The big foodservice distributors, for their part, find it easier to let a coffee specialist such as Karsay Coffee handle all the coffee in accounts with multiple needs. Karsay Coffee employees are on site regularly. Hence, they can provide better service. "They (the site managers) have one contact for all their coffee needs," Rich Karsay said. "They've got one phone call to make."
Karsay Coffee does not provide or service the liquid-based coffee machines in the cafeterias it serves, but they do carry the liquid coffee and they contact the manufacturer or supplier when it's time for machine maintenance.
Profitable sideline: bulk food
Karsay Coffee's relationship with the big foodservice suppliers has also enabled it to become a niche foodservice distributor for bulk food products. Karsay Coffee can offer new products before the foodservice distributor adds them to its regular menu.
"We can market specialty items early on in their sales cycle," Rich Karsay explained. These include cheese sauce, spaghetti sauce, peanuts and instant potatoes. "There is a small window there where new products can be marketed and we can make some money," he said. "There's always new stuff coming and going. It's an ongoing process."
While most of the company's growth comes from referrals, Karsay Coffee mails out post cards, occasionally advertises in the local newspaper, and exhibits at local food fairs. Rich Karsay handles the sales, along with another full-time salesperson.
One successful promotion is a post card that offers customers a chance to win the state lottery for scheduling a free single-cup demonstration.
Single-cup leads in office accounts
The company offers customers a wide range of services. Most office accounts today want cartridge-based, single-cup units, Rich Karsay said. Those that are not large enough for single-cup units are offered three-burner, automatic glass pot systems.
Accounts must purchase a certain amount of coffee to receive a machine free of charge. For those accounts not large enough, Karsay Coffee has a service agreement that offers both rental and purchase terms for three different single-cup brewers.
The company will provide gravity-fed airpot brewers or water soluble single-cup systems to customers that want them, but Rich Karsay said he does not encourage these units since they require more maintenance. In addition, the company needs to streamline its parts inventory. "You can't be all things to everybody," Rich Karsay noted.
Focus on national brands
With cartridge-based, single-cup systems (Keurig and Flavia) driving much of the growth, Karsay Coffee believes more in the power of national brands than in private label coffee. The company takes advantage of the point-of-sale marketing material provided by its coffee suppliers. Point-of-sale material is particularly important in retail accounts such as coffee shops and convenience stores.
Karsay Coffee makes good use of graphic brewer overlays from its roaster partners, particularly Green Mountain Coffee Roasters and Kraft Maxwell House.
The company began offering private label coffee in the 1980s when the market was more cost-driven, but it does not see private label as a growth area. Being primarily a single-cup provider, most of the coffee sold is provided in proprietary portion packs.
Even the fractional pack coffee is predominantly branded coffee. Rich Karsay believes it makes sense to capitalize on the brands that have already been established.
"Without the signs and the promotion with the label on it, we aren't promoting it (private label)," Rich Karsay said. "Why would I want to spend $30,000 on a display box with my name on it? I could get all that from a national supplier (for free)."
The company has tested some of the new manual pod brewers, but it has not seen a demand for them. Demand remains strong for cartridge-based units.
Expansion based on service
While the Karsays are anxious to grow the company, they believe it is important to continue to provide the same high level of customer service. To date, they have been lucky attracting committed employees, and there hasn't been much worker turnover.
The Karsays reward employees with comprehensive medical benefits, a profit sharing plan, two weeks paid vacation and a free tank of gasoline every week.