Passion for Coffee Brings OCS Success in Las Vegas

Veteran OCS operators know the industry has changed a lot since the days of pourover brewers and standard coffee kits. The bar has been raised considerably with the advent of specialty coffee and a more sophisticated coffee consumer.

But that doesn’t mean that a dedicated newbie can’t make it. For coffee lover Evalynn Merrill, today’s coffee service business is the type of business she wants to be in. The Las Vegas, Nev. native has parlayed her passion for coffee into a viable business, thanks to single-cup technology and high quality coffee.

Merrill, a woman who spent most of her working life in the casino industry, had limited business experience and limited funds when she launched Gourmet Coffee Vendors five years ago. But she believed the coffee service industry in fast growing Las Vegas wasn’t keeping up with the demands of the office coffee consumer. She seized an opportunity to deliver what many consumers like herself wanted but weren’t getting in the work place: specialty coffee.

Today, Gourmet Coffee Vendors is one of the most visible independent OCS companies in one of the nation’s fastest growing cities. Key in “Las Vegas coffee service” in an Internet search engine, and Gourmet Coffee Vendors will pop up on the list of companies.

IN SEARCH OF OPPORTUNITY

Merrill’s company markets specialty coffee and almost exclusively uses single-cup brewers. To foster a high quality image, the company uses professional looking marketing materials, including a Website, a colorful brochure and a delivery van that doubles as a moving billboard. All of these media deliver the company’s enthusiastic message: espresso, cappuccino, café latte, café Americano, mochaccino, hot chocolate and flavored coffees.

In person, Merrill comes across as very reserved. She doesn’t impress a stranger as an ambitious business person. But start talking coffee, and her excitement spills forth. “Coffee is the most traded commodity next to oil,” she says with passion. “Coffee isn’t going away.”

Working as a roulette dealer in a Las Vegas casino, Merrill was exposed to successful people constantly for years. She realized that people from many different walks of life became successful by owning their own business. She contemplated how she could be one of them. She considered opportunities that would allow her to launch a business but still keep her regular job.

FIRST ATTEMPT LASTED TWO YEARS

Her first attempt was an automobile windshield repair service. Given the big fleets of rental cars in Las Vegas, there was a demand for this business, but servicing the demand was difficult.

After two years, she quit the windshield repair business and began looking for something else. She came across a single-cup coffee brewer at a business opportunity show.

Merrill was sold instantly. She was well aware of how difficult it was to find a good cup of coffee in Las Vegas work sites. Specialty coffee shops had popped up everywhere, but outside of these coffee shops, good coffee was nowhere to be found. “Everybody loves coffee and I love coffee,” she said.

BUSINESS OPPORTUNITY: SPECIALTY OCS

The idea of a specialty OCS service made perfect sense to her. “People leave the office to go to Starbucks, so I could bring coffee like Starbucks to the office,” she said. “I just saw that right off the bat. I like the concept of OCS, giving great coffee in a work environment.”

The single-cup brewer delivered a cup of coffee that was comparable to what specialty retail shops sold, and it could offer even more variety than the coffee shop. “It’s a big plus when employers see they can have the versatility,” she said.

Before she began looking for customers, she purchased a delivery van and hired a graphic designer to develop a logo. She also hooked up with a consultant who helped her develop a Website.

INITIAL FOCUS: A PROFESSIONAL IMAGE FOR OCS

The consultant advised her of the importance of having a professional image. The graphic designer came up with a logo that combines traditional lettering with a cartoonish coffee cup overflowing with froth on a brown, coffee-colored background. The logo goes on all of her marketing materials, including her business card, her brochure, her Embarq Yellow Pages ad, her van and her Website.

The Embarq Yellow Pages ad yielded immediate results. Before she went out knocking on doors, Merrill got a call from a television production studio that wasn’t happy with its OCS provider. “That account came before I was actually ready,” she said.

SINGLE-CUP PROVIDES A SOLUTION

The television production studio was being serviced by a single-cup system, but that system didn’t offer espresso in addition to regular coffee. Fortunately, Merrill was able to show a machine that offered both: the Saeco espresso brewer.

