KEYS TO BUSINESS SUCCESS

COFFEE   -     COFFEE     -   COFFEE     -    COFFEE

- Enrique Pena Velasco

 

We are always looking for the right ingredients to achieve business success and once we achieve it, we are constantly looking at ways to maintain it and continue to grow the business.

 

I am confident you have done a great job at building a solid foundation for your business with a strong customer base.  You are doing all the right things, providing great customer service, delivering products on time, offering the right product mix and now you are asking yourself, what next?

 

Well let me ask you this question.    Are you currently selling coffee to your vending customers?  If you are not, you are missing a great opportunity.  Coffee is the most profitable product you could possibly merchandise to your vending customers. 

 

Your already know the profit margins on snacks and drinks.   Let's take a closer look at this coffee category by simply doing the math.   A Standard cup size in the industry is a 7-oz cup.   The cost of coffee, sugar and the cup is about $ .18 with a vend price of $ .50, this equates to a $ .32 gross profit or more than 2.5 times mark-up of its base cost or 277%.   Now on a 12 oz cup the average cost is $ .22 with a vend value of $ .65 per cup or 295% mark-up.  

 

Now consider this, we all have noticed the changes in the coffee industry as a whole.  The coffee industry as we know it today is entirely different than 10 or 15 years ago.  We have now been exposed to a new coffee culture revolution, the defining of a new coffee value system if you will; it is as if we have rediscover the new meaning of the coffee drinking experience with the rapid growth of the Specialty coffee industry.  Gourmet coffee shops have sprung-up throughout the country and we now have a new coffee consumer who is well versed on the subject and considers himself or herself a lifetime contributing member of the true authentic and well meaning exclusive international coffee club aficionado association.  This coffee phenomenon has profoundly made an impact in our society and has forever changed the landscape of the coffee industry, as we know it.    All other coffee related industries have changed drastically including the vending industry. 

 

For many years the only vending coffees we had available were instant and ground coffees.  Most vending ground coffees were primarily blends and were not your premium quality blends that we find today.     In recent years we have experienced more rapid changes in the vending coffee category. We now have whole bean coffees available and we can choose from a wide selection of coffees with specific country of origin, roast color and specialty blends.   Now a coffee consumer can walk-up to a vending machine and order not only Colombian coffee but press a specific button to select Colombian French roast for a more robust and rich taste.

 

This provides more opportunities to increase your margins because the true coffee connoisseur is used to going into a specialty coffee shop and paying $ 3.25 for a cup of Latte or cappuccino.   They are the new breeds of coffee consumers that created a new frontier and allowed all of us in the coffee industry to cater to their coffee drinking needs at every level and price really is not an issue.

 

So if the coffee connoisseur pays this premium, you should be able to offer a cup of 100% Colombian, perhaps tease their taste buds with Kona coffee or Guatemalan Antigua and command a nominal fee of $1 to $ 1.25 for a 14 oz cup at a total cost of $ .25 per cup, that is a 500% mark-up, WOW!   Again simply do the math and your will see for yourself.  

 

By the way the premium you pay per pound for the specialty coffee you sell to your customers only equates to a couple more pennies per cup so, it pays to serve the best because your customers are willing to pay a premium for a great cup of Java.

 

We all like visuals and graphics so, let me put it this way.

 

Cup size	Cost per cup	Vend Price	Mark-up
7 oz	$  .18	$  .50	277%
12 oz	$  .22	$  .65	295%
14 oz	$  .25	$1.25	500%  (Specialty Coffee)

 

Now that you see the big picture for what is considered the most profitable category in the vending business, keep in mind that along with coffee you can now offer other coffee related drinks such as cappuccinos, chocolate and specialty teas even chai tea which is blend of tea and frothed milk and spices.  These coffee related drinks are very popular today and also command a higher premium as well.

 

So as you consider adding coffee to your vending program, make sure you select the right equipment and understand the importance of buying coffee and coffee related products from a qualified coffee supplier.   Not all coffee roasters are created equal, by that I mean, not all coffee roasters know how to roast, grind and pack vending coffee to meet the exact coffee vending specifications.   Achieving the right balance is a combination of roast color, grind and moisture content. 

 

I have seen vending operators add coffee to their vending program and unknowingly select the wrong coffee from an inexperienced coffee roaster and in some cases decide that they can just go to their local discount grocery store and buy regular coffee in a can and put it in a their new coffee vending machine.

 

Guess what happened then, the new vending coffee program is doomed from the start.  The customer walks-up to the machine presses a button and gets colored water or the machine gets clogged or some other undesired result.

 

So consider the great opportunities that adding coffee to your vending program can offer your business to increase your bottom line.  After all you have been successful up-to-now and I have just showed you a new revenue source that is at your fingertips.   The decision is all yours, don't wait, get started today!

 

In the next issues we will address other potential opportunities that are within your reach, we will explore more in depth the coffee industry and how a little bit of more coffee knowledge will give you an extra edge in your market place.   We will also take a look at the OCS industry and how you can capitalize on this great opportunity within your existing vending customers.