Consumers might be unnerved by rising unemployment and falling stock prices, but they still love a good cup of coffee.
Howard Chapman, office beverage manager at Royal Cup Coffee Co. in Birmingham, Ala., isn’t worried. The company continues to expand as more customers discover the benefits of high quality OCS. A company with the right infrastructure to deliver a great product along with sensational service has nothing but growth ahead of it.
Chapman, the 2008 Automatic Merchandiser OCS Operator of the Year, has witnessed the evolution of high quality OCS. The company has aggressively marketed the single-cup systems that have delivered constant growth to the OCS industry, economic conditions notwithstanding.
INTRODUCED TO OCS AS AN ACCOUNT DECISION MAKER
Chapman learned the importance of good quality OCS as an account decision maker. He was director of administrative services for an Atlanta, Ga. law firm in 1986 when Royal Cup Coffee called on him about a new service they were introducing — OCS. Chapman was not completely satisfied with the law firm’s existing OCS provider.
Royal Cup Coffee, which was established in 1896, had established a reputation as a foodservice coffee provider in Atlanta. Chapman agreed to meet them, knowing they were knowledgeable about coffee. He was impressed by their professionalism and their coffee knowledge. He was also impressed that they were a roaster that was already providing high quality coffee to white tablecloth restaurants. By that time, Royal Cup Coffee had established a dedicated route and sales division for offices.
AN INVITATION TO ‘SWITCH SIDES’
In 1992, Royal Cup Coffee asked him to join them as Atlanta, Ga. district manager. Chapman had always wanted to own his own business, but he had always been uneasy about risking his finances to start a business. Royal Cup Coffee, because of the way it was organized, offered him the chance to build a business.
The position made him responsible for a profit center. As a district manager, Chapman had the freedom to invest resources as he saw fit, and would be rewarded based on performance.
At that time, Royal Cup Coffee acquired a vending operation in Atlanta that had an OCS division. Chapman was put in charge of the entire Atlanta operation.
In the course of a year, Chapman decided it did not make sense to be in both vending and OCS. He decided to divest the vending routes. “It (the OCS) grew dramatically as a result,” he said.
In 1998, Royal Cup Coffee’s upper management offered him the position of office beverage manager, and he accepted. He moved his family from Atlanta to Birmingham, Ala., where the company is based. He oversaw OCS operations covering Atlanta, Ga., Charlotte, N.C., Nashville, Tenn., Memphis, Tenn., and Washington, D.C. Chapman opened operations in Florida, Texas and Colorado, focusing on the major metropolitan areas.
SPECIALTY COFFEE CHAINS EMERGE
The specialty coffee chains were expanding nationwide at the time, and the OCS industry was beginning to develop tools to replicate the coffee house experience in the office. Under Chapman, the office division grew from $11 million in 1998 to almost $50 million in 2008.
A key factor was partnering with Flavia in 2000, Chapman said. He believes brew-by-pack has been the single most important development for OCS in recent years. Royal Cup Coffee carries both Flavia and Keurig.
“They (brew by pack) were a win-win for everybody,” Chapman said, referring to customers, who got more variety, and operators, who were able to charge higher prices and have reliable delivery systems. “That was such a phenomenon for us.”
Specialty retailers educated people about the variety with their menu boards. In addition to coffee, they offered teas and hot chocolate. “Brew by pack brought those same options to the office,” Chapman said.
About a quarter of all customers now have single-cup systems, Chapman said, and as many as 70 percent of all new customers take single cup.