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Issue Date: Vol. 44, No. 10, October 2004, Posted On: 10/26/2004


Coffee Serv Embraces E-Commerce, Brew-By-Cup Delivery System To Satisfy Today's Client And Patron Demands In Delaware Valley


Emily Jed
Emily@vendingtimes.net

PHILADELPHIA - Jack Kirshner finds the coffee service customers in his market to be more discerning today, not only regarding the quality of the coffee they expect away from home but also about the ease of preparing it.

Decision-makers, more than ever, now see the value in providing what their employees want, Kirshner added; and they seek the most convenient way to procure it.

By leveraging a new generation of single-cup brewers and harnessing the power of the Internet with a thriving e-commerce website, Coffee Serv has met the requests of this demanding and sophisticated customer base.

"When I began my business, the average weight of a pack of coffee was 2.5 oz. And the market was wide open. It took a lot of turns over 28 years, but now it's come full circle, back to quality," noted the OCS veteran.

Kirshner discovered the office coffee service niche in the mid-1970s when he took a job as a sales representative for Automatic Brewers & Coffee Devices, selling its "Flavor-Maker" tape brew machine. This was a single-cup wall- or counter-mount unit that worked on the same principle as the original Rudd-Melikian fresh-brew vending machine of the late 1950s. The coffee was portioned into "pods" formed of top and bottom layers of filter paper, supplied in 100-cup rolls. The system was ancestral to the modern pot concept (see VT, September 2002).

"I discovered the OCS niche while selling the 'Flavor-Maker' machines, and I realized that with good product, competitive pricing and good service, it was a solid business to enter with a lot of potential to grow," recalled Kirshner. "Back then, people didn't know what OCS was. A three-warmer Bunn-O-Matic was a new and exciting brewer."

The pod machine concept was way ahead of its time, according to Kirshner, because the market was not ready to embrace the novelty. The portion cost was relatively high, the selection of coffee was limited, and the market was beginning to suffer from competition on price rather than on quality. The immediate future of pods lay in Italy, with the suggestion by the Italian distributor that they be diecut from those filter tape rolls and packaged individually to simplify brewing espresso at home.

But the market has caught up, Kirshner observed; it was just a matter of time before the pod approach would be applied to American-style coffee too. Portion-packed roast ground coffees, offering the customer a wide choice of freshly prepared hot drinks, were successful for Flavia (a Mars company) in the UK and for Keurig in the U.S., and a new generation of brewer using standardized pods rather than proprietary portion packaging is rolling out this year.

"The concept is back, 30 years later," Kirshner observed. "It's reliable and easy to use, and it makes a superb cup of coffee. The market can't get enough of it."

But all that lay in the future when Kirshner decided to take the plunge and become a coffee service operator. He and his wife Lynne founded Coffee Serv in 1976, a year during which the young industry was enjoying rapid growth.

A GREAT TRADITION

Early in his OCS career, Kirshner joined other local operators as a founding member of Keystone Coffee Association. Over the years, he has served KCA as a board member. He credits his early association and open dialogue with such OCS pioneers as the late Irv Greif of Take Ten Coffee (Philadelphia) for laying the foundation that has led to a quarter-century of success.

As workplace refreshment services demand evolved, Kirshner added allied products, starting with cream and sugar and soon adding teas, juice and soda, paper goods and, eventually, water coolers and 5-gallon bottles of spring water and inline water filtration systems.

For a brief period, 15 years ago, Kirshner experimented with vending and decided against pursuing it as an adjunct to his established OCS business. "It's a different set of overhead and expenses and labor demands. The only thing it has in common with OCS is the same types of customers," he commented.

Instead, Kirshner teamed up with several local vending operators to fulfill customer requests for vending service. "If I don't get someone I know to do the vending, my competitors will come in and offer a complete package. By working with other operators who I know, we're able to provide that package and we're each expert at the part of the business we do, which is a good selling tool," explained Kirshner.

When he made the decision to leave vending to the vending specialists, Kirshner put his resources into the Olland "OCB" tabletop single-cup brewer, which was marketed in the U.S. by Coffee-Inns. "That way, with the same overhead and resources, I could be more efficient and grow the business in a new direction, building on what I knew best," he recalled. "The biggest trick was service, keeping the machines running, but they were a hit. The technology had been perfected, and the customer base was ready for single cup."

Building on his successful experience with the Olland machine, Kirshner found it easy to transition to the Keurig portion-pack brewer. "Single cup, in the form of 'brew by pack,' has finally become mainstream, with the availability of Flavia and Keurig systems," he said. "The reason for the lasting success of these machines is the convenience, the selection and the resulting customer satisfaction."

The specialty coffee revolution of the past decade has raised the bar for operators in terms of their customers' expectations, Kirshner pointed out; and the modern brew-by-pack systems have proven to be a very effective solution. "Twenty-five years ago, happy customers meant free 'Maxwell House' and a three-warmer Bunn-O-Matic. Today, happiness is Sumatra and Rain Forest Nut in a 'K-Cup' , that's today's employee's version of customer satisfaction," he said. "It's the difference of the availability of what they perceive as Starbucks-quality coffee at their desks, brewed with the press of a button just for them, versus having to go out. With the Keurig machine, the perception is becoming , at last , that coffee in the office is as good as it is in the specialty store."

