C-stores and Coffee: Be Afraid, Be Very Afraid

Coffee: The New Black Gold. That’s the title of one of the workshops at this year’s National Association of Convenience Stores (NACS) tradeshow. Nervous? Wait till you read the description:
“Now that a cup of coffee provides more profit than a gallon of gas, retailers are focusing more and more on how to compete with Starbucks®. The coffee customer shops your store frequently and is known to have a margin rich market basket. This session will highlight several retailers who are excelling at serving a hot cup of Joe to their customer and share what it takes to keep them coming back day after day.”

C-store coffee facts
NACS Online (www.cstorecentral.com) also cites the following facts:

  • Quick service restaurant operators identify coffee as one of the top items for future growth.
  • More than one third of all coffee consumed at work is brought in from outside the office. This has lead to some stores offering larger bulk “to-go” containers of 64 ounces or 96 ounces.
  • More than 97 percent of all convenience stores sell hot dispensed beverages, a category that includes coffee.
  • 13 percent of consumers who drink coffee outside their homes purchase it at a convenience store. 31 percent purchase coffee at work — the most popular source.
  • The No.1 item purchased with coffee at a convenience store is sweet snacks (donuts, pastries, etc.) and one in five coffee purchases includes a sweet snack purchase.

Do you know what this means?
So, it looks like the convenience store industry is reenergized in its efforts to reduce your sales in your No. 1 profit maker — coffee! And if that worries you, think about the other products your customers are buying right along with the coffee — pastries, doughnuts, breakfast sandwiches, to be sure. But, don’t forget the lunch entrees, sandwiches, salted snacks and cold beverages they are picking up for later in the day. There go your sales on a whole other product category.

Are we defenseless as an industry?
So, what can you do about it? Plenty!

Sell your customers GOOD coffee — not just the stuff that gives you the highest profit margin. If you aren’t offering single cup brewers — start — immediately!

The new generation of brewers and portion pack and pod coffees are phenomenal, producing excellent coffee equal, if not superior to the coffees available at c-stores.

Hot beverage vending machines have also made great improvements. The building I work in recently got a new vending operator who put in a new hot drink machine, offering a variety of drinks the employees never saw before. Employees now rave about the coffee.

So what are we waiting for?

Play your ace
In 2003, 82 percent of all coffee was consumed in the morning. I’m going to go out on a limb and suggest that consumers would rather drink FREE (or very reasonable priced) good coffee at work, than stop and pay for it at a c-store. Then, once you get them in the office, drinking YOUR coffee, they just might buy some pastries…or doughnuts…or a breakfast sandwich…from your vending machines.

Funny how that works.

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