By Erin Rigik, Associate Editor.
The competition for coffee customers continues to brew among the various channels, with convenience stores feeling increased pressure from Starbucks, Dunkin’ Donuts and numerous QSRs—even Walgreens’ new superstore prototype in Chicago and New York is serving up fresh java.
While competition is fierce, the good news is customer demand is surging as well, but their palates are becoming increasingly discerning. Total coffee consumption is on the rise, having jumped five percentage points according to the National Coffee Association’s (NCA) National Coffee Drinking Trends 2013 market research report. The increase means some 83% of the U.S. adult population drinks coffee. What’s more, daily coffee consumption by coffee drinkers totals 64%, and 75% of consumers report drinking coffee at least once a week.
Retailers are taking note and upping the quality and variety of their brews, continually sampling to peak customer interest, and upgrading their coffee bars to make room for an expanded condiment station whenever they remodel stores. As foodservice experts repeatedly note, mastering coffee is step one on the road to a profitable food offering.
Changing With The Times
Jim Weber, chief marketing officer for the Spinx Co., noted that the change in customer coffee palates has been evolving for years, beginning with the inception of Starbucks and its heavy, dark roast coffees that java fans soon began demanding from convenience stores as well.
When Starbucks launched Blond, Weber noted, the company also began resonating with the common coffee drinker who prefers a lighter flavor. “As a c-store chain, we’ve learned to adapt to the Starbucks influence by providing the dark roast option, as well as an array of varieties, as opposed to ‘Hey, here’s our cup of Joe’—which is how c-stores traditionally used to operate,” he said.
Spinx, which operates more than 70 convenience stores in South Carolina and North Carolina, has been partnering with Royal Cup Coffee—through which it offers proprietary brands of Spinx Coffee—for 20 years.
Spinx offers a regular House Blend, a dark roast known as “Midnight Roast,” a decaf coffee, and in specific stores it provides a hazelnut option. Holiday and other in-and-out favors also keep the coffee bar exciting and continuously refreshed so customers can find something new. At presstime, Spinx had just finished offering its Harvest Blend, a pumpkin flavor for autumn, and was introducing its Holiday Blend with a cinnamon streusel flavor. Such limited-time offers are introduced, on average, every eight weeks.
“Throughout the year, we typically run geographical blends from parts of the world, which is becoming pretty popular. We have offered a Brazilian, a Costa Rican and a Kenyan blend, to name a few,” Weber said. “Our coffee partner, Royal Cup, sources those and lets us know when a blend is available, so we work closely with them to keep our coffee offering exciting for customers.”
Upgrading the Coffee Bar
RaceTrac recently drew attention to its coffee program with its third annual “Free Coffee Week,” which ran from Nov. 10–16. Customers who stopped by any of RaceTrac’s more than 365 stores during Free Coffee Week had the chance to enjoy a free brew—no coupon required. RaceTrac recently revamped its coffee offering and has expanded its coffee bar presence in its newest stores. RaceTrac is offering something for every coffee drinker with an array of six blends, including 100% Colombian Roast, Dark Roast, Hazelnut and Extra Caffeinated. Its coffee bar also boasts that it allows customers to create their brew their way with a host of free flavored syrups, creams and sweeteners.
Kangaroo Express, celebrated National Coffee Day on Sept. 29, by offering a 12-ounce Bean Street Coffee for just a penny. As part of its current “New at the Roo” program, Kangaroo Express is renovating stores in key areas—including the coffee bar. Recently 10 stores in North Carolina gained an updated Bean Street Coffee makeover to include new coffee dispensers and more spacious serving stations complete with accessories, such as creamers, syrups, caffeine shots and whipped topping.
TravelCenters of America (TA), operator of the TA and Petro Stopping Centers brands, recently introduced World Blends Coffee to its locations. Now premium whole bean blends are ground on-site just before brewing. Customers can choose between four varieties: House Blend; Dark Sky Café Blend; Red Sky, a South American medium-bodied coffee; and High Mountain Arabica, a full-bodied dark roast.
“The coffee in our restaurants and travel stores was good before, but the new fresh ground, whole bean blends take our quality offering to another level,” said John Ponczoch, senior vice president of food marketing and operations for TA.
Such gourmet-style options are becoming increasingly important in resonating with customers. Younger consumers in particular prefer espresso-based beverages with 16% of those 18-39 drinking them in the past day compared with just 6% of those 60+, according to a 2013 NCA report.
NCA also found nearly one-third (31%) of consumers prefer gourmet coffee, while traditional coffee consumption dipped to 49% from 56% in 2012. Not only are younger consumers reaching for espresso drinks, they’re also more inclined to reach for iced coffee.
An August report by Mintel showed increased customer demand for frozen and iced coffees—and not just in the hot summer months. More than just a passing fad, the trend reflects the changing tastes of the younger generation. Consumers 18-24 years old are far bigger consumers of iced coffee compared to older coffee drinkers. Overall, one in five (20%) U.S. consumers drink iced coffee, compared to 38% of those aged 18-24 and only 11% of those aged 55-64 and 5% of those aged over 65. Mintel also reported that 77% of iced coffee drinkers perceive that drinking it makes them feel more productive at work. Luckily for foodservice operators, frozen blended coffees have a high profit margin, estimated at around 65-70%, according to Mintel.
While new brews and a condiment bar of flavors are crucial for making your coffee bar a destination, nothing compares to the importance of a fresh cup of coffee. Equipment can make all the difference in the quality of your offering and whether customers return.
Spinx sources all its equipment through its coffee partnership with Royal Cup, saving it the hassle of managing its own equipment.“The benefit of that is that we are constantly using upgraded equipment,” Weber said. “In other chains that buy and manage their own equipment, you go into their stores and you might see outdated equipment that looks old, and that impacts the presentation of the coffee area.”
Spinx switched from glass pots to thermal dispensing units about two years ago. “I loved the glass pot program because you could tell right away that the coffee was fresh just by the smell. But the response we’ve received from the thermal dispensers has been extremely positive,” Weber said. “It has also helped the stores because the thermal dispensers have timers on them to ensure the coffee always stays fresh. It really brought us up to date and the customers love it.”
At its largest stores, Spinx features eight different brews—typically two dispensers of each coffee variety—while its smaller stores typically feature six dispensers in the morning and cut down to the house blend and dark roast in the off-peak afternoon hours.
Its coffee bars make it clear to customers Spinx is a destination for coffee with a 4-6-foot linear counter that provides plenty of space for multiple customers to service their coffee cups simultaneously. “Our customers appreciate it,” he said.