Brewing Up Success

Not only is offering a quality cup of coffee expected of the nation’s truckstop and travel plaza operators, it is crucial. Americans love their coffee, and today’s consumers are looking for choices well beyond decaf or regular. By crafting a coffee menu with a range of beverages, operators can ensure professional drivers, the traveling public and local customers of all ages will grab a cup of Joe or an iced blended drink for a morning pick-me-up, a snack or a simple indulgence. What’s even better is that consumers have proven they’re willing to pay for a quality cup of coffee.

“It isn’t so much what something costs but what something is worth,” said Ed Brown, national account manager for Caribou Coffee Co. “The perception of value in the customer’s mind is key.”

Coffee is a core category and reason consumers visit truckstops and the convenience stores located within truckstops. “Coffee is the human fuel and they’re in the fuel business,” Brown said.

The National Coffee Association’s annual survey showed that 58 percent of those surveyed said they drank coffee in the past day, up from56 percent in 2010. The survey also showed that the number of young adults drinking coffee is on the rise, with 40 percent of the 18- to 24-year-olds who took part in NCA’s survey saying they drink coffee daily. That is up from31 percent in 2010.

“The game has changed in that specialty coffee is becoming more widely available in a number of places,” said George Reigelsperger, vice president of license and foodservice for Caribou Coffee Co. “We see a continuing search by consumers for coffees that offer them different roast profiles, different options. Anyone who is a coffee drinker has now gotten the bug for specialty coffees.”

Coffee house operators expect to see an average sales growth of 9 to 10 percent for the next 12 months and saw an increase of about 5 percent in the first quarter of 2011, according to a recent report by the Specialty Coffee Association.

The downturn in the economy caused many consumers to slow their away-from-home coffee purchases, but truckstops can actually use the economy to their advantage. “Convenience stores can offer quality coffee at a less expensive price point compared to competitor channels, which can adhere to consumer concerns,” said Kari Manze, customer marketing manager, convenience stores for Sara Lee Foodservice.

Consumers go to convenience stores specifically looking for coffee or other dispensed beverages, the market research firm NPD Group reported. According to the NPD Group’s Convenience Store Monitor, 86 percent of coffee purchases are planned. The study also showed that coffee and other dispensed beverage buyers represent 68 percent more visits than the average c-store customer. Brown said, “People will drive 20 miles out of their way to get a coffee product they want. It is a real motivating factor for their travelers.”

The NPD study also found that consumers tend to make impulse purchases along with their beverage, with the average customer purchase averaging around $7. NPD research showed that 45 percent of those purchasing coffee between 6 and 10 a.m. in a c-store also purchase doughnuts, gums, sweet rolls, sandwiches, breakfast sandwiches, snack cakes and cookies.

Manze said operators can increase the profitability of their coffee Program by increasing the price spread between cup sizes. Typically there is a 10-cent spread. “A 20-cent price spread can really help an operator’s margin without disrupting consumers. Through our research, we have found consumers expect to pay between $1 and $2 for a cup of coffee at a convenience store, but don’t always know exactly how much they pay.”

In addition, operators can charge a higher refill cost for 40-ounce and above sizes, Manze said.

With the right menu, coffee drinks can appeal to all consumers regardless of age. “A broader range of products allows for a parent to order steamed milk with some syrup as a quick beverage for a child, a teenager can get an ice blended beverage,” Brown said.

The NPD reports that coffee is on the rise during the lunchtime and afternoon parts of the day, which Manze said is a direct result of frozen and iced coffee offerings. “The most prominent group increasing convenience store coffee consumption is ‘Millennials.’ This nontraditional consumer group is responsible for driving afternoon consumption and flavored and frozen/iced coffee purchases,” she explained.

Americans ordered 500million iced coffee drinks in 2010, up from 400 million in 2006, according to data from the NPD Group. Many consumers think of iced beverages as a snack. “It opens us up to opportunities throughout the day and into the evening,” Reigelsperger said.

