Foodservice 201: Intermediate Insights

3/19/2012

Contemplate how you will continue to expand your offering and perhaps how to get into some form of service beverages. An important consideration at this stage is also program branding — creating proprietary labels for your dispensed coffee, fountain and frozen beverage programs, which create an image that customers can remember and helps develop store loyalty.

KEY CONSIDERATIONS

Hot Beverages — Consistently keep the core three varieties, and begin to add another flavor or two as volume allows. Where possible, expand to include cappuccino, which has a strong shelf life, low labor and high profits.

A store's house blend typically garners upwards of 50 to 60 percent of total coffee sales, so operators should add new flavors cautiously to create incremental sales. Don't add more flavors than associates can keep up with and keep fresh.

Review the ergonomics of your program and ensure it is laid out in a logical path for the customer to find their cup, fill it, add condiments and cover it with a lid — all within a few steps or an arm's reach. It's ideal when one lid fits all cup sizes. Review your condiments to ensure customers get a coffee shop experience and can customize their beverages with a variety of creams, milk, sweeteners, mix-ins and toppings.

Cold and Frozen Beverages — Stores that are currently single branded at the fountain should consider expanding to dual brands to appeal to the widest possible audience and grow volume. Operators should expand into non-carbonated dispensed beverages as well.

Add brewed iced teas only to high-volume stores with great execution since these programs require a higher degree of quality, cleaning and maintenance, according to experts. There are powered and liquid iced tea options for lower volume stores. Depending on volume and geographic location, operators at this level should have between 10 and 20 valves at the fountain, and three to four frozen beverage options.

Operators should consider adding carbonated frozen beverages, but understand the higher maintenance requirements (see Foodservice 101 section). Adding carbonated frozen drinks can add incremental volume since the core customer is different than the younger shoppers who enjoy non-carbonated and fruity frozen beverages.

One expert recommends staying with non-carbonated frozen options at this stage unless cup volume is extremely high. One simple way to create excitement without adding more valves is to periodically rotate limited-edition flavors in and out.

OPERATIONS ADVICE

Expanding a core dispensed beverage program requires careful consideration. Who is your current customer and who is the potential customer you are targeting? Who is the competition and what are they doing with their beverage programs? How do you make your offer a destination? How much of the store volume is your proprietary brand vs. national brand? Are you considering service beverages? If so, how does your store/department have to change to incorporate this service?

Dispensed beverage programs are expensive to roll out and maintain, so it is critical to expand based on customer traffic and volume growth. Operators should explore bundled/ combo promotions, encouraging beverage customers to couple their purchase with some of your new food items and vice versa. Be careful not to discount too deeply or for too long because customers will come to expect this pricing all the time, making it difficult to switch back to full-menu pricing.

HOT TIPS

Do your research. Understand the customer and your competition and be sure you have commitment from the top for execution.
Promote combos. With a strong beverage program in place, now is the time to compel those customers to try your new sandwiches or food programs.
To avoid adding too many new offerings, rotate limited-edition flavors in and out to see what customers like best.
Add flavors and expand programs as customer traffic and beverage sales volume rises. It's easier to add on to a program and more costly to cut one back.
Focus on the ergonomics of your programs and ensure they are laid out logically, making it easy for customers to find all they need to customize their beverages.

"For retailers serious about dispensed beverages, service [beverages] are a must to compete in the current marketplace."

— Jennifer Vespole, Quick Chek Corp.