your retail coffee business springboard you into other successful wholesale coffee service opportunities? For many coffee retailers across the globe, that is the burning question. It’s as simple as this: Never stop moving. By all means, don’t get complacent. He who rests, gets passed. As a business owner, you have heard them all. So having said that, the question is: What’s next for you and your retail business in the specialty coffee industry?
Don’t Overlook a Tremendous Opportunity
The natural progression for a specialty coffee retailer has historically been to take your first successful store and replicate it in another location - maybe a stand-alone or a drive-thru. Or, how about a chain of retail shops that dominates your town or your region of the country?
Retailers have found that a considerable amount of success has been realized following all of these options. But, as an industry, we may have overlooked one tremendous opportunity.
Of all the growth we see and hear about in the specialty coffee industry, one area seems to be overlooked. It offers a potential way to increase exposure of your product line to more and more people continually, furthering the expansion of your brand. Ultimately, this drives more revenue through your company. That area of untapped potential lies in what has historically been referred to as Office Coffee Services, or O.C.S.
Arghhhh! There it is! I have used the term once, and once only. The rule in my office is that using it once is fine, but then never again after that.
From this point forward, I will refer to this giant untapped market for commerce and growth as the “coffee services industry.”
We have all watched the coffee craze take off, not only in North America, but around the world. We have not only seen the growth in retail coffee shops around our towns, but we have been blessed with the need to work hard to keep up with the increase in traffic through our stores each and every day. But what happens to all of those coffee drinkers once they leave our stores?
The reality of it is that the specialty coffee industry has raised the expectations for something better than what has been historically served in both restaurants and offices. Don’t you think it is time to give them what they expect?
Offering Services to Non-Coffee Experts
In the state of Maryland, we took our retail stores, City Dock Coffee and created a wholesale division called City Dock Coffee Services. Keep in mind, we are not a roaster, nor are we a distributor. But it was our plan to take the success we had enjoyed as a retail chain, and by using our brand recognition and reputation, offer our products and services to restaurants and businesses that are not coffee experts.
Think for a moment; can you recall a single reasonably sized business that does not already have a coffee service or coffee club? Or, how about naming a high quality restaurant that does not have coffee on their menu? There’s a reason why you can’t think of one, because they all offer coffee.
Many companies hire outside professional services in other areas of their business to make them more productive and profitable. Offices have outside computer technicians and cleaning companies. Restaurants have separate vendors for their seafood, and outsource their payroll services. Why wouldn’t both of them want an expert in providing specialty coffee? It is only logical to offer them the level of expertise they desire for their coffee program.
Taking the Plunge
City Dock Coffee Services took City Dock Coffee’s retail reputation and set out to offer our products and services to local businesses. We did not intend to paint the area with a broad brush. We were selective about our new customer base and solicited several businesses in different segments of the business community to examine their interest, and ultimately our level of profitability in dealing with that segment.
As of today, we have over 100 wholesale customers, including the United States Naval Academy, the Maryland State Legislature, and several national restaurant chains.
Yes, large chains like to offer recognized local branded menu items to break away from that “big chain headquartered across the country” belief. Local products make them appear to be a part of the community. Marie Friedland, Director of Promotions for Chevy’s Fresh Mex put it this way, “Partnering with City Dock Coffee Services is like having our own coffee expert on staff.”
Our business grew by over 116% last year, and we have yet to really get out of the gate. The growth potential, if carefully nurtured, is tremendous.
Let’s face it, we could not compete with the big office coffee service companies, if price was the only consideration. We must offer clients the highest quality products and an unmatched commitment to service. Convenience, a selection of coffee blends, and flexibility continue to play a major role in keeping their business.
We are not looking to compete with the common office services companies. They have had their own niche for many years. We try to offer an extension of what has made our stores successful.
We see thousands of people each day coming to our retail stores that are willing to pay a bit more for a higher standard of coffee. We wanted to be able to offer them that same quality when they left our stores and went to work or neighboring restaurants. John Astle, Maryland state senator confirms this, “Having watched City Dock Coffee’s success in their retail stores, we knew they were a company the Maryland State Legislature could count on to support the needs of our offices.”
New Hurdles to Jump
Of course this industry, just like all others, will provide you with new challenges. While your retail business challenged you with staffing turnover, customer demands, and cost of goods, the coffee services industry will expose you to a whole new set of hurdles.
Suddenly you find yourself in the delivery business, or building an alliance, such as a bottled water company, to deliver to your customer base. You will begin to recognize that unlike in a retail cash business, you will have outstanding receivables and collections. You also will find it necessary to provide equipment for many of these new customers, requiring both the capital to install it, and the education to fix it, should that be necessary.
Just like you count on your vendors to help remedy problems that interfere with the operation of your retail store, you suddenly become responsible for others’ equipment, products and needs. The key is to have a good reputation, the infrastructure to support a wholesale division, and quality products and services that set you apart from the commercial service companies - justifying a higher price point.
We are all trying to grow. If you are interested in exploring a venture like this, the question you must ask yourself is, “What is best for my company?”
Certainly the trends and history in the specialty coffee industry would indicate that there is still plenty of room available for expansion into new retail locations, drive-thrus, etc. But maybe another opportunity is just sitting out there where you can bring your products and services to the customer, instead of banking on them to come to you.
About the Author: Stephen Duffy is president of City Dock Coffee, headquartered in Annapolis, Maryland. He and his partner/sister Kerolyn started the company in 1994, opening a coffee kiosk within a hospital. Today, the company includes six City Dock Café locations, City Dock Coffee Services, and retail coffee consulting. For additional information, visit www.citydockcoffee.com, or contact Stephen at (1)(410) 269-0961 or firstname.lastname@example.org.