Every so often, in one or other of the women’s magazines, there’s an article on how to save money. One of the top tips is usually to cut back on buying coffee on-the-go. However, it seems people just can’t help themselves when there’s a hot, frothy coffee on offer. And it’s not just women splashing out on the skinny lattes. Visa Europe, in its Working Day Spend report, found that the average UK worker spends £2.09 on hot drinks a day.
And neither is it just adults who like their hot drinks. For John Carty of Spar Old Dean in Camberley, Surrey, the most popular drink from his machine is hot chocolate, selling largely to school children.
Coffee with your papers
Smiths News’ new Jack’s Beans concept means retailers can now get their coffee consumables with their newspaper deliveries.
The Jack Bean’s machine itself measures just 500mm wide, but is capable of serving 100 drinks a day. Currently, there are six variants made using fresh milk.
At the time of the Jack’s Beans launch in March, Smiths News managing director Jonathan Bunting said that more than half of consumers interviewed during the research phase for the brand found the idea of purchasing ‘coffee shop’ quality coffee from a local store appealing. “The daily takeaway coffee is now considered so vital to many people’s routine that it’s become a ‘non-negotiable’ treat.”
He adds: “We have invested a significant amount of time and energy in the product and delivery system. The result is the kind of barista-style coffee customers have come to expect from high street coffee shops, but in a convenient format.”
As for the machine, John was given it through Spar some time ago. It uses freeze-dried coffee. John says it’s not bad, but adds: “To be honest, people are so used to drinking bean-to-cup coffee that it’s hard to sell instant coffee; you really need a brand.”
He’s actually applied to Costa for one of its machines, but was turned down. “We are on an estate. We had the footfall, but were not in the position they wanted,” he explains.
But John’s not giving up. He’s looking at doing a store refit in a few months and his wholesaler has said it will try to get him a Costa machine. “I think Costa would do well here and it would help me build up my student trade.”
One store that has managed to get its hands on a Costa machine is the EuroSpar at Milford Haven, Pembrokeshire, where manager Richard Harries says it’s a big success. “We’ve had it about a year and we sell an awful lot of drinks - typically 200 cups a week.”
The Costa machine is visible as soon as you walk through the door of the 5,000sq ft store, but halfway down the shop there’s the bakery section with another coffee machine, a Nescafé & Go unit.
Says Richard: “Costa didn’t mind us having the other machine because they said they’d easily beat sales on it, but sales from the Nescafé unit have remained steady because Costa attracts a different type of customer. We’ve also got a coffee machine in our Subway and that’s still going strong.”
The Nescafé & Go drinks sell at £1 a cup, whereas the Costa drinks retail at £2.10 for a regular sized cup and £2.40 for a larger one.
“Taxi drivers go for the cheaper coffee. It sells throughout the day as the shifts change. The same drivers come in at the same times every day - some of them drink up to 10 cups a day,” says Richard.
Tchibo managing director Paul Chadderton says the firm now has more than 500 systems in convenience stores, double that of last year.
He points out that the market for quality coffee in convenience stores barely existed a few years ago, but now Tchibo meets demand from discerning consumers. “Our 100% Arabica coffee meets their desire for high quality. We are also constantly looking for link sells such as a coffee and a croissant in the morning or a meal deal at lunchtime to keep adding value for the retailer.”
The company is also aware of providing good margins. Chadderton adds: “We have driven down costs to maximise margins, which means even modest sales of 20 cups a day can generate £11,000 revenue and more than £4,000 gross profit. At 30 cups a day this leaps to £16,000 revenue and more than £8,000 gross profit.”
“The Costa coffee appeals more to the office workers and other local workers.”
Richard says the machine is quite bulky and it’s fixed into the floor, but it’s easy to maintain.
“Stock levels are controlled centrally by Costa; all we have to provide is the semi-skimmed milk and we get through a fair amount of that. A rep comes in regularly to make sure we have everything we need.”
Binny Amin at Londis in Blean, Kent, says his Nescafe & Go unit is a really good money earner as it attracts all sorts of people.
“It’s got a very small footprint but once people know it’s there they use it time and again. When we first had it, it used to just be men in the morning who’d use it, but now we’ve a nice mix of people - men as well as kids who come in for hot chocolate after school and bring their mum with them.
“We have older customers who get a cup of tea, stay and drink it, then do their shopping, plus we’re on a cycle route so we get lots of cyclists who get a drink then sit outside and drink it.”
Coventry retailer Paul Cheema says he looked at the Costa model before he started offering hot beverages in two of his stores recently, but the numbers didn’t work for him. So instead he’s now offering his customers Smiths News’ Jack’s Beans and although the coffee is bean-to-cup, sales have been an instant success.
