Diversified Services Make Capitol Coffee Formidable Industry Competitor

May 22, 2018

Capitol Coffee Systems, Raleigh, NC, adapts to industry innovations with vigor. Founded in 1983 by two partners, it began as an Office Coffee Services (OCS) company. It transitioned over the years to incorporate pantry service, vending for a short stint, and eventually micro markets. The cofounders' families continue to operate the business, including Jonathan Scott, one of the cofounder's sons. Covering North and South Carolina, Capitol Coffee services OCS, pantry and micro markets at 3,000 businesses. "It's more than just coffee, but coffee still drives the ship for us," said Scott. Capitol Coffee differentiates itself by keeping up with OCS, micro market, pantry service and point of use water filtration system trends.  

Coffee: the driving force 

Capitol Coffee started out in office coffee service in the 1980's. At that time, it sent off one box of coffee kits for each delivery, and each kit would contain coffee, cream, sugar and stirs. "Naturally, things have evolved quite a bit over the years," said Scott. Now, Capitol Coffee is getting into bean-to-cup heavily, as it seems to be driving the market, Scott explained. The OCS locations that have bean-to-cup enjoy the brewers for many reason, one reason being the benefit of specialty coffees. "They like the freshness," said Scott. "They like it because its green without having to do anything – its just coffee grounds and filter paper, or just coffee grounds." Many of Capitol Coffee's customers are looking for sustainable alternatives, and are moving away from Keurig and Flavia (pod systems) because the pods aren't recyclable. Last but not least, people who have bean-to-cup brewers like the touch screens. 

It is very common for Capitol Coffee to get asked from a prospect or current client, "what do we have to do to get a bean-to-cup?" For this reason, Capitol Coffee has been testing more equipment than ever over the last year to see what works and what's affordable. Manufacturers will contact Capitol Coffee with brewers, and it tests the brewers to their breaking point. This is because it doesn't want a customer to have a brewer constantly having issues, and Capitol Coffee also doesn't want to constantly be fixing the brewer. In lieu of this, Capitol Coffee is very choosy when picking a bean-to-cup brewer. Part of the reason for the demand of bean-to-cup is the demographics of the locations Capitol Coffee serves.  

Location, location, location 

"We were fortunate in that the area we were founded in is the Research Triangle Park (RTP) – kind of like a Silicon Valley of the east; a lot of tech companies," said Scott. He admits that not everywhere has the industry makeup that area does. It is a tech sector, where part of the competition of employers is offering employees nice breakroom options. When Capitol Coffee first started out doing pantry service, it was pretty much whatever was in a vending machine was offered to the location's employees for free. Now, its fresh fruit, dairy, vegetables, bulk snacks (pourables), new age beverages (like kombucha), and so on. "It has become more and more specialized," Scott explained. "We have a pretty large inventory. With the micro markets, a lot of the same items sell. So, we can move them in two places – micro markets and customers that offer pantry. Because of this we don't have a tremendous amount of spoilage." 

Action and reaction 

Capitol Coffee has most recently gotten into micro markets and is now serving 30-40 of them. "Some of the micro markets are reactionary," said Scott. It was about staying competitive. Some of its largest accounts with OCS were offered micro markets with bigger companies, and Capitol Coffee realized it had to get on board. Scott explained that it's easier for a company to have everything through one vendor. At the same time, they also have locations with micro markets but no coffee service. Each location is different.  

"Micro markets are an expensive endeavor up front, but you have to get smarter and realize that eventually the account will have an ROI," explained Scott as a word of advice.  

Be cool -- Give them what they want  

Another service that Capitol Coffee offers is point of use water filtration systems. It has partnered exclusively with Ion, which is the water cooler it uses. It has also partnered with Lavit and Bevi, and is a distributor of those systems and products as well. The newer water systems, such as Lavit and Bevi, Capitol Coffee has brought in "because of the insane popularity of the specialty water," explained Scott. "It was only natural to bring in systems that dispense it." By offering additional services for its customers, Capitol Coffee strengthens its value-based relationship with its customers. Bringing in new items such as specialty water is one of the ways that Capitol Coffee has adapted to industry trends.   

In order to be successful, service has to be the basis, explained Scott. For the most part, Capitol Coffee and all of its competitors have very like products. "It has to start with service – that's the added value," said Scott. Having an engaged and driven team who truly care about the customers is also essential. A company cannot be stagnant, it must continuously evolve to keep up with the industry. This includes adopting new trends, bringing in new items and equipment. Doing this has kept Capitol Coffee competitive. It has also continued to adopt new technology. Both behind the scenes and by empowering workers when they're out in the field so that they can be mobile.