Pushing Boundaries

March 12, 2018

Rebranding can be problematic for a long-time operator with an established brand. However, Scott Unter, an office coffee service operator in Elk Grove Village, IL, knew it was time. The multi-million dollar business he is running is different than the one his father started 48 years before. It needed to push beyond the perception people got from its name, Antique Coffee, in order to showcase all the services now offered in a new, modern package that appealed to today’s decision makers. Unter wanted to feature the company’s focus on premium beverages, sophisticated single-cup brewers and partnerships with other service businesses to drive demand. The diversification of business types helped the company weather the Great Recession and has been a leading source of growth. Unter knew it was time to put them front and center by relaunching as BrewSmart Beverage in 2017.

Spirit inspired beginning

Unter’s father, Kurt, started the family coffee business in 1970. Kurt had worked for his brother-in-law at K&K Coffee, but a falling out had left him without a means of support. He contemplated the future with a bottle of Antique Bourbon, and eventually inspiration hit. He would open his own coffee service business with the name Antique Coffee.

The company grew steadily with Kurt’s careful attention, from the family’s garage to 20,000-square-feet of warehouse space in Elk Grove Village, IL. Unter was born into the family business, working in nearly every position of the company from 2000 when he was just 16 years old until being named President in 2016, as Kurt decided to semi-retire. Kurt is still active in the business, supporting Unter with his experience and business acumen.

Unter appreciates having his father’s feedback on new service ideas and brands. The two don’t always agree, but Unter wouldn’t have the business any other way. In fact, he tracked down a bottle of Antique Bourbon, despite the brewery being closed since the 80’s, as a keepsake of Antique Coffee’s inspiration. “I found the only unopened bottle that existed,” said Unter, proudly. “I keep it locked up in my wine cellar.”

While Antique Coffee would always have a special place in Unter’s heart, the necessity to rebrand became clear as the company’s services changed to better serve customers. “People were overlooking us,” said Unter. “I asked a few I knew, and they told me it was because they thought all we did was coffee.”

Rebranding becomes necessary

In reality, the business had grown into many different services, including catering, vending and micro markets, OCS and a growing share in on-premise beverages. Unter felt that part of the issue was the age of today’s decision makers. “We studied the average age of the gatekeepers in OCS,” said Unter. “It was 32 years old.” The target customers for the service are 25 to 40. “Antique Coffee just wasn’t hip,” he said.

Unter launched on a mission to rebrand the company to better appeal to the Millennials. He hired marketing consultants and graphic designers. “Actually, it was my father who came up with the new name,” said Unter. “It’s based on the idea that we are a smarter way to brew — BrewSmart. “We like to say that we handle anything brewed — coffee, tea, espresso, etc.”

It took five months and a substantial investment to update the logo, website, marketing materials, vehicles and more, but now Unter feels the company is projecting the image it needs to succeed. “It completely changed the business and its outlook,” added Unter.

Birth of on-premise

When Unter started to take an active role in growing the company in 2002, he focused on the convenience store business. The company had an exclusive distribution deal with Eight O’Clock Coffee and Massimo Zanetti Beverage, which meant that Unter was the only person the gas stations could go to for that specific brand of coffee in the Midwest.

“It saved us in 2007 to 2008,” remembered Unter, “because people still had to get gas and wanted coffee but didn’t have the money for expensive artisan coffee.”

During that time, the company’s vending business was suffering as facilities closed and layoffs were prevalent. Unter took a hard look at the margins of the vending segment and saw that they were significantly lower than the margins the company was getting on coffee. This led to his decision to scale down the vending side. The company went from 10 vending routes to only 2 in 2017.

Around the same time that Unter was assessing vending, he took on-premise under his wing. He added other coffee brands and offered signage and branded options. The segment grew from providing service and coffee to gas stations and convenience stores in two states to serving 14 out of 4 centrally located warehouses. The brands Unter brings to the other states offer a chance for a distinctive coffee that may not be popular in that area. “We carry brands to new markets such as Chock full o’Nuts, Eight O’clock, Seattle’s Best, Arthur Ave, Torke, etc.,” said Unter. Plus, the company also offers signage for convenience stores to advertise the coffee brand to customers.

Unlikely partnerships

Revenues from on-premise have grown to represent 60 percent of the company’s overall revenue. Part of that growth has been a new partnership with Legacy Spirits, a large liquor supplier to the area with 2,000 accounts in the Chicago market. While coffee and booze might seem an unlikely pairing for an operator, Unter saw the potential. In his own life, he enjoys a nice Breckenridge Bourbon after dinner, and his wife, who opts out of dessert still wants a post-dinner coffee cocktail. “Restaurants want $20 to $30 at the end of a meal,” said Unter. “They are losing that from customers no longer ordering dessert. That has given us the opportunity to work with Legacy Spirits on offering craft coffee cocktails.”

