy a muffin and a coffee for $5 for example.

"Importantly, customers need to know that quality coffee is available," said Espresso Essential's Leon Beattie. "This is where good POS material helps, however we recommend good customer relations and actively promoting the coffee to your customers."

Avem, which as well as offering fully automatic coffee machines, also offers granita machines, refrigeration of all types, ovens, display cases and microwaves, is happy to advise outlets on the best way to maximise sales via product positioning and use of point of sale material.

"Our coffee machines are all self service, although they can be staff operated if the retail outlet wishes to provide a barista experience," said Mr Murray. "And we offer national installation, training and service programs on all equipment that we supply and that is available 24/7 365 days per year."

So, how does the C&I operator persuaded by the strength of the case for an in-store café ... and by a coffee machine ... select the one that is right for him or her?

Most coffee machines these days are extremely easy to use and staff are generally given full operational and cleaning instructions by the suppliers. Often, they can be set up for either self serve, with or without coin mechanism, or kept behind the counter, depending on what suits each store situation.

Obviously, C&I sites should consider their own circumstance and consider such elements as; site, space and budget. Happily, there are a huge range of options available.

The Franke range of coffee equipment is primarily 'Bean 2 Cup' with machines which dispense 150 cups per day to units which dispense 220 per hour. Its solutions incorporate automatic syrup dispensing systems, automatic hot chocolate options, two types of milk, and the ability to dispense iced coffee or cold syrup drinks…….all from one automatic coffee machine.

The Franke range is extensive, with the Evolution Basic, Top or Plus, Spectra S and the newly-launched in 2010 'Pura' said to be ideally suited for convenience. Franke says its equipment and expertise, not only supports McDonald's in Australia and New Zealand, but throughout the world into McDonald's, Burger King, KFC, Pizza Hut and many franchise organisations in Asia, Middle East, Europe, North America and Canada.

For its part, Global Coffee Solutions (GCS) offers a range of options from vending machines right through to super automatic fresh bean fresh milk espresso machines. Three of its most popular C&I options are: the Bianchi Gaia which has eight drink selections and combines the quality of fresh ground espresso beans with the convenience of powdered milk; the Swiss-made Cafina Bar Cube which uses freshly ground espresso beans and fresh milk to make a range of café quality coffees at the push of a button; and the super automatic Cafina Alpha which is commonly used in McCafé, Hungry Jacks or any of the other major quick serve restaurants.

"GCS's equipment range is designed to be as user friendly as possible both for the owner and operators of the machinery," said GCS's Leo Stanners. "Simple things like self cleaning and rinsing and prompts for when the machine needs attention … supplying the major quick serve restaurants has given us the knowledge of how to design systems that will work under pressure in any environment."

Espresso Essential is one of Australia's market leaders in the supply of espresso machines to C&I outlets and offers professional point of sale material, including eye-catching display stands and signs to help increase coffee sales and profits.

"Espresso Essential machines are popular with C-Store owner's because they require little staff training and maintenance and they can be either staff or customer operated, and really are a 'press and go' solution," said Leon Beattie. "However, our greatest advantage is that we use our own trained technicians and not contractors to service machines, with an average response time of 24-48 hours."

As previously stated, as well as supplying automatic coffee machines, Avem also offers granita machines, refrigeration of all types, ovens, display cases and microwaves.

"The purpose of these items of equipment are to both reduce the skill requirements of the operators, and to minimise operator intervention, that is maximise self service, which consequently reduces labour costs," said Avem's Andrew Murray. "The in-store café is becoming a 'must have' in all impulse stores and a significant contributor to bottom line."

Cost: a critical consideration

Cost though is a critical consideration and the size of the outlet, as well as its likely sales need to be carefully considered before a coffee solution is acquired.

Avem says its pricing varies dramatically based on a store's potential and requirements, and it prefers to assess these before discussing prices and expected returns.

Rental or leasing agreements are standard within the industry, and monthly costs vary depending on the actual equipment acquired.

Espresso Essential says a C-Store can lease a machine on monthly payments that equate to only $5 per day (sell more than 3 cups per day and you're making good profit). The added benefit is that lease payments are 100% tax deductible and stores get title ownership of the machine at the end of the lease term. It says that with an average cost per cup of 60-80 cents, C-Stores can expect an average gross profit of $2.30 per cup.

Global Coffee Solutions sells equipment ranging from $4,000-$20,000 that can be purchased outright or with fiancé arrangements. It says based on the outright purchase of a Cafina Bar Cube you can start seeing a return on investment in eight weeks by selling as little as 5kg, or 500 cups of coffee per week.

Franke offers a large range of Coffee Machine solutions, with equipment prices ranging from $7,000 - $23,000.

The Australian public's growing fascination with quality coffee and the technological advances that allow it to be made quickly and stylishly in C&I outlets is then leading the way in the in-store café revolution. But, while a good coffee is an essential element of the in-store café, it is just one part of it ... and taking similar care in the provision of quality hot and cold food is important to maximise the growing opportunities in this area. Australians, it seems, are responding enthusiastically to the in-store café but they remain hungry and thirsty for more.