Single-Cup Solutions

April 4, 2016
There are many single-cup brewers to choose from. Placement should depend on location size, ROI and customer wants.

Customers, locations and regions are all different and likewise, the type of OCS equipment offered at each location varies. One system that continues to be a driving force in OCS is single-cup. It also drives the highest consumer satisfaction with workplace coffee, according to the National Coffee Association (NCA). Consumers enjoy the customization and convenience of single-cup systems and 36 percent of them in the NCA’s 2015 Single Cup Format Report say that a single-cup brewer makes an overall better tasting coffee than other brewing methods.

From an OCS operator standpoint there are many pros to adding a single-cup option. There are no brewing pots of coffee that sit around for hours; there is no waste of coffee and no pots to clean or maintain; there’s also a plethora of offerings for any customized taste. Operators can also make a higher “penny profit” per cup over traditional brew.

The offering is, however, more expensive than traditional brew and can be a slower brewing method, requiring multiple brewers to be placed in high volume offices. In some cases, there is shrinkage where customers take the single-serve capsules home.

Location volume, cost of equipment, return on investment, machine maintenance and customer preferences are all things OCS operators are taking into consideration when choosing which single-cup solution to place.

Location volume

The location’s size and number of consumers working in-office daily will help OCS operators narrow down which brewers they can place, said Dave Carroll, vice president of Southern Refreshment Services, located in Tucker, GA. Before the company began integrating single-cup in its OCS lineup in the late 1990s and early 2000s, it had only offered traditional OCS. Today single-cup makes up 60 percent of OCS sales for Southern Refreshment Services but only 40 percent of product flow. “We move more cases of frac packs but because the single-cup is a higher price per cup, it makes up more revenue,” said Carroll.

For locations with many employees, operators need to consider the brew time involved with each system. Long brew times may cause lines. Small holding bins on equipment can also be problematic when they fill up too quickly.

Bean-to-cup brewers, which are growing in popularity, need at least 80 to 100 people at the account to make them worth the placement. Southern Refreshment Services purchases all bean-to-cup equipment and has the client sign a three-year lease agreement, pay a lease fee each month, in additional to ordering a specified minimum of product per month. The solution is cheaper in the long run though, said Carroll. “Whole beans come out to be about $.40 per cup whereas K-cups are $.75 per cup.”

Look at the full picture

Single-cup wants are driven often by price. “If you have a location with 125 employees and they want the cheap option, they won’t go for single-cup,” said Carroll. “For those locations who want convenience and don’t want to have to brew a pot or have it sitting in a thermos all day, then single-cup becomes an option and we can start discussing their needs and a solution that fits their price point.” The equipment can be expensive, with varying ROIs depending on lease agreements and/or how many cups are sold each day. “Everyone is different,” continued Carroll. “You’re not going to put a $4,000 bean-to-cup machine in a 25 person office, but you have to have an option for all different types of locations.

Maintenance costs also need to be taken into consideration when choosing a “Bean to Cup” solution. Southern Refreshment Services was adding so many bean-to-cup brewers that it had to hire a maintenance technician full-time simply to travel around and service/clean the machines. This was an unexpected cost, said Carroll, but with growing from 20 to 150 bean-to-cup machines, it was a necessity. It is not feasible to exchange a bean-to-cup machine every time it needs regular maintenance or service said Carroll; unlike K-cup or POD style machines, which are cheaper and easier oftentimes to replace. In total, Southern Refreshment Services has 1,500 single-cup machines and 150 bean-to-cup brewers and can’t imagine a future in OCS without single-cup as a solution.