Fortunately, she had also found a coffee that she knew would be a winner: Gavina’s espresso blend. She characterized it as a good medium ground of espresso coffee that would not be too strong or too weak. “My coffee business is based around my taste,” she explained. “I’m picky. I sell the coffee that I think is good enough.”

She uses Nature’s First natural powdered creamer, chocolate and cappuccino. “It tastes really good and it’s a really thick froth,” she said. “It’s very important to have a good product.”

Water quality has always been an issue in Las Vegas, and Merrill addressed this from the start. She provides both mineral and chlorine filters on her brewers, except in cases where the customer already has a filtered water line. She also provides 5-gallon bottles and bottle dispensers.

Merrill offers a variety of service packages to customers. She provides machine cleaning for a set fee which varies based on the amount of coffee purchased. Customers can also choose to lease a machine.

From the outset, Merrill required customers to sign service contracts. Customers are responsible for the condition of the equipment.

Merrill kept her evening job as a casino card dealer, which allowed her to do her deliveries during the day. When her operation was up and running, she solicited accounts in person and also mailed out some brochures. Where other OCS operators were marketing coffee, she was marketing espresso, cappuccino, latte, mochaccino, hot chocolate and flavored coffees.

LAS VEGAS RESPONDS

The Las Vegas market was very receptive to her message. The local economy has a lot of service industries, and much of the population consists of young people who have been exposed to specialty coffee. Law firms, accounting firms, advertising agencies and other professional accounts have continued to grow along with the general population. Her locations range between 25 and 100 people.

New customers came largely by word of mouth in her first year. “Everybody loves the concept of the single-cup over the non-single-cup,” she said. “I’ve done several conversions.” After a year and a half, she hired her daughter as office manager, working from her home.

MARKETING ON SEVERAL DIFFERENT FRONTS

Merrill joined the chamber of commerce and exhibited at some local business-to-business conventions, but her best selling tools have been word of mouth, the Website and the Embarq Yellow Pages. Merrill’s service area extends throughout the Greater Las Vegas area, including Henderson.

Merrill’s foray into OCS was fortuitous in that the Las Vegas economy was mushrooming at the time. While the economy is still healthier than the nation’s as a whole, the rapid growth has tapered off in the last two years. Fortunately, most of her accounts have not reduced their employment.

The only customer segment that noticeably cut back on orders has been realtors, and fortunately, they represent only a fraction of her customers.

While much of Las Vegas’ population is Hispanic, the population that Merrill services is more typically American. The only Hispanic coffee requests she has received have come from a Brazilian and a Cuban, both of which she met with an espresso called La Llave from Gavina.

OPERATION EXPANDS

After two years, Merrill had 50 customers. Not wanting to quit her evening job, she hired a full-time delivery person. She also leased warehouse space to store product and equipment.

This was good timing, as the business was about to experience a growth spurt, thanks to the introduction of a cartridge single-cup system.

Merrill attended a tea convention and came across the Flavia cartridge system and became the first Flavia distributor in Las Vegas.

“You have multiple flavors of coffee,” she said of the single-cup cartridge system. “You can please everybody in your office. That was really a huge thing.” The other big advantage is that the system is very easy for both the account and the operator to maintain. It also reduces product waste.

“I was totally prepared for it taking off,” Merrill said for the cartridge-based system. “I knew people loved espresso.”

Since taking on the cartridge system, the business has doubled. Merrill’s business is almost entirely single-cup. She services a few thermal pot and glass pot systems, but she provides no national brand coffee.

“Most people are getting out of that,” she said of the traditional OCS model. “They recognize there are better ways to go.”

One of the national OCS operators has since introduced a cartridge-based single-cup system to the market, but Merrill insists that she continues to hold the dominant position.

She also took on the Rheavendors single-cup system, which she came across at a Spring NAMA expo. She said the unit is mechanically sound, easy to maintain and offers a very sleek design.

POD BREWERS: A CAUTIOUS APPROACH

Merrill placed her only manual pod brewer two years ago in response to a customer request. She was contacted by a pod supplier to service the account. Merrill was familiar with the manual pod systems, but was concerned that the pod holder, being stationary, would become contaminated by the different pods it held.

