The growing complexity of bean-to-cup machines translates to higher maintenance costs, which means convenience-store retailers must be more proactive in creating add-on items to drive revenue.
This insight comes from Farmington, Connecticut-based White Knight Marketing owner Frank White, who spoke on bean-to-cup return on investment (ROI) last week at CSP’s Dispensed Beverages Forum in Schaumburg, Illinois.
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“There’s a lot going on in the bean-to-cup world,” White said. “In the old days, you’d brew coffee, sell it, then dump what didn’t sell—a never-ending cycle.”
Bean to cup came around at right time, White said, “But it’s also a math equation, and we don’t know the math well right now. We know we’re not wasting as much.”
Add-ons are key to a retailer’s success with a bean-to-cup program, White said. “They drive extra revenues and return visits.”
Add-ons include:
- Selling mug refills
- Mixing in food items, loyalty perks and merchandise
- Offering breakfast sandwiches and bakery items
“How do you get the full ROI?” White asked. “In our world, it’s more than just the coffee to think about. Also think about what are we adding on to help us create more ROI.”
One item White discussed was Stroopwafels, a thin, round waffle cookie from the Netherlands.
“Add it to coffee and it melts and adds more flavor,” White said. “That add-on gives you more revenue and it’s something for consumers to return to talk about.”
Selling item like this builds “something new into the entire program for you,” he said. “It won’t give you a ton of money, but if you do it a lot, it does. It’s a great way to bring in customers. They may never have heard of a Stroopwafel.”
In addition to the revenue drivers above, there also are bundled meal deals, White said.
“All these items are bringing something new into your store, and that’s key,” he said.
Equipment Costs
Turning to exploring equipment costs for bean-to-cup equipment, White said retailers must determine which machine “is the right one and what is the one that’s going to give you the better dollar back to you.”
White noted:
- Bean-to-cup costs vary depending on the manufacturer, the model and the bells and whistles that come with the package.
- Due to the variety of manufacturers and key differences of models, comparing one bean-to-cup machine to another often is comparing apples and oranges.
- It’s important to assess issues such as throughput, maintenance contracts and the ability of a machine to make specialty drinks/espresso/cappuccino.
- Know the maintenance requirements; some units have more frequent downtime than others.
- In making a selection, don’t go only by price.
“You want to make more money and bring more to the consumer,” White said, adding the importance of examining what one’s traffic will be like when choosing a machine. “If you’re a smaller store, a smaller model might be right for you. Customers will be happy, and you’re not out a bunch of money and you get your toe in the water. If it works, you can add more machines.”
When asked by an audience member about replacement costs, White said a machine “must stand the test of time, and that depends on the vendor you’re using. At the end of the day, it must be dependable, workable, affordable—and the customer must like it.”
Other Highlights
A machine should last at least six years and be placed where customers can see it, White said.
Make sure parts are easy to get. Moderator Mitch Morrison, vice president of retailer relations and event content director of CSP parent Informa, shared a story of a retailer waiting too long for parts. “So, he went out and bought them himself,” Morrison said. “They cost about $30, and he trained staff to replace them.”
Make sure equipment matches because a retailer adding additional units will want them to look the same for two reasons: so they all blend together for aesthetic reasons and so you’re not highlighting the fact that one or more machines are older, White said.
Get customers in your store to use the equipment, he said. Have indoor and outside seating, sell items like bagels and have a sit-down area so customers stay and hopefully buy more merchandise.
When asked about the importance of seating, White said, “It’s a meeting place. Why are you closing at 2 p.m.? What are you doing to get them in? Try to have your assets work all day long.”
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