“I was a bit worried initially about having a new brand, but it’s a good vibrant brand and Jack’s Bean’s is a straightforward company that’s easy to work with,” says Paul.
And it’s helped with customer missions as having hot drinks means the two stores are more popular with commuters on their way to work in the mornings.
Paul adds that it’s a simple system: “All you have to remember is to turn the machine on first thing in the morning when you turn the lights on. If you’ve done the prep work the night before, you’re all set for the day.”
Clive Sheppard from Exeter forecourt operator Chartman Group reckons ease of use is crucial for any hot beverages operation as some people don’t like to ask for help. “We chose Bostons for our sites because we already had a relationship with Country Choice, so it was a natural choice. The machines are simple to use; they’ve got to be because if they are too confusing consumers could simply walk away. We’ve found that our customers are confident in using the machine and that the drinks are the right quality and served at the right temperature.”
Everyone’s looking for value nowadays and it’s no different with coffee-to-go. Paul operates a loyalty scheme where consumers get their eighth drink free, while John Carty does link deals. “We sell our hot drinks really cheap - all at £1, and we link them to hot food. We sell a large sausage roll at £1, too, but customers can get a sausage roll and a coffee for £1.80. It’s a good deal, popular with the workmen, and we still make money on it.”
The idea of a brightly coloured icy drink might not be your ‘cup of tea’, but if you’ve got lots of five- to 14-year olds as customers and a bit of space, you might like to consider a Slush Puppie unit.
These fully-branded freezer units are provided free-on-loan from Slush Puppie to stores that can commit to an agreed level of sales.
The units are 106cm wide. Typically, they are placed near a till, but in addition to space you need to think about good ventilation to release the hot air that is generated from the freezer technology.
Slush Puppies come in five flavours but limited editions are available from time to time, such as the most recent Moshi flavour - roarberry cheesecake. A typical 230ml cup can sell from £1-£1.50.
The company says they sell all year around, but peak during the summer months and key school holidays.
EuroSpar at Milford Haven runs its own deal on the Costa coffee: “Costa aren’t keen on deals, but we do ‘buy six cups and get your seventh free’,” says Richard. “We have cards printed by Spar with both the Spar and the Costa logo on them so people know the offer is only available at this store. It’s a big success; we noticed an increase in sales as soon as we started doing it.”
Meanwhile, Clive likes to ring the changes when it comes to offers so when you visit one of his sites you could be greeted by a loyalty stamp scheme where you get your sixth cup of coffee free, or a link deal with a special price on a coffee and a pastry.
He explains: “A deal that appeals to one type of consumer might not appeal to another so we like to change them around a bit,” he explains. Currently, he’s offering coffee and a bacon bap for £2.99.
You can find similar deals at Binny’s Londis, where at the start of the winter he runs an offer of a free hot croissant with every hot drink from his Nescafé & Go machine. “We don’t get much of an uplift in sales, but the offer does bring in a few new customers and for the price of some croissants we retain their custom through the winter.”
But David Charman from Parkfoot Garage in West Malling, Kent, hasn’t felt the need for offers. “Ours is an interesting case as we’re not in an inner city and there’s a lot of money in this area. But every single day I could tell you the exact time that someone will come in for his or her coffee. And that might be because they don’t have the equipment to make the coffee at home or that they don’t have the time. Whatever the reason, we’re extremely consistent in the amount we sell, which is about 80-90 cups a day at £1.49 each.”
David has a Tchibo machine - he says he opted for this because he felt the company was a bit more flexible than other suppliers. “Tchibo is also something different around here; there are a number of competitors but what’s the point of us all having the same coffee?”
Shoppers warm to iced coffees
Emmi reports great success in the convenience channel with its Cappuccino and Skinny variants. The company recently launched two longlife variants, Cappuccino and Extra Shot, which don’t need be be kept chilled and are re-sealable.
Be a smoothie operator
With the drive to eat and drink healthier, Cuisine de France’s smoothie solution could be just what the doctor ordered. The company has everything a retailer needs to create smoothies, including frozen fruit sachets and juice, along with commercial blender, jugs, branded cups lids and straws, and a training guide.
Slush Puppies on-pack promo
Slush Puppie is running its first on-pack promotion in conjunction with Moshi Monster. Customers are being offered 200 of the free in-game currency with every 230ml and 341ml cup. Customers can download code access to a virtual in-game Slush Puppie machine for their Moshi Monsters’ room.
Hot chocolate now a nation’s favourite
Sales of hot chocolate and malted drinks are expected to grow by a third in the next three years, according to Mintel research. The improvement is largely driven by hot chocolate, worth £142m at present.