After expanding the coffee offerings and introducing paper goods, the company began offering cleaning supplies, such as soap, tile cleaner, lime solvent, glass cleaner, degreasers, bleach and detergents. With each new product offering, the drivers need more product knowledge. But each product expansion has resulted in higher earnings per stop.
Timbers said the cleaning supplies, while the smallest part of the business thus far, are the most profitable and growing. Another advantage is they take less space in the delivery van than either coffee or paper goods.
Cleaning supplies presently account for 3 percent of OCS sales. Timbers believes he can build this to 10 percent.
The company has also expanded into bag-in-the-box juice dispensers. A 100 percent frozen juice offering has proven especially popular with schools that are looking for healthy products.
The company began adding fuel charges two years ago when gasoline prices first spiked. Timbers said customers were accepting of the charges. He noted that drivers are permitted to remove a fuel charge to save an account, but this has to be approved by Timbers, and it has yet to happen.
Raising coffee prices has been a bigger challenge. Timbers said most customers realize there is a value to having coffee delivered, having their machines serviced and having their glass coffee decanters exchanged with every service visit.
Recently, some customers have opted to switch to less expensive coffee because of rising prices. But they are not switching to lighter pack weights. “The pack sizes are getting bigger,” said Timbers, who has witnessed average pack weights rise from 1.1 ounces to 2.0 ounces over the years. He gives credit to specialty coffee houses. “They (specialty coffee houses) woke people up and they are coming back to the heavier packs.”
High volume purchasing helps
Timbers noted that the company has benefited from its high volume coffee purchases. He is also thankful for his relationship with Cadillac Coffee Co., which advised him in advance about the rise in coffee prices. He opted for an extended contract this past summer that has protected the company from the most recent price increases.
“Not many companies can leverage that far out,” Timbers said. “That has saved us an enormous amount of money.”
“To get into it (OCS) now if you haven’t been in the business before can be very capital intensive,” Timbers observed.
Timbers introduced single-cup brewers three years ago, but it didn’t succeed. Even though the OCS market is primarily white collar in Jefferson and Columbia, due to the large number of government, education and health care locations, most people still prefer glass pot brewers.
Homeowner coffee pod systems have gained visibility at retail, Timbers noted, and he is keeping his ear open to customer requests. But so far, there have been none.
Another synergy that Graves Menu Maker Foods offers Austin Coffee Service is an aggressive marketing program.
Austin Coffee Service advertises on the radio and in various publications. The company also supports civic and charity organizations, and exhibits at local business expos.
Graves Menu Maker Foods also has its own trade show where its vendors exhibit for its customers.
Austin Coffee Service demonstrates the need for an OCS company to understand its customers’ preferences well.
The company has succeeded because it has been able to do this, and to deliver the products in a manner that ensures a reasonable profit.
No doubt, the management skills that came from operating a broadline foodservice distribution business have helped sustain Austin Coffee Service as an independent OCS player in the Jefferson City/Columbia, Mo. market. “We don’t regret ever making the acquisition,” Timbers said.