The fact that Costa was recently named the Nation’s Favourite Coffee Shop brand for its fifth consecutive year (Allegra Project Café 15) came as no surprise to Vicky Nielsen from Cambuslang Service Station in Cambusland near Glasgow, as she says the coffee it serves is lovely. "We’ve had a Costa machine in here for about a year now and we have regulars who come in just for the coffee. It’s so good it sells itself," she says. "Lattes are the best seller and there are two sizes: regular for £2.10 and large for £2.40."
Vicky says Costa’s is a simple system: "Customers just grab a cup and press a button. The machine needs to be kept clean and if it’s not cleaned it won’t work so it gets cleaned every day. Consumables come from Costa direct they take care of everything for us."
Meanwhile, the Costa name is such a draw at Broxden Services in Perth, that when Forecourt Trader spoke to manager Ian Niven, he was expecting to take delivery of his third machine very soon.
"We have two machines at present and the queues to use them are just too long," he explains. "We’re located on a very busy roundabout, where the A9 meets the M90, so we sell around 500 cups a day and really need that third machine." Like Vicky, Ian says Costa is simple to use and the company is "pretty well organised" with its automated delivery of consumables.
Point of difference
But Tom Taylor from Lydford Services, a Budgens/Shell site between Shepton Mallet and Yeovil, opted for an Expresso Plus Lavazza coffee machine to give his store a point of difference.
"I’d tried the coffee, knew it was good so had a machine installed last September," he says. "Since then our hot drinks sales have increased by about 30%. The machine gives us the flexibility to offer customers a wide range of other hot beverages including tea and soup. Ninety nine per cent of feedback from customers has been excellent."
His best sellers are flat white and latte and an offer that’s currently flying out is a regular coffee and a Nature Valley cereal bar for £2.50.
As well as the drinks themselves, Tom praises Expresso Plus/Lavazza’s partnership approach to the business. "Communication has been very good, everything is very clear and it’s a real partnership. We’re on a revenue share deal, but that works very well and gives us healthy margins. If you’re a convenience store and forecourt you have to have a coffee machine customers expect to find one in the store and it is a great driver of other in-store purchases."
Mr Salvidge, director of Pricewatch Ltd, which is in the Top 50 Indies list and trades as Local Fuels, has opted for a Tchibo revenue share deal at six of his 10 sites. "We were looking for an alternative to the mainstream brands," he explains, "and we’ve been very happy with our choice. The revenue share deal is working very well. We’ve never done anything like this in the past but it’s in both our interests that the deal works and it does. Another great thing with Tchibo is that if you have a problem, you can pick up the phone and actually talk to someone about it."
When Forecourt Trader spoke to Mr Salvidge he was actually drinking a cup of Tchibo coffee so he can easily vouch for its quality. "Everything’s moved on from when a cup of instant would satisfy us; we’re all coffee snobs now and want it made from freshly ground beans. There are limited options for that in our sector. We looked at other offers and decided Tchibo was the best.
"We did take a little bit of a flyer with the brand, as it’s not as well known as some others, but people of a certain age remember the Tchibo coffee shops we used to have here and the company has been very proactive in getting the name out there. Every day I seem to see a new Tchibo sign when I’m out and about."
And Mr Salvidge is doing his bit to encourage trial. At the moment the Local Fuels sites that have the Tchibo offer are running a promotion where everyone who buys a coffee gets a free packet of biscuits. "It’s definitely working," he says. "In one site we doubled coffee sales on the first day."
At Maple Leaf Garage in Daventry, they’ve had a Jack’s Beans coffee machine for nearly a year and sales are going well. Forecourt manager Wendy Price says: "We have quite a few people who come in especially for the coffee. In fact we have a couple of lorry drivers who come in two or three times a day for a drink. And some customers have said the coffee tastes better than Costa’s."
Drinks come in one size and sell for £1.75, although Wendy says she knows other outlets are selling them for £2. "Prices are dictated by Jack’s Beans so we just go with what they recommend," she says. She adds that the machine is very efficient and only needs cleaning every other day. Consumables are delivered with the site’s newspapers direct from WH Smith so all in all, it’s quite a slick operation.