“It is strong in the morning, too, but remains relevant as an afternoon pick-me-up or treat,” Manze said. “As competitor channels continue to promote frozen/iced coffee, convenience stores and truckstops can realize the opportunity and capitalize on the growing trend.”

Reigelsperger said coffee drinkers are turning to specialty coffees at home, so it makes sense they would seek them out when they head out the door.

Several coffee companies offer single-serve coffee machines that use individual pods of coffee to brew a single cup. For example, the Keurig single cup coffeemakers brew a wide variety of gourmet coffee, tea and hot cocoa one cup at a time in under 60 seconds. In the NCA study, 7 percent of respondents said they owned a single-cup brewing system in 2011, and ownership is growing at about 1 percent per year.

“The coffee consumer is becoming more and more educated and more and more in search of specialty coffees that differentiate across from the crowd,” Reigelsperger said.

Brown said NATSO and Caribou have worked together to create a comprehensive, contemporary up-market coffee solution exclusively for NATSO members. When truckstops enter into an agreement with Caribou, the coffee company does an in-depth analysis, which includes a site visit, to review their current offerings.

Caribou creates licensed concepts, which Brown refers to as “a store within a store” with its truckstop partners. “It is a complete Caribou experience in those travel plazas,” he said. “Everything a coffee café can do can be done in a Caribou concept coffee offering.”

Manze said truckstop operators looking to improve their coffee program should first evaluate their core coffee and cappuccino offerings. She suggests they examine the coffee throw weight— how much ground coffee used per pot—and make adjustments accordingly. “The average throw weight for convenience store house blends is 2.0 – 2.25 ounces. If a truckstop is looking to increase their throw weight, it should be done in .25 increments to avoid disrupting core consumers,” she said.

Operators will also want to evaluate cappuccino flavors and ensure the most popular flavors are offered. Those flavors include French vanilla, chocolate and caramel. “Then, encourage customers to customize their beverage by mixing coffee and cappuccino flavors together to create their own customized beverage,” Manze said.

Store layout can also spur coffee purchases. “Consumers prefer when coffee and cappuccino machines are next to each other, cups and condiments are located at separate add-on bars or at the end of the counter—condiment variety is important at truckstops,” Manze said. “Make sure to keep the coffee area clean, free of clutter and keep the coffee fresh and hot.”

Limited-time offers can add excitement to hot beverage programs. “By rotating a coffee and cappuccino offering on a seasonal timetable, truckstops can keep offerings new and fresh,” Manze said.

The coffee category is a significant contributor to grab-and-go foodservice traffic, and Manze said consumers are motivated by perceived value. Bundling coffee with food items can also spur purchases. “Offering coffee with a breakfast sandwich for a set price encourages purchase of both items,” Manze said. “By offering different bundling deals for different parts of the day, truckstops can grow their foodservice business.”

Brown said the utility of the product and what it does in delighting the consumer takes on more importance than price. “In an economic time that is challenging for most everybody, an indulgence that is gratifying is personally satisfying,” he said.

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This article originally ran in Stop Watch magazineStop Watch provides in-depth content to assist NATSO members in improving their travel plaza business operations and provides context on trends and news affecting the industry.

The magazine is mailed to NATSO members bimonthly. If you are a member and not receiving Stop Watchsubmit a request to be added to the mailing list. Not a memberJoin today or submit a request to receive additional information.

Mindy Long's photo

Mindy Long

Before launching a full-time freelance career, Long edited NATSO's Stop Watch magazine. Prior to that Long worked as a staff reporter for Transport Topics, a weekly trade newspaper, covering freight transportation, fuel and environmental issues. In addition to covering the transportation sector, Long has written, reported and edited for a variety of media outlets. She was the Washington correspondent for WCAX-TV (CBS) in Burlington, Vt., a criminal court reporter in Chicago and a freelance copy editor for Kiplinger’s Personal Finance magazine in Washington D.C. Long hold a master’s degree from Northwestern University’s Medill School of Journalism in Evanston, Ill., and a bachelor’s degree in Communications from Westminster College in Salt Lake City.More
Source:
Stop Watch Magazine
Supplier Focus:
Caribou Coffee

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