After examining different manual pod systems, Merrill decided that Grindmaster’s system overcame this issue with its removable pod holders, so she placed the Grindmaster system in this account.
While the Gourmet Coffee Vendors’ Website highlights three different single-cup options: the hopper unit, the cartridge system and the manual pod system, Merrill doesn’t see pod systems growing.

PRICE COMPETITION INTENSIFIES

Price competition has intensified in recent years, but Merrill claims that most of her customers are not basing their OCS decisions on price. She claims that no competitor has won an account from her because of price.

She did lose one account to a competitor who offered a dedicated Starbucks Interactive single-cup brewer, but Merrill suspects she may recover that account. She claims the Starbucks brewer doesn’t offer mochaccino and French vanilla, both of which are very popular items.

Pricing has become more of an issue this year as her suppliers continue to raise prices. She raised her prices once so far, and it didn’t cost her any customers. She sent a letter to her accounts explaining the need for higher prices. “Nobody has left me because of price increases,” she said. “They understand the costs are going up.”

EXPANSION INTO FOODSERVICE

Merrill has expanded into the foodservice sector, but not significantly. This came as a result of an office account; she was providing the office coffee for a company that operates a restaurant, and the customer suggested she handle the restaurant coffee as well.

The problem she encountered was the employee turnover in the restaurant. New employees did not take care of the equipment properly, so she removed it. “It would have worked out a lot better if they had not had such a high turnover,” she said. “A restaurant is very hard on the machine. I’m a little more cautious with restaurants.”

Merrill has since taken on a few more restaurants, but on a selective basis. “It just depends on the type of restaurant,” she said.
She attempted to expand into catering, but many of the requests did not allow her sufficient preparation time. She now works as a subcontractor for some caterers.

ADD ON BUSINESS: HOMEOWNERS

The Website has brought requests for delivery to homeowners. Using a route delivery system, Merrill has been able to accommodate these requests, providing they meet minimum orders. She noted that she can deliver local orders faster than other Websites that offer coffee delivery.

The company name, Gourmet Coffee Vendors, is a bit misleading since it is not a vending company, and Merrill said she occasionally fields requests for vending. While
her machines can include coin and bill validators if customers request them, she prefers to stay focused on coffee service.

Merrill is also a bit careful about placing machines in public locations. She had to remove a machine from a surgical center waiting room because of vandalism.

Gourmet Coffee Vendors has become a family affair in the last year. When her delivery person left to pursue other opportunities, she hired her brother, Rob Merrill, to replace him. Rob had been working in construction, but was seeking a different opportunity as the construction market began to soften.

Her husband, Eric, a casino supervisor during the night, handles a lot of the equipment maintenance.

Merrill feels well rewarded for her efforts. More than a third of her customers are billed monthly, and the balance pay on delivery.

POSITIVE CASH FLOW

The business has been operating in the black for the past year and a half. Merrill has repaid most of the money she borrowed in the beginning, and she currently has a positive cash flow.
She is considering quitting her evening job to devote all of her time to the business. This will make a big change in her life, since it will mean her entire future will rest on the business.

As the Las Vegas economy grows, she expects her company will continue to grow at a steady rate. She is willing to continue investing in the business as long as it continues to expand. She is willing to ride the growth as long as she can maintain personal rapport with her customers.

“It’s a slow grower,” she said of the business. “It’s not an instant thing.”

pictures

Evalynn Merrill found the Las Vegas OCS market receptive to specialty coffee. She and her husband, Eric, visit an apartment where residents can serve themselves specialty coffee from a single-cup brewer.

Gourmet Coffee Vendors’ logo can be found on all marketing materials, including its delivery van. Evalynn Merrill has found customers want more than regular coffee, so she lists the various specialty beverages on all marketing materials.

Single-cup brewers with multiple selections have proven very popular in Las Vegas service businesses.

Evalynn Merrill’s daughter, Jennifer Ebaugh, serves as office manager at Gourmet Coffee Vendors.

Merrill has expanded to the foodservice market on a limited basis. She has found these accounts are hard on equipment.

Gourmet Coffee Vendors’ Website includes detailed product information and has been a good marketing tool that has even allowed her to expand into the homeowner market.

Evalynn Merrill’s brother, Rob Merrill, a former construction worker, handles deliveries.