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Issue Date: Vol. 43, No. 1 / January 25, 2003 - February 24, 2003 , Posted On: 1/25/2003


Cathy's Specialty Coffee Thrives By Providing Customized Programs To Meet Booming Demand For Espresso At Work On '24/7' Basis


Tim Sanford
Editor@vendingtimes.net

DALLAS - Finding a product for which there's a strong and growing demand , and virtually no supply , is a happy discovery for any entrepreneur. According to Joe and Cathy Wright of Cathy's Specialty Coffee, espresso is such a product. Meeting the demand for it has positioned the company for profitable growth despite the sluggish economy, the Wrights told VT.

Joe, who was a general contractor, recalls stopping into an espresso shop for coffee in 1996, and encountering a Saeco countertop vending machine. He imagined its potential for delivering specialty coffee to people at work, and he bought one for trials.

"I messed around with it for awhile, then bought a few more," he said. "Then we hooked up with Saeco USA and became a distributor." The business has grown from an interesting and instructive part-time activity to a growing, profitable enterprise, and the Wrights now are devoting their full time to it.

"The opportunity is to put this equipment into breakrooms, so employees and customers can get their favorite beverages without leaving the site," he pointed out.

"And you have your own business," Cathy added.

At present, the company is operating Saeco equipment in 50 locations, and is receiving an increasing number of inquiries through referral. Cathy's Specialty Coffee has found the "7P" series to be optimal for the sort of service it sells. This includes the original "7P," the "7P High Profile" (which permits easy use of standard 12-fl.oz. disposable cups) and the "7P Plus" (providing enhanced electronics for coin changer and bill validator support, and a redesigned door for more flexible cup handling).

Entering the workplace service business with an entrepreneurial mindset and no preconceived notions, the Wrights decided that their market would consist of companies that want outstanding specialty coffee, with utmost convenience.

"The whole idea of offering coffee at work is to keep people on the premises, and to keep them happy," Cathy pointed out. "But too often, 'free' programs use such cheap coffee that most people will go out for something better, anyway."

"Our system is easy to sell, because everybody wants better coffee than what they're usually offered in the office," Joe agreed.

"We can give them all sorts of reasons to use our service," Cathy continued. "When employees truly enjoy the coffee at work, they stay at work; their productivity improves and their morale goes up."

An important selling-point is the selectivity offered by the Saeco "7P." In addition to espresso and caffè americano (black coffee pressure-brewed, as espresso is, but delivered with a lower percentage of dissolved solids), available products include hot chocolate, "mochaccino" (a mixture of freshly-brewed espresso and soluble chocolate), and another gourmet soluble product.

All "7P" machines prepare espresso coffee from whole beans. They incorporate commercial-grade grinders, sophisticated pump and brew chamber systems for true high-pressure espresso extraction, and three soluble-product bins for Saeco's premium dehydrated milk and two soluble gourmet selections.

Each auxiliary product channel has its own whipper chamber and delivery tube, so there is no flavor contamination. The milk product is heated and frothed automatically during the vend cycle.

CUSTOMER SOLUTIONS

Cathy's Specialty Coffee also builds business through its eagerness to work with clients in devising a program that meets specific cost criteria. The location may choose to subsidize the program and provide the coffee for free, or to use the machines' vending capabilities to control the gourmet coffee service program's cost, or to make it entirely self-supporting. Joe reported that, at present, the company's customer base is about evenly divided between free and employee-paid programs.

Joe added that some locations wish to offer the coffee (and perhaps hot chocolate) for free, but charge for other gourmet hot beverages. The "7P" design makes this very easy to do, as it provides two price levels, one of which can be "free."

Moreover, he continued, the "7P" permits coin or bill, token or card-based vending.

This is very helpful in tailoring programs even more precisely to specific situations, Cathy said. "I've become the 'Token Queen' in partially-subsidized locations," she told VT. The ability to use tokens (supplied by Saeco USA) for vending allows Cathy's Specialty Coffee to enable the several departments of a large organization to subsidize the gourmet coffee to different degrees, she explained. Tokens can be sold at different prices, or simply handed out free as a tool for tracking consumption.

"And, if we have a situation in which four doctors are sharing one machine in a medical center, we can color-code the tokens we supply to each," she added. This makes it possible to bill according to use.

Joe explained that the company color-codes tokens very simply, using a permanent marker. As Americans become more and more familiar with and receptive to card-based payment systems, he anticipates experimenting with Saeco USA's card option in the not-too-distant future.

Because the Wrights ran the business on a part-time basis for awhile, they had the luxury of trying different things and considering the nature of the market. One opportunity they explored was partnering with foodservice establishments to provide the espresso expertise and to share the profits on a per-cup basis.

"We tried revenue-sharing, and it's not for us," he told VT. "There is an opportunity there, and we know people who do it, but it simply isn't our calling." The need to mark product up differently for foodservice clients, and other differences in approach, have persuaded the Wrights to concentrate on workplaces.

But these workplaces come in many varieties, including professional offices that wish to provide gourmet coffee to clients (medical and legal offices, property management concerns, and the like) , even high-end auto dealerships. And, of course, many simply wish to boost efficiency and provide a prized but affordable prerequisite to their employees.

"We look for the high end," Cathy observed. "There are quite a few single-cup coffee programs out there, but our costs are higher."

"We want clients who just don't want to mess with the coffee," Joe explained. "We clean and we service; we fill the machine as often as it needs to be filled."