With appreciation for specialty coffee beverages driving new demand, Lavazza's "Espresso Point" pod system has proven to be successful in small restaurants and offices, and growing numbers of employees at Coffee Serv OCS locations who become familiar with the machine at work are buying it from Coffee Serv's website for use at home.

Consumers' quest for quality is evident in the return to heavier coffee pack weights, and a new concern on the part of decision-makers to provide coffees that compete with specialty shops in quality. Employers increasingly prefer to keep employees on task, rather than on line waiting for their favorite brew during their breaks.

Single-cup brewers are not the answer for all workplaces, the industry veteran pointed out. Fortunately, great strides have been made in small-batch brew equipment too. "When I'm not selling single-cup, I'm suggesting thermal brewers," Kirshner told VT. "And even accounts with single-cup equipment may need something for meetings , thermal pitchers and carafes, or dispensers with sight-glasses."

Today's thermal systems have expedited the shift toward better coffees in heavier pack weights, since tight control of the brew parameters and a way to hold brewed coffee without exposing it to heat is essential in avoiding flavor degradation. "Thermal equipment goes hand in hand with specialty coffees, which can stay fresh for a longer period of time," the Coffee Serv founder said. "I urge customers to protect their investment in specialty coffees by using thermal servers."

However, there still is a role for the traditional restaurant-style bottle brewer that launched OCS four decades ago. This is a perfectly good way to brew excellent coffee if it's consumed quickly or discarded, not permitted to stand over heat. "There are people who want the old-fashioned glass because they feel it's easier to clean, they want to see the coffee, or they have high turnover," Kirshner explained.

Kirshner estimates that half of his coffee sales come from his private-label "Coffee Serv Gourmet" and "Coffee Serv Colombian Supremo" brands, while regional and national brands , Wawa, Starbucks, Ellis, Green Mountain, Godiva, Lacas, Barrie House and Millstone , comprise the rest.

The tea category has grown significantly in recent years, and Coffee Serv has responded by carrying a diverse upmarket assortment, including Tazo, Bigelow, Celestial Seasonings, Ashby's, Lipton and Oregon Chai. Hot chocolate is also a popular alternative for non-coffee drinkers, especially during the winter months, and while one or two varieties once sufficed, Coffee Serv now offers many gourmet varieties to meet new demands.

The operator has seen remarkable growth in orders for Land O' Lakes "Mini Moo's" liquid creamers as a premium alternative to once-standard nondairy creamers, as specialty coffee has become mainstream in the workplace.

Kirshner keeps his finger on the pulse of new trends and patron preferences by maintaining close personal relationships with his customers, and training his customer service professionals to do the same. He places great emphasis on communications and rapport.

"Our clients see the added value of the customer service we provide," the industry veteran explained. "We have a team of four customer service professionals here, and they have the ability to immediately straighten out any issues that arise, so our clients don't look elsewhere to save a penny when they feel they're being taken care of." The operator emphasized that he regards his suppliers and brokers as his partners, and the strong relationships he has formed with them positively impacts pricing and availability, to the benefit of his customers.

Coffee Serv's dedicated team of route drivers, service technicians and warehouse personnel ensure prompt, courteous and professional service to support the company's three coffee routes and one bottled water route. Kirshner added that business is on a steady upswing, with the successful efforts of two outside sales representatives, one inside sales rep and two telemarketers who continue to find new prospects.

TECHNOLOGY BUILDS RELATIONS

The swift and steady development of superior communications technology has helped the company maintain close contact with its clients, enhancing convenience and flexibility of service, the industry veteran emphasized. While some operators fear that computers erode the personal relationships on which successful coffee services depend, the reverse can be true if modern methods are applied with skill and care.

Ordering procedures have evolved partly to take advantage of improved communications methods, and partly in response to the vast proliferation of products that a successful workplace service operation must offer today. In the early days of OCS, "rolling store" ordering, true route sales, was a popular and practical option. "The 'rolling store' worked when there were six products instead of 6,000," Kirshner explained. "It was easy to carry creamer, sugar and Lipton teabags on the truck. But today we have 'Splenda' and 'Red Bull' and 'Diet Coke with Lime' and every Snapple item under the sun."

Small-package bottled water has become a real growth category, he added, which increases the premium placed on efficient loading and delivery. "More and more employers are seeing the value of giving their staffs bottled water to bring to their desks; it's an inexpensive but valuable 'perk' that keeps them hydrated and more energetic." Coffee Serv presently stocks branded waters from such leading suppliers as Evian, Fiji, Dannon and Nestl©.

"If I can provide something for a customer, I've made a friend; and if they keep buying it, I'll stock it just for them," Kirshner explained. This willingness to become a one-stop shop has made old-time route sales impossible.

And this is a good thing, the industry veteran emphasized. "With the 'rolling store', the customer had little contact with the office, and the driver made a lot of unnecessary stops," Kirshner recalled. "Now, my driver walks in with the order and the preprinted invoice, delivers it, and moves on to the next stop."

