The Operator’s “Store”
In keeping with this issue’s focus, the retail centric theme is most appropriate in the world of Coffee Service. Yes, for the most part Coffee Service is an amenity provided to office employees as a no cost benefit or perk. But this is a business and as an operator providing the service, I want to maximize my long term return on investment. And as the Office Manager, my goal is to have happy, productive employees and keep them in the office rather than vacating the premises for caffeination and hydration. Approaching these opportunities with a retail mindset makes perfect sense from both perspectives.
For this article I write from the operator’s perspective, having witnessed the good and not so good impact of a brew site presentation.
Real Estate Limitations – The first factor to consider in merchandising a brew site is the relatively small space allocated to the brewer and related items. Unfortunately, oftentimes the consumables are relegated to a kitchen drawer or pantry. The first objective therefore becomes appealing to the decision maker for an extra linear foot or two to display the products. Unseen usually translates into unconsumed.
If faced with a decision of what should be the most visible, my choice was most often to put the coffee in the drawer or pantry. My experience is that people will find their coffee but not necessarily take the same effort to search for flavored creamer, stevia sweetener or their organic tea. And these “ticket builders” can move a borderline account to profitability. Keep these products front and center to optimize profit.
Coffee Shop at the Office – From the Office Manager’s perspective, one effective way to keep employees from leaving their work stations for a beverage they deem better than what they can get at the office is to provide higher quality offerings and ample beverage options that can satisfy a multitude of tastes. This would include providing organic teas, cocoas, water and even cold brew coffee.
Liquid creamer is another meaningful offering that not only provides a better mouth feel for those that whiten their coffee but provides a higher profit line item for the operator. Natural sugar and a stevia sweetener are also welcome additions and are coffee shop staples.
While replicating a Starbucks or Caribou store might be a bridge too far, upgrading offerings and image will positively impact employee satisfaction.
Clean, Uncluttered and Inviting – Retail merchandising basics should be employed at the brew site. Here is where having diligent route men and women is very important. Not only should the brewing area be kept clean and organized, refreshing the signage and showcasing new products will keep the employees interested and active, while at the same time, the operator enjoys consistent and improving consumption.
Menu cards are a fun way to encourage beverage experimentation. Some operators even provide coupons for retail use. Brokers, account representatives and distributors are a great source for merchandising racks and shelf organizers. Just ask!
Operator Profitability Impact – As an operator, our team believed in the mantra “One Route = One Profit Center”. We did not manage and measure our business at account level, but instead, studied each individual brew site with a metric that we called “MOL” or machines on location. Within a single office building, we observed that different departments or floors had different needs and wants. Said another way, there is often (unfortunately) a coffee service caste system. The executive suite might have a fancy bean to cup machine while other departments might have batch brewers and a bank of decanters. The coffee was typically good quality but definitely a step down from the combination drink brew systems enjoyed on the top floor. Some brew sites might be bound by a list of authorized items while others were often allowed carte blanche to order most anything. In either case, there were things our route personnel could always do to impact the monthly invoice.
An average route in my coffee service operation, which was a combination of rural and urban business, would serve approximately 250 brew sites. An average route at that time would generate $500K annually. We found that paying attention to proper merchandising and “building the ticket” that good route professionals could grow their gross revenue by 5-10 percent annually over a three year run. Not bad same store sales!
Customer Retention Impact – The most important KPI for an operator is to retain profitable customers. Great service is the key. Included in great service is ensuring that each brew site is appealing to the employee, is vibrant and is well stocked with the products that the employees desire. From experience I can confirm that when our sales executives were attempting to replace the incumbent coffee service, nothing instilled more confidence than encountering a sloppy, unappealing break room. On the other hand, if our site visit revealed a professionally merchandised brew area with trendy, current offerings, our sales team knew that replacing that operator would be much more difficult.
While a Coffee Service operator will not have aisles and aisles of shelves at their office accounts, taking the approach of a retail merchandiser will most certainly impact accretive revenue.
Until next time – Ken