Management technologies for coffee-to-go in retail chains, or how to fill a niche worth hundreds of millions of Euros

Having more than 25 years of experience in successful network projects dedicated to coffee, I strongly recommend that the management of retail chains do not waste time reviewing fragmentary telemetry developments but roll up their sleeves and create their own automated coffee business management systems.” – Alexander Kuzmin on one of the growing sales markets.

Coffee-to-go is one of the few segments of the catering market that has been growing in the past few years.

The abundance of traditional coffee houses does not prevent this growth. Automated coffee points that work without a barista salesperson take up 1.5–2 square meters where an ordinary coffee shop is problematic or unprofitable.

It is important to note that this line of business has many unfilled niches, including offices of large companies and bank branches, multifunctional centers for public services and communication stores, waiting rooms for passenger transport hubs, and Russian Post offices.

Even among gas station chains, whereas a rule the coffee business has already been created, in 80% of cases, it is both necessary and possible to radically improve it. This is because the technological coffee-to-go solutions they use often do not meet modern market demands.

The largest coffee-to-go niche and its scale are global, is chain retail. Indeed, most retail chains around the world today do not have their own coffee solutions, including companies like Walmart, Costco, or Carrefour, which have tens of thousands of shopping malls, are all without exception on the path of launching rental shop-in-shop coffee islands from Starbucks, Costa, and other coffee companies.

In this regard, the value of the customers’ belief that companies like Magnit, Tesco, or Auchan do not only offer an affordable range of products but also fine coffee, is clearly underestimated by both the top management and marketing specialists of these retail chains.
Why don’t retail chains develop their own coffee solutions?

Why do they allow third-party tenants to parasitize on their client traffic?

There are several reasons for this:

1. The world’s top consultants who work with retail leaders always make recommendations for the benefit of global coffee chains, primarily Starbucks. Naturally, they don’t do it for free.

2. The strategic managements of retail chains receive initial information and sample business cases from top consultants and blindly follow the recommendations of these “market experts.”

3. The decision-makers of large retail chains have no expertise in organizing the coffee business in all retail outlets other than to entrust these sites to third-party tenants recommended by these consultants.

4. The market for comprehensive technological solutions is just taking shape. Managers who might constructively influence the situation have no idea what tools to use to build their own coffee business.

If the top manager does not understand the difference between a coffee vending device and a fully automatic professional coffee machine, then they will most likely not be able to choose either the right set of equipment or effective contractors to realize a coffee project for their own retail chain.

Leaving the first three reasons to the professional conscience and the IQ of those who found themselves at the helm of large retail structures, I would like to focus on the fourth, technological, reason for the existing “coffee vacuum” in retail chains.

Modern information technologies have triggered the