After reading about all these retailers, you still might be asking yourself ’why do I need a branded coffee offer’ when, in fact, you should be asking yourself ’why haven’t I got one?’ And that’s because according to research firm him!, a quality branded coffee offer is more important to forecourt shoppers, in terms of getting them into a store, than cheap prices or value for money. What is more, 70% of those surveyed who purchased a hot drink said it was the primary reason they visited the forecourt, with many saying that branded hot drinks such as Costa would encourage them to visit the store more often.
Him! data also reveals that 75% of UK forecourts now have ’self-serve’ hot beverages while some 36% have ’served’ hot bevs and some obviously have both.
Katie Littler, insights and communications director at the research firm, says 13% of forecourt shoppers will purchase a hot drink. "This is the same as the percentage of shoppers who buy cigarettes so shows just how important this category can be as a footfall driver, and it has a fantastic profit margin."
Obviously by offering hot beverages, you are competing with some major players Costa Coffee being just one. Indeed Costa is the number one seller of speciality coffee with an estimated 149 million cups sold annually (Project Café 15), followed by McDonald’s which sells approximately 126 million cups a year.
But the convenience of your location and your customer’s familiarity with your site can be a major pull.
Indeed according to Allegra World Coffee Portal’s Project Café 2015 report, the non-specialist coffee shop sector including pubs, fast food operators, supermarkets and retail stores has increased its coffee credentials. And this has made these outlets more attractive to consumers and has presented stronger competition for coffee-focused operators.
The report says increasing competition provides consumers with a better choice of quality coffee at home, at work and wider variety from non-specialists. And consumer choice of destination is driven by more criteria than ever before, including: habit, loyalty scheme and brand of coffee offered.
Getting your customers in the habit of grabbing a coffee on their way to work takes some effort but can be rewarding. So, if you get yourself a new hot drinks supplier don’t be afraid to shout about it and actually give some of the stuff away. Get your customers to try a cup for free if the coffee’s good, one taste and you’ll have them hooked.
This is no April Fool
To celebrate the launch of Seattle’s Best Coffee in its restaurants, fast food chain KFC has developed a range of coffee cups, which are 100% edible. Yes, you did read that correctly. The ’Scoff-ee Cup’ is made from a unique biscuit, wrapped in sugar paper and lined with a layer of heat-resistant white chocolate, which keeps the coffee hot and the cup crispy. Over time, the chocolate lining begins to melt, slowly softening the biscuit to reveal a melt-in-the-mouth tasty snack.
And not only do the edible cups taste good, but they smell delicious too. That’s because they have been infused with ambient aromas including coconut sun cream, freshly cut grass and wild flowers to evoke the positive memories people associate with warm weather, sunshine and summer holidays.
Jocelyn Bynoe at KFC comments: "We have been experimenting with edible packaging to see if it could be a feasible product to bring to market in limited quantities and thought that if our customers occasionally like to have their cake and eat it, why wouldn’t they want have their cup and eat it instead!"
But don’t rush out to try one just yet as the Scoff-ee Cup is still in development and not yet available in stores.
The coffee shop consumer
Nearly three-quarters (73%) of consumers surveyed by Mintel had purchased hot drinks out of home in the three months to September 2014, with Costa Coffee enjoying the highest usage.
Takeaway coffees are most frequently bought by people from households earning £50,000 or more.
More than a quarter (28%) of specialist coffee shop users visit a coffee shop to sit in once a week or more, with 24% buying a takeaway drink from these venues as often.
39% of out-of-home hot drink purchasers buy them for a break/coffee break, while 38% do so as part of a day out, highlighting the need for the venues to deliver on everyday and special-occasion experiences.
Consumers are also looking to buy hot drinks as part of a wider range of meal occasions, with 25% buying hot drinks out of home for lunch and 16% for breakfast.
A quarter (24%) of those surveyed said that price was more important to them than the brand of coffee chain, demonstrating the price sensitivity of the market and the significant threat posed by rising competition from cheaper, non-specialist options.
More than a fifth of users think hot drinks from other shops (eg bakeries) are better value for money than those from specialist coffee shops.
30% of out-of-home hot drink buyers haven’t used a drive-through but would like to, while 35% would be interested in self-service formats.
Mobile technology is increasingly big business in the coffee shop market with 36% of out-of-home coffee purchasers interested in customised offers sent to their smartphones. Demand for concepts such as payment apps peaks among men and those aged 16-34.Source: Mintel