"We will negotiate a discount if the client is willing to participate in filling and cleaning the machine," Cathy added. But most clients prefer to concentrate on their businesses or professions and leave the equipment service to Cathy's Specialty Coffee.

She added that most workplaces have not tried to calculate the real cost to them of having employees standing around making coffee, using typical bottle brewers, and of the waste that results from throwing away unconsumed coffee in the decanter before brewing a fresh pot.

A paradox here is that employees who are diligent about cleanliness and freshness will produce the best coffee, but at the highest cost in distraction from their primary jobs and the greatest "pot waste." If they are given good quality roast ground coffee, in packets of sufficient weight, to work with, the expense becomes greater. When these cost factors are considered, along with the convenience of pushbutton cup-on-demand brewing, Cathy's Specialty Coffee's programs are seen to be very cost-effective, Cathy observed.

"And we like the Saeco machine because it makes a great cup of coffee, over and over and over again," Joe explained.

That consistency and reliability enable the company to make, and honor, a commitment to free its clients from worry about the availability of coffee. Most clients can be kept up and running happily with a weekly visit to fill, check and clean the machine; some require more frequent service, and receive it. "It's very service-intensive," Cathy pointed out.

In her view, the need to provide the sort of service associated with traditional vending in a market that seems more akin to traditional coffee service has deterred both vending and coffee service operators from pursuing the espresso-cappuccino workplace opportunity. Perhaps for this reason, Cathy's Specialty Coffee is a subcontractor for a national operating company, which calls on the Wrights when a client requires an automated espresso program.

OMNIPRESENCE

Just as the Saeco machine delivers a cup of coffee at any hour of the day or night, Cathy's Specialty Coffee is prepared to meet sudden, unexpected demands for product or technical support "24/7," Joe observed.

"Once in a while, the location will host a crowd of people, and they'll clean out the machine," he told VT. "They they'll call us to say that the machine 'isn't working.' And we go out and solve the problem."

"We get 'coffee emergency calls,'" Cathy concurred. These are infrequent, since most clients do inform the company when uncommonly heavy consumption is taking place, and the machines are highly reliable, she noted; but she is grateful for every service call she gets.

"You can't make any money if your equipment isn't delivering product," she emphasized. "We're happy to get a service call at 2:00 AM; the caller has taken the time to help us sell coffee, and deserves our thanks."

Located in the Dallas-Fort Worth Metroplex area's high-tech "telecom corridor," Cathy's Specialty Coffee sees no lack of growth potential. The company has just hired a full-time sales representative to keep up with increased referral business. "We're doing demos every day," Joe said. "We have our phone number on all our equipment; people see it and call us. They usually say they want to buy a machine. If they're within a reasonable distance, we'll tell them about our programs, and in most cases, they'll see the service as a better choice than outright purchase."

The company presently is prepared to handle accounts within 30 miles, although it is concentrating its sales efforts in a smaller 10-mile radius. Its most remote inquiry to date came from 400 miles away; in that case, selling the equipment and providing service backup was the better solution.

The Wrights pointed out that their business really has just started, in terms of meeting the proven demand for espresso programs. It also has just started as a Saeco USA distributorship. Joe told VT that the next step will be to bring a field technician on board, to help handle the increasing volume of installations and weekly (or more frequent) calls.

Cathy explained that they attended Saeco USA's in-depth training program in Annapolis, MD, and thus are prepared to train others and to deal with any situation that may arise. "We know the machines better than anyone," she stated.

"I was in the construction business for 20 years," Joe observed. "This is a lot more fun. People really like good coffee."

Contrary to widespread belief, he emphasized, the American public , or at least the part of it that works in the greater Metroplex area , does like and appreciate espresso coffee, and values good espresso enough to pay a fair price for it. "What we've done is come up with an affordable way for them to get just what they want," he said.

Cathy agrees about the fun, and added that the operation has reached a point at which it is beginning to yield more income than the construction business. "We're excited," she said, adding that an appealing feature is that the family's two children can help out. Their teenage son Joey is working part time, and 7-year-old daughter Michelle is intrigued by the money-counting function, and becoming a real help in accomplishing it.

She also is grateful to the specialty coffee retailing trade, notably Starbucks, for reawakening Americans' enthusiasm for the pleasures of high-quality coffee and willingness to pay for that experience. Cathy's Specialty Coffee has devoted a good deal of study to the question of roast color, and has worked with its private-label roaster to achieve a lighter roast than has become usual in American espresso programs. This roast provides a more definite flavor profile, she explained, and does not develop as much oil on the surface of the bean.

An important feature of the Saeco "7P" line is its commercial-quality grinder, Cathy explained. Formed with 32 burrs, it is adjustable in precise steps to provide exactly the grind desired.

Joe agreed. "You can get the grinder to do exactly what you want it to do," he said.

In fact, extensive programmability characterizes all the functional parts of the Saeco machine, he continued. "You can change product throws , milk or anything else , to meet the location's taste preference," he instanced. "You can deliver the beverage at a higher or a lower temperature."

Moreover, the "7P" controller board works in conjunction with a handheld computer to receive values for all these variables from the operator, and to send information back to the handheld in turn. Information on total cups delivered, for invoicing; the number of vends made, and the number at each price (if two prices are used), or the number of cash and the number of free vends, all are loaded up to the handheld for easy retrieval and processing by the operator.

All this technology contributes to the principal objective of keeping the business profitable and fun, Cathy noted. "Our goal is to keep people happy," she emphasized. "Coffee should be one of the good parts of the day. Remember: If you're not starting your day off with a cappuccino, you should call Cathy!"


Topic: Vending Features

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