Restaurants were already a customer for Unter, because many wanted the artisan roasts and specialty coffee he offered. “A customer won’t spend $60 for a steak and be happy with a luke warm cup of coffee,” said Unter. However, pairing with the spirits company made the restaurant business much more fun and lucrative. Unter shows locations how to use capsule espresso machines that don’t need a dedicated water line in the bar area. Then he works on developing unique coffee cocktails for each customer. He is currently up to 180 coffee-based cocktails, including a variety of espresso martinis, “The Bob” which is a white Russian with espresso and a “Wake The Dead” shot with espresso and tequila. “It is our mission to show people that there are easier, less expensive and yet reliable ways to make espresso, coffee and specialty drinks,” said Unter.

Technology woes

The unusual business path of BrewSmart Beverage does come with challenges. Unter currently runs three different routing systems: Compuvend, Parlevel and Quickbooks.

While Unter would love to be using one system, they each have features he values. “75 percent of our customers are cash on delivery (COD) which is not something most systems come with,” said Unter. The COD business runs on his server-based version of CompuVend, but he’s looking at Parlevel Systems for a cloud-based solution. “It is important to be able to remotely access equipment as we grow out of state,” he said. “I foresee that in 6 to 12 months everything will be on Parlevel.”

He also uses GPS tracking software Fleetmatics on the company’s delivery vehicles. “We deal with Chicago traffic which is tough so it’s great to get a report on accidents and reroute drivers before they leave,” said Unter. The GPS is in real-time, so it shows how fast the driver is going and sends alerts for sporadic driving, stopping too quickly, riding the break, when the vehicle is outside the territory longer than 15 minutes, or even when the vehicle needs an oil change. 

“It probably added 5 percent to our bottom line,” explained Unter. Part of the savings was on hourly wages. Some drivers were turning 4 hours worth of work into 8 hours of deliveries. “Plus, now when a customer calls asking when the delivery will arrive, we can actively look and see where the driver is and give a realistic ETA,” added Unter. “It’s the best piece of technology we’ve put in over the last couple years. It’s paid for itself 10 fold.”

OCS trends

In traditional OCS, Unter has seen a significant change in regards to coffee. Locations want special equipment and better coffee to attract top talent. “It’s not about pay, that is the same,” said Unter. “It about the amenities.” 

Bean-to-cup machines, in particular, have been a huge growth area for BrewSmart Beverage, and Unter believes this is all due to the younger decision maker. “Millennials have the lowest percentage of home ownership and the highest percentage of expendable income. My 16-year-old niece will pay $7 for a latte. That is the new normal.”

This has made it easier for Unter to go in and get the price he needs for bean-to-cup coffee. “When we say the coffee they want is $18 to $30 per pound, they are like ‘OK.’ Five years ago they would have kicked us out for that price,” Unter added.

BrewSmart Beverage has several brands and a private label coffee, but it can basically be parceled into three levels: super premium or artisan, premium and private label coffee. Most offices in Unter’s area aim for premium brands. Part of opting for the premium brands is also using the branded cups that Unter keeps in the warehouse for local customers. “An office will spend the money on Starbucks coffee, but not the extra nickel for a Starbucks cup advertising what’s inside,” said Unter. Instead, he explains to locations that it is worth the few cents more for a branded cup than a plain cup, because it advertises the better quality coffee they are paying to offer employees.

Space challenges markets

BrewSmart Beverage has some vending accounts and has placed three micro markets. Micro markets are getting bigger as a segment of convenience services and Unter sees it as a profitable opportunity. The biggest challenge is that in the Chicago area, space is at a premium and many of the coolers and racks are just too large. “Currently, the minimum is 20 feet for current coolers,” said Unter, “but we often don’t have that much wall space.”

Service is the biggest part

“My outlook is, we will service anyone who requires it — offices, restaurants, hotels, gas stations — anyone who requires equipment and needs a quality beverage program, who needs more than a throw away solution,” said Unter. That is why BrewSmart Beverage offers a true 24/7 service department with a dedicated service staff there every holiday and night and weekend. They stock parts and replacement equipment that can be placed at a location within 24 hours. In addition, each brewer has a label with QR code that allows BrewSmart Beverage to track the asset from where it is placed to how many times it’s been in need of service. Having great equipment partners such as Bunn is a key component in providing such great service, Unter adds.

“OCS is so much broader now than it used to be,” Unter said. He pushes past the traditional lines of service to keep his company relevant and growing. Unter is willing to invest and still enjoys the family business each and every day. 

About the Author

Emily Refermat | Editor

Emily has been living and breathing the vending industry since 2006 and became Editor in 2012. Usually Emily tries the new salted snack in the vending machine, unless she’s on deadline – then it’s a Snickers.

Feel free to reach Emily via email here or follow her on Twitter @VMW_Refermat.