The world of coffee can be a strange but profitable place for a category manager. The environment is changing rapidly, and coffee flavors, beans, condiments, fair-trade, organics, freshness and competition are all part of the coffee business.
As operators we need to understand our customers and their needs. After all, it is not what we want to stock; it is what the guest demands. Someone recently told me, “If you want customer feedback, look at your sales—that is your feedback.”
Pricing the Java
The days of placing a Folgers sign up above coffee pot in the c-store are over. How did the market change, and why? One could speculate that Starbucks changed the taste profile through the long process of consumer education. It may not be Starbucks alone, however; people have started to view coffee as they do wine. The descriptors of tastes—earthy, oaky, dark and sweet, mild with a strawberry-like finish—are now used with wine and coffee alike. People have become educated about the beans and where they come from.
As retail buyers, we need to understand where the coffee is coming from and how the price can fluctuate. This is quite the task, as we all know. Coffee beans are part of the green bean market, which has a price forecast. We need to have a person we can rely on to help us judge the market and purchase the beans at the right time. Prices can fluctuate from $1.50 to $2.25 a pound in an instant. This could be a large variable when buying 60,000 pounds or more at a time. So you need to know the market and a good time to buy in. If you are working with a reputable coffee company, your representative should be able to help the category manager with this task. Other types of coffee, such as organic or fair trade, can be bought seasonally. These forms of coffee also have their niches. As operators, we must know our customers and offer them these types of coffee if they demand it. As consumers become more educated about coffee, we may need to bring more specialty coffees into the store as a way of keeping their business.
Fighting Back
Quick coffee used to be our gig. Now we have Starbucks, Dunkin’ Donuts and McDonald’s all selling a great cup of coffee. McDonald’s is more than just burgers, and Dunkin’ Donuts is a lot more than doughnuts. We need to be aware of these entities and what they are doing and have an edge on them. We need to be the top-of-mind choice of the customer. How do we do that?
Well, that is the million-dollar question. It has to be more than just copying the competition. We need to have the same if nota better cup of coffee, a competitive price and something special. The “special” makes the customers come back.
What is special? It may be a large condiment bar with all of the fixings. Maybe it’s toppings such as whipped cream, or maybe it is a barista who makes the coffee for the customer. What has worked for our company in particular is bringing in a whole new coffee program. The look, feel and quality all needed to change. The pots needed to be elegant, including timers tonsure fresh coffee. The new pots are on a granite countertop with indirect lighting to provide an eye-catching appeal. We now offer higher-quality coffees, including fair trade, organics and a Rain Forest Alliance-certified option. Our idea is to couple high quality with great service to keep our guest coming back.
We as operators need to decide what tools to use and when to use them. We also need to understand the costs behind condiment bars and baristas. We all know that coffee is a revenue producer in our locations. Adding cost and cutting into margin is not always the brightest of ideas. However, it is a fine line that we must walk. Instead of always worrying about cost, we need to have the courage to step out of the box and look to build sales by offering something unique. And of course, higher sales are the cure for most of our problems.
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