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Issue Date: Vol. 52, No. 10, October 2012, Posted On: 10/24/2012


Could The Torrent Of Single-Cup Cartridges Rekindle The Romance Of Bean-To-Cup Brewers?


By Matt Greenwald
TAGS: office coffee service, OCS business, OCS operator, coffee brewer, office coffee equipment, equipment, vending, vending machine, Matt Greenwald, Betson Enterprises, H. Betti Industries, coffee frac-pack, Bunn VPLF, Bloomfield 8572, Brewmatic Diplomat


Many of us "seasoned" OCS professionals remember when our biggest day-to-day sales challenges were whether to offer a 1.25-oz. or 1.5-oz. frac-pack and if an account justified the placement of an automatic Bunn VPLF or Bloomfield 8572, or if a VPR or Brewmatic Diplomat would suffice.

Fast forward 30 years. Sure, there have been technological advances in snack and soda vending, but at the end of the day, can venders are still vending cans, carousel food machines are still vending food, and glassfront snack venders are still rolling out snacks through a lot of the same spirals of yesteryear.

So what happened to coffee? When did this whole office coffee thing become so complex? Why did this become so difficult? How many different pieces of equipment does one need to make available in today's discriminating marketplace?

My position at Betson allows me to speak to OCS and vending operators all over North America about the challenges they face and, most importantly, how they can do their best to stay a step ahead of the game.

Industry In Flux
Rumor has it that the industry may very well be in the midst of one of the more dramatic changes we've seen in years. The recent OCS industry buzz seems to be over the patent expiration of the ever-popular Keurig K-Cup single-cup cartridge.

It is common knowledge that at least two of the K-Cup patents are expiring this fall. The question now is: What does this mean for the single-cup business in the American workplace, and what happens next?

Will low-cost K-Cup clones start popping up all over the place? The simple answer is "yes." The consumer market is in for quite a change, once the price drops on capsules as the grocery and big-box retailers begin stocking their shelves with these "non-Keurig-approved" capsules.

With coffee being the fragile commodity that it is, pricing can be affected by many factors. And if that's not enough, the coffee is stuffed inside capsules made from petroleum-based plastic, which is probably the world's most volatile commodity, making for an unstable pricing future.

This brings me to a silly observation. We can put a man on the moon, and even a robotic rover on Mars, but we cannot make a more environmentally friendly little plastic cup to hold ground coffee?

Too Much Of A Good Thing?
When your customers walk down the aisles of their local supermarket, Target or Wal-Mart and see these new K-Cup competitors at a fraction of what operators are charging at already minimal margins, how does the OCS operator combat this?

Please understand that I am in no way anti K-Cup or trying to promote anti K-Cup propaganda. I have immense respect and admiration for this technology, which single-handedly changed the consumer coffee market today and possibly forever.

Often times I find myself comparing this scenario to the Federal Reserve and printing money. As children, many of us wondered why the government didn't just print more money. But we know the more dollar bills that are printed, the less valuable they become. If the K-Cup isn't there already, will this flood of new compatible packs cause exactly this to happen? Will people no longer appreciate this once state-of-the-art brewing method?

Fresh Brew Comeback
Like fashion, which seems to generally come back full circle, should we expect the same in this situation? Perhaps a return to the traditional drip-style brewer, an airpot brewer, maybe even with a portion-control grinder? People love the smell and taste of freshly ground coffee.

Fresh grind, of which I happen to be a big fan, seems to be a method that is making quite a resurgence. I can only imagine that this is because operators are quickly realizing that these types of alternative brewing systems may very well be their best tools in fighting redundancy and obsolescence. And because of this, the industry is seeing an upswing in the sale of bean-to-cup brewing machines.

We all know these pieces are considerably more expensive, and generally require much more maintenance than a simple cartridge system. But for the right locations, and when the return on investment works out, operators are able to significantly increase their profit margins by selling customers coffee by the pound. Another plus is the generally favorable profit margins of soluble products such as milk, chocolate and other added flavors.

Many operators who have attempted the placement of bean-grinding or soluble brewing machines in the past may feel the associated maintenance requirements are too cumbersome. They may even have a bad taste in their mouths because of past experiences. I don't completely disagree.

What we have seen over the past 10 years or so are some significant improvements in many of the countertop units. But don't get me wrong; without the right maintenance program in place prior to installation, you can expect headache after headache from any manufacturers' units.

Do's And Don'ts
Lately, I have been asking some of the more successful operators who place this kind of equipment about the measures they put into place that may contribute to this success, and what have they done to reduce unnecessary maintenance-related visits. Some of the answers I got are probably obvious to most of us, but others may not be.

Clearly, most of these units cannot and should not be placed on location if the operator plans to deliver the product by UPS. We're finding route delivery people are generally taking an additional five to seven minutes per unit while on a delivery, opening up the machine and giving it a little TLC. This includes emptying grounds bins and rinsing brewers and whipper assemblies. A quick wipedown of the machine, and the routeperson is on his or her way.

Some of our luckier operators have a location with one or more key contacts who have taken "ownership" of the unit, and volunteer to perform daily or weekly simple maintenance.

When I polled Betson's customer operators about the expense of the units, and the associated maintenance costs, I was pleasantly surprised to hear that monthly rentals can reach $250 a machine. While this may be a realistic number for some locations, by no means is it an industry benchmark.

If It Ain't Broke, Service It!
I was also happy to hear that a lot of these operators seem to be more proactive than one might think when it comes to maintenance. As someone who has been intimately involved in the national coffee equipment repair scene for 20-plus years, my experience has shown me that many operators have a tendency to be more reactive than proactive. They're conditioned to wait until things break and become an emergency or crisis, rather than require their technicians to perform regular, detailed preventive maintenance service.

I found the conversations regarding this topic quite fascinating. OCS operators have learned that, in addition to the obvious benefits of having fewer emergency repairs, scheduling regular service visits gives their customers a feeling of confidence that they are more important and valued.

I know that if the manufacturer or dealer of my car unexpectedly showed up to my home or work to check under the hood to make sure that everything was working properly, it would be a nice surprise. And when something did go wrong and a repair was required, it would likely be a much less crucial situation, knowing they had proactively gone above and beyond to do what they could to reduce and eliminate reactive, emergency service.

Going The Extra Mile
Operators lose customers every day due to their lack of customer service. This preventive maintenance is not repair service; it's customer service.

All too often, this cardinal piece of the business gets away from us. Though we would all agree that customer service is by far the single most important piece of any company's customer retention ability, as busy as we all are, this is often lost in our day-to-day chaos and must be managed carefully.

When a salesperson sells to an account, gets the installation completed, and doesn't make it a point to keep in contact with the key location personnel, it is often the time when operators are most vulnerable to losing accounts to their competitors.

Going above and beyond to distinguish yourself in a competitive business is critical, whether it is a surprise visit, a phone call or an email to check on their business. Maybe send them lunch? How about personally dropping off new products you want them to try, or at the very least, sending samples with their delivery, accompanied by a personalized note?

It's tough out there. No matter what the business may be, we need to do whatever it takes to not only solidify new business, but more importantly, retain the business we have.

Well, if you've gotten this far, I thank you for reading my thoughts on the OCS industry and truly hope that you were able to take away something useful. Good luck everyone; we're all in this together!



 Matt Greenwald MATT GREENWALD is the director of vending and OCS at Betson Enterprises (Carlstadt, NJ). Greenwald is a 20-year veteran of the commercial coffee equipment industry, where he's worked for roasters, distributors and manufacturers. Prior to joining Betson, he was vice-president of a national organization that provides installation, repair and maintenance services to some of the world's largest retailers, equipment manufacturers and coffee companies.


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