I don’t drink coffee. I just don’t like it—not the aroma, not the flavor. Even its caffeine kick fails to entice me to get over my aversion to it. That said, I am truly enamored of its role in driving the convenience channel’s success. There’s a lot of excitement around specialty coffees today (with good reason), but I’m starting to wonder if regular joe is getting lost in the shuffle.
Regular coffee is the workhorse of the hot-beverage business. Half of c-store customers (50%) purchase regular coffee once a week and 17% do so daily. In the rush to jump on the specialty-coffee bandwagon, I’m sensing a relapse into the “If we brew it, they will come” mentality regarding regular coffee. In market visits recently, it seemed to me that some retailers are giving little thought to what or how they’re brewing and what they’re doing around it to merchandise and make it work for them.
Wake up and smell the coffee (you go ahead, I’ll wait over here). It’s a highly competitive category. As the breakfast wars heat up, McDonald’s and Taco Bell are hotly pursing the morning java purchase, while Dunkin’ Donuts and Starbucks constantly push the envelope on new coffee beverages to urge consumption throughout the day.
Each touts the origins, flavors and preparation methods of its regular brews to varying degrees to send an overall quality message.
Be a Java Hero
Rather than commoditize regular coffee, convenience operators need to position it as a key differentiator. Sounds like a plan, but with all that coffee competition, where can convenience operators win?
C-stores do have an edge in a few key elements of the coffee purchase. The cost of the cup is the top influencer in the regular hot-coffee purchase decision in a c-store, according to our recent research, and about six in 10 consumers rate convenience stores better on price than coffee cafés and fast-casual restaurants. So c-stores win against more upscale concepts when it comes to affecting consumers’ wallets. Going up against fast-food restaurants is tougher: Only 35% of consumers say c-store regular coffee is better on price, but 47% say prices at c-stores and fast-food outlets are equal.
Quality, the second most influential element of the purchase, is an area in which convenience stores could raise the bar and really pull ahead. Nearly five in 10 consumers say the quality of regular convenience store coffee is equal to that of the brews poured at fast-casual restaurants, and four in 10 say it’s equal to that of coffee cafés. Fewer than two in 10 consumers say c-store coffee is of higher quality.
It’s head to head in the c-store vs. fast food quality competition, although convenience appears to have a bit of an edge.
Nearly six in 10 say regular-coffee quality is equal across both types of operators, but slightly more consumers (23%) say c-store coffee quality is better than those who say fast-food restaurant coffee is better (20%).
Because fast-food restaurants are the primary competitors for on-the-go foodservice occasions, convenience operators would do well to position their regular-coffee programs to pull ahead on quality and capture more morning customers, who tend to be loyalists.
Price is important, but quality is crucial because it plays into the consumer value perception. A 99-cent cup of poor quality regular coffee is not money well spent for today’s demanding consumer, while a 99-cent cup of a quality blend properly brewed represents value for which they’ll return time and again. Convenience operators are winning on the value attribute: More consumers say c-store regular coffee is a better value (28%) than those who say the same of fast-food coffee (16%).
Does ‘Free’ Always Win?
This is all well and good, but how do you compete with free? McDonald’s and Dunkin’ Donuts offer free regular coffee on Mondays, with no additional purchase necessary; the offer runs for varied lengths of time in select markets where stores need a traffic boost. Convenience retailers in those markets have their work cut out for them—both chains are known for quality coffee—but we find combo meals that include coffee as well as the ability to customize beverages with creamers, syrups and other condiments each ramp up the appeal. Convenience retailers can excel on these fronts; some already do.
Sheetz gave away free coffee and fountain drinks to celebrate its 500th store opening in February. And via 7-Eleven’s mobile app, every seventh cup is free in the recently launched 7Rewards program. Strategic “freebies” can reward loyal customers and invite new ones to sample at no risk, but the quality has to be there or they won’t return to buy it again, no matter how competitive the price.
I may not know beans about the flavor nuances of different roasts, but I get that a quality regular-coffee program drives traffic and builds a loyal customer base that leads to sustainable sales and profits. Specialty coffee is sexy, but regular joe is reliable.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.