In its early days, Coffee Serv met its customers' needs by pre-calling them for their orders before the drivers made their scheduled visits. But with the advent of facsimile, "e-fax" and e-mail, pre-calling generally has become a thing of the past , to everyone's benefit, Kirshner told VT.

"Fax ordering became popular in the mid-1980s," he recalled. "At first, only a few customers preferred it; the telephone was still king. As people got used to it, it became more widespread, just as the Internet is today.

"We use 'WinFax' to generate order forms," Kirshner explained. "We fax the form from our computer system, and the customer just fills it out and faxes it back. It saves us and the customer a lot of time compared to the old system, under which a customer might only need two boxes of tea and a box of sugar, and we lost the profit in the time that it took to process the order."

coffeeforless.com

Giving customers easier, faster, more convenient and more flexible ways to do things is never a bad idea, Kirshner emphasized. Always eager to be in the vanguard of technology to the advantage of Coffee Serv and its customers, he enlisted his son, Ben, a computer expert, to launch coffeeforless.com, a fully integrated e-commerce site that has helped the OCS operation streamline the ordering process for time-crunched administrators in charge of OCS purchasing, and to tap into existing workplace consumers for an additional revenue stream. It went on line three years ago.

Each client contact is assigned a password that provides access to a secure page that lists only the specific products he or she currently orders, at the pricing designated for his or her account. "We might have a law firm client who's been with us for 20 years and has always paid $10 for coffee. When they log in, they see their coffee for $10, and all of the product they regularly order at their pricing. They don't have to scroll through thousands of SKUs of paper products and soda if they don't regularly order those items," Ben explained. "And if they want access to order other products, we can add them to the list at any time." Coffee Serv can display introductory offers, monthly specials and other promotional items on those web pages, so patrons can try them if they wish.

Additionally, customers are able to see their order history and spending reports on a secure web page, a feature that allows them to review their expenditure on OCS during a particular period in order to budget for the coming months, quarter or year.

"We have found that these tools help not only in managing orders, but also in making for easier budgeting and forecasting of future ordering trends," Ben remarked. "For example, a customer knows that its OCS ordering is historically higher in December, perhaps because of holiday parties and winter weather, but may be unsure exactly how much to order. That customer now has the ability to review the purchase history from the previous year's season, and make the necessary adjustments upwards or downwards to accommodate their anticipated need."

Providing online ordering capability has set Coffee Serv apart from its competitors, boosting customer loyalty and providing an opening wedge to new business. "Businesses love it; it separates us from all the other OCS companies. Our contacts who are in charge of ordering really appreciate the ability to order online, at their convenience, and that we don't clutter the screen with SKUs they don't use," Kirshner said. "They are very happy that we take credit cards, and our service lets them consolidate their purchases and view them in one place. And we love it because our receivables stay down."

E-commerce provides an added dimension to the service, not a radical break with established procedures. For example, like many early OCS operations, Coffee Serv offered automatic ordering to clients desiring a completely hands-off service. It is the responsibility of the operator to gauge product usage during the period between deliveries, and to make sure that the customer always has sufficient coffee and allied products on hand.

That system remains available today, with the added option of e-mail verification that the monthly order is being processed. This also provides the opportunity to inform clients of advantageous monthly specials, or to invite them to try new products.

Coffee Serv offers customers their choice of ordering methods, Kirshner noted. "We'll do monthly calling, if they want , and some customers prefer to call us," he said. "We'll do whatever they want."

E-MAIL POWER

More and more of them want the convenience of Internet ordering. As clients make greater use of the Internet in everyday business dealings, they usually come to prefer the almost effortless interaction made possible by a good e-commerce website. "People are realizing that 'telephone tag' wastes time; it can take three or four calls to make one connection," the OCS pioneer pointed out. "With e-mail, you send your message and you're done; you can keep it off your mind until you hear back. With a phone call, you need two people to be ready to talk at the same time, and to be in the same frame of mind. This can be difficult."

Coffee Serv invites its clients to e-mail, concerning issues that arise or anything else, and monitors these messages carefully for swift and appropriate response.

As an added benefit, employees at Coffee Serv accounts can log onto coffeeforless.com to order their favorite products for home delivery. They can take advantage of special seasonal items, such as Gingerbread or Pumpkin Spice coffee, to purchase as gifts for holidays, birthdays and special occasions. The site also features coffee- and tea-themed gift baskets and other novelty items for gift-giving. Since Coffee Serv implemented the home ordering program three years ago, the incremental business has been a nice bonus, the industry veteran reported.

Coffee Serv ships most items ordered through the public pages of its website directly from its warehouse by UPS. "If there's a request for an item that an employee had in the office that we don't stock in great quantities, like Wild Blueberry flavored coffee, we'll have the supplier, Green Mountain Coffee in this case, ship it right to the customer," added Kirshner. "People who work for our clients love our website, because they can sit in their living rooms and have an extensive variety of all the products they know and love from the office available to them."

NEW SALES OPPORTUNITY

In addition to a solid base of local customers, coffee lovers from across the country and around the world surf the Internet and find coffeeforless.com. The site offers a full range of coffee, tea, allied products and equi


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