A headline in the national press last month announced that us Brits spend more on coffee each year than on our annual electricity bill. According to a study by espresso makers VillaWare, a heavy coffee drinker consumes more than 21 cups each working week, which means they spend as much as £2,000 a year on cappuccinos, lattes and espressos. But even the average consumer spends £452.28 a year on drinks bought from coffee shops, compared with a typical £424 household electricity bill.
It’s figures like these that have prompted many forecourt retailers to offer good quality hot coffee to their customers. And with many of those customers being men, the VillaWare study has good news in that coffee is becoming more popular with men as they drink an average of eight cups between Monday and Friday.
There are many hot coffee offers available but which is right for your store and your customer base?
Boston’s Cost of equipment: £2,700 for a medium volume machine; £5,900 for a high volume one.
Pay back: four to five months depending on machine/volume.
Space required: approx 850mm wide x 650mm deep.
Requirements: plumbing for high-volume machine.
Drinks offered: coffee (white, latte, cappuccino, americano, espresso and double espresso), tea and hot chocolate.
Profit margins: around 75% on coffee and 45% on other drinks.
Support: all ingredients plus cups, stirrers and sugar are provided by Country Choice. Nationwide network of service engineers 24-hour response, seven days a week.
Drinkmaster offers instant hot drinks sealed in branded paper cups. The customer serves themself by removing the foil lid and adding hot water from a dispenser machine.
Cost of equipment: free-on-loan machines.
Drinks offered: Douwe Egberts coffee; PG Tips tea, Cadbury hot chocolate, Ainsley Harriott soup; Café Joe Fairtrade drinks.
Profit margins: typically over 50-55p per cup profit.
Support: nationwide service engineers if the machine breaks it is fixed or replaced quickly.
Other info: drinks are supplied direct from the manufacturer in small mixed orders to save on storage space.
Cost of machine: around £300
Drinks offered: Kenco Rich Roast, Kenco Sustainable Development, Carte Noire, Kenco decaffeinated, Kenco Cappio, PG Tips, Twinings traditional English tea, Bovril, Knorr vegetable soup, Suchard hot chocolate
Brand support: Kenco point-of-sale material available
Cost of equipment: £269 plus VAT (delivery charges may apply). This price includes a free starter kit comprising three sleeves of free stock (Gold Blend white coffee, cappuccino and Aero hot chocolate), lids, stirrers and sugars, and point-of-sale material. Additional stock can be purchased from all major cash and carries and wholesalers.
Space required: 420mm wide x 393mm deep x 507mm high (with lid fully open).
Other requirements: the machine needs no plumbing you simply plug it in and fill with water. The power output of the machine is approximately 2.8kw and can be plugged into a standard power socket.
Drinks offered: six drink options in 12oz quality paper cups, similar to coffee shop cups Nescafé Gold blend white coffee; black coffee; white decaffeinated coffee. Nescafé cappuccino; Aero hot chocolate; Tetley tea.
Rrp: typically £1.10.
Profit margins: by selling cups at the rrp of £1.10, retailers can make an estimated profit of 60p per cup. Based on selling 20 cups per day, six days per week, 48 weeks per year, retailers have the potential to make an additional profit of £3,400 per year, delivering payback on investment within year one.
Support: The Nescafé &Go online Club gives retailers handy hints and tips on how to maximise their sales. It also provides its members with all the latest news and consumer trends.
Coffee Nation/Costa Coffee
Coffee Nation is now owned by Whitbread. The company says the Coffee Nation brand is an important part of the business and there are many customers who will continue to sell the Coffee Nation brand. However, the Costa Express brand was launched in June 2011 and the aim is to have 3,000 Costa Express machines in operation in five years. Both Coffee National and Costa Express brands are available to customers but the majority of new customers will be offered Costa Express.
How to get a Costa Express machine: a retailer is required to operate a high-footfall site with the capability of selling approximately 30 cups of self-serve coffee each day.
Cost: the machine is installed and maintained free of charge and Costa Express provides all coffee and consumables (excluding milk) free of charge.
Profit margins: the company operates a revenue share scheme where income from coffee sales is shared at an agreed percentage rate with the retailer. An average machine generates revenue upwards of £35,000 a year but many customers generate significantly higher revenues.
Space required: the machines take up approximately one square metre of space.
Other requirements: machines require a 13-amp electrical connection; the retailer only needs a water and waste connection.
Support: a ’Brand Guardian’ is allocated to each retailer and is responsible for training them and their staff. They also manage stock to make sure that the Costa Express machines are always up and running. The Costa Express Helpdesk operates 12 hours per day, seven days a week to monitor the performance of customers’ machines.
Ease of use: Costa Express machines use touch screens.
Range of drinks: cappuccino, caffe latte, mocha, americano, white americano, hot chocolate. Flavour options such as vanilla, hazelnut, caramel and chocolate can be added to drinks. All products are made with the same Mocha Italia beans that Costa uses in its stores.
Rrp: £1.95 for a regular; £2.25 for a large drink.
For forecourt stores, WMF offers the Presto and Prestolino, described as small footprint machines with low-to-medium drinks outputs Prestolino up to 100 cups per day and Presto up to 150 per day.
Cost: machines can be purchased outright or taken on lease.
Payback time: If a basic Prestolino was leased over a three-year period then the costs are approximately £5 per day. WMF says you do not need to sell many drinks to recoup this cost.
Space required: Prestolino 682mm high x 325mm wide x 555mm deep; Presto 668mm high x 325mm wide x 555mm deep.
Requirements: a 13amp three-pin socket each for the machine and milk fridge. The Prestolino and Presto can be either manual fill or plumbed.
Range of drinks: Dependent upon specification, the machines can produce black, white, espresso, cappuccino, latte, latte macchiato, chocolate, mocha and water for tea.
Support: Full sales and service back-up. WMF employs its own factory-trained, dedicated service team.
CASE STUDY 3
WMF at Woodgrange Service Station
Site manager of Woodgrange Service Station near Peterborough, Michael O’Conner, spotted the WMF offer in Forecourt Trader back in March to ’road test’ one of its coffee machines. "Maintaining a coffee offer that is priced competitively is one of my greatest challenges as there are a number of grab-and-go operators in the local area," he says.
"Prior to the trial, our coffee offer was admittedly quite poor. We sold a 7oz cup of instant coffee for 80p and a 9oz mug for £1.20. As we have a high-volume food-to-go business, it was a great opportunity to see if we could increase our profit by selling a better quality bean-to-cup coffee for an enhanced price." WMF installed a Presto! bean-to-cup coffee machine for a six-week trial. "The Presto! machine was fabulous. It was easy to clean, very simple for customers to use and had a tiny footprint, which is a bonus. We had some point-of-sale material made up to promote the new coffee and increased our price to 99p for a 7oz cup. The feedback has been very positive; we increased our coffee sales by 25%! I can see real potential for this as it widens our appeal."
CASE STUDY 2
Coffee Nation/Starbucks at Euro Garages
Mohsin Issa, director of Euro Garages, says providing customers with a superior coffee offering not only delivers excellent customer service but also gives them a reason to return.
"We recognised the opportunity to expand our coffee proposition three years ago when we signed a deal with Coffee Nation to place its gourmet self-service coffee machines into each of our Spar convenience stores. This move was well received and prompted our next move into the market.
"In March 2010 we signed a licensing agreement with Starbucks to open 50 coffee shops by 2014, the majority of which will be drive-thrus. The deal marked the first roll-out of the Starbucks drive-thru concept in the UK and so far six highly successful outlets have been opened (three are drive-thrus) with several more planned over the coming months.
"Starbucks is an internationally trusted brand and we knew that the addition of it to our portfolio was sure to attract a high number of customers. By offering self-service coffee to those customers in a rush, and an internationally loved coffee brand to those looking for a longer break, we are sure to appeal to the majority of customers passing through our doors."
CASE STUDY 1
Costa Express at Whitehouse Services
Whitehouse Services, near Okehampton, Devon, is a family-run business located on one of the busiest routes into Cornwall. In June, a new Costa Express machine clearly visible from the till queue was installed next to the hot food cabinet and coffee sales began to take off.
The new machine was supported by Costa-branded point-of-sale material including a giant replica coffee cup at the entrance to the site, banners on the front of the building and a large elevated sign facing the busy dual carriageway.
The strength of the Costa brand, improved coffee quality, variety of drinks and easy to use touch-screen machine means that even Whitehouse Services’ regular coffee customers are more than happy to pay a little bit extra. And some of the locals are even visiting twice a day for their coffee fix.
The popularity of the new offer has also resulted in a tremendous uplift in daily sales. Before the introduction of Costa Express, Whitehouse Services was selling around 100 hot drinks each day. The site now sells between 150 to 200 cups on a week day and well over 300 a day at the weekend. "In our busy summer period, we have seen sales of more than 450 cups a day on a Saturday," explains manager Dale Snowdon.
With an increase in coffee sales of more than 300%, Whitehouse Services is looking forward to a significant increase in profits. Based on average sales of 100 cups a day, forecourts can expect to generate profits of around £20,000 a year. At the moment, Whitehouse Services is anticipating a healthy income that is way in excess of this figure.
Dale says: "The increased footfall has been phenomenal for our site. The whole Costa Express experience has been a positive one and we have been very happy with the support we’ve received. We would recommend Costa Express to anyone looking to improve their hot drink sales and overall shop turnover."
To date, Whitehouse Services has achieved the highest-ever sales for one Costa Express machine (in a forecourt or any other sector) in a week 466 drinks!