Two things come to mind right away Monday morning … Coffee and Work. As a micro market operator, why wouldn’t you capitalize on the current coffee craze! Including a single cup brewer that works with either pods or cups can be a huge boost to your profits.
Take a look at this article for more facts and ideas to boost your market sales with the inclusion of coffee.
Use Coffee to Boost Micro Market Sales
by Adrienne Zimmer
We’ve pulled out the best takeaways for you!
One thing many operators agree upon, however, is that hot beverage offerings provide an opportunity to drive micro market sales.
What type of operator are you?
Coffee programs vary widely between micro markets and are often based on the type of coffee available prior to the installation. Multiple approaches are being utilized effectively around the country by operators including the use of single-serve brewers, hot beverage vending machines and liquid coffee equipment.
Nearly every large business and industry location has coffee available in some form prior to a micro market installation, generally either OCS offered on a no charge basis to employees or a single cup, vended product. Coffee is generally handled in one of four different ways, consider these when installing your markets:
Option 1: No micro market coffee
The pre-micro market OCS system is retained as the sole option for location coffee, often providing fresh-brew coffee at various points at the account and with no incremental coffee program within the micro market.
Option 2: Augmented OCS, employee paid
Retention of the prior OCS system as it existed, augmented within the micro market by the installation of an employee-paid upscale, multi-variety, coffee system. The popularity of upscale, quality coffee shops has proven that consumers often prefer a better coffee product, and will pay for better or different coffee blends as well as other types of hot beverages.
Option 3: OCS in market, company sponsored
An addition of micro market coffee as an OCS inclusion funded by the location and at no charge to the employee. This provides the highest micro market hot beverage volume, but with increased employer cost.
Option 4: Upscale OCS, employee paid
Not having any coffee in a micro market is the least preferred option. On average, coffee is a top-5 seller in micro markets.
Every time a consumer comes into their micro market for any beverage, there is always the opportunity for incremental, purchases. Similar to convenience stores, micro market operators should also be working towards increasing morning food purchases in combination with providing in-market coffee.
Current challenges and solutions
John Ward of Serenity Vending located in Rockford, IL, witnessed the benefits of a hot beverage program firsthand when he noticed coffee became the number one seller in 70 percent of his micro markets. Remember to look at your location and the customers that you are serving when deciding on a path to follow. Ward looked into pod and single-serve brewers when he first got into micro markets, but they weren’t right for his locations. Most of Ward’s locations are on a limited time schedule, and he found they would not have time to make their own coffee in the micro market. “I came across liquid coffee early on and I had machines for it,” he said. “So I’ve been using that in micro markets.” He likes this option, and so do his locations. He also places a 3- to 5-head cappuccino unit alongside the liquid coffee dispensers. Customers pay for their drink by selecting their drink option at the kiosk. Ninety percent of Ward’s micro markets provide coffee that is employee-paid for.
Changing to a premium coffee, Pete Johnson of Quail Vending, increased the gram throws on coffee and cappuccino to create a “coffee house” coffee and cappuccino. All of Johnson’s micro market locations are high-volume, with more than 450 employees, so he needed a solution that did not require a lot of maintenance and could accommodate the numbers. His solution was to place a hot beverage machine on free vend with 12- and 16-ounce cups that the customer then scans at the kiosk. The 12-ounce cups are $1.00 and 16-ounce cups are $1.50. He has seen sales slightly increase.
For many operators, finding a micro market coffee solution depends on the individual location. Single -serve and bean-to-cup machines work well in many smaller micro market locations, although some single-serve cartridges do not have UPC labels. Operators can get around this by either printing off their own UPC labels and placing them on the item or by making each single-serve drink one price. “Single-cup has been doing well in micro markets because the customer is already in the micro market purchasing items,” said Kevin Searcy of deORO Markets in Odessa, TX he has found pod machines to work the best, especially because pod packages can fit well onto shelving.
Searcy charges either $.45 or $.50 per cup on the lower end and about $.80 for higher quality hot beverages. In each of Searcy’s micro market locations, the employer is providing either cups or mugs for the coffee, which has helped keep the end sale price down. He noticed that some locations are more willing than others to pay for gourmet coffee.
In Utah, Trevor Booth of Fuel Vending has seen tremendous success with single-serve coffee in micro markets. “I use a single-cup brewer in every location with the exception of two highrise office locations. At those, I use a bean-to-cup machine which is much more expensive, but they are willing to pay for it,” he said. Coffee makes up 5 percent of Booth’s overall micro market sales and is the number one selling product, even above fresh food. “I was hesitant at first to get into coffee in micro markets, but since I’ve put resources into it, we make about $3,000 per month in seven locations just off of coffee sales.” Booth prices cups of coffee at $1.00 at the majority of his locations. “The right location makes all the difference when it comes to maximizing coffee profits in micro markets,” he said.
Although operators are making coffee a part of their strategic plan in micro markets, many are waiting for other operators to move, to find the best option. It is unlikely that one standard will work for every location and operators are quickly finding that it takes trial and error. “Operators should be aware of their customer profile in selecting what coffee solution to offer in a micro market location and how to price it,” said Caston. “It’s a question of understanding the customers.” Caston advises that operators avoid looking at coffee service and micro markets as two separate entities. “Integrate coffee service into your micro markets and into [your] initial micro market design,” he said. “There is an opportunity for cross-pollination, so to speak,” he continued. “Marrying coffee service and micro markets should be an emphasis for full-line operators.”