by Emily Refermat
Article first appeared on vendingmarketwatch.com.
OCS is a lucrative business in most regions. That is especially true when upselling locations to specialty hot beverages. This was the focus at a 2015 NAMA OneShow OCS-focused panel, which centered on a few ways to give users coffee service they love while maintaining good margins. The key is to look to coffee shops for inspiration, experiment, highlight the SKUs and services already offered and charge service fees.
Offer many options, see what sticks
Panelist moderator Mike Tompkins of Coffee Products Associates, noted that to increase sales, operators must always be on the lookout for new products. “If you see it at a coffee shop, investigate it,” he said. “This is how you will be able to figure out how to deliver it to boost sales.” One example is the increasingly popular cold brew coffee. Large OCS operators are addressing how to bring this into workplaces on a large scale.
Ancillary specialty beverage items are also important. “Don’t forget, milk and sugar are a big component of what the consumer wants,” said Tompkins.
To see what the new OCS trend might be, look to Millennials, said panelist Tom Steuber of Associated Services. He finds that Millennials are driving a different type of coffee experience in the workplace than the previous generation. They like bean-to-cup machines, which they feel make a fresher cup of coffee. Many of the units also have touchscreens which give the brewer a modern, state-of-the-art feel. “We’re trying out different things,” said Steuber, who feels it’s important to understand the customer. “Sometimes things work and sometimes they don’t.” In these cases, the brewer or coffee is eliminated, but Steuber doesn’t treat it as a failure, just a learning experience.
Promote what makes you different
Panelist Ken Shea of DS Services of America talked about retention and incremental OCS sales by promoting what is already in the warehouse. There might be a number of items in the warehouse that could be considered specialty beverages that could be offered to a location. Shea cites cocoa as an example. If a product is an existing SKU, but hasn’t reached 100 percent penetration of accounts, operators should consider it for specialty beverage expansion. Hot tea is another example. “We’re seeing really good teas in these coffee shops today,” said Shea. “That will help operators sell these items for a higher price.” Other items include sparkling and flavored waters.
“Make sure you are promoting the special aspects of what you are already offering,” explained Shea. He recommends talking to the account about upselling, especially with specialty coffee blends. “A price of 60 or 70 cents per cup is not uncommon in the coffee shop — use that,” he said. If the location wants specialty equipment, get a service fee and make sure to offer, and get, the pantry service. “You can’t leave anything on the table,” Shea stressed to audience members.
Equipment isn’t cheap
“It’s one thing to delight the customer, but equipment is expensive…you have to make money,” panelist Steve Brehm of Berry Coffee Co. warned. He gets a commitment upfront to accept a service fee that will increase if the account doesn’t maintain a minimum volume order. The location also has to designate someone to clean and maintain the brewer, in the case of a bean-to-cup machine. “With this model, any size operation can be a potential customer,” added Brehm. He’s careful to ensure the water going into the brewer is filtered to keep the machine working properly, the coffee tasting good and because it provides another revenue stream.
Brehm finds offering specialty equipment really does delight a location. For one foodservice account he even agreed to place a frozen coffee machine. He has a partnership with a coffee roaster for a special recipe to be used. “Even with the extra maintenance [done with a laminated cleaning checklist] it’s worth it,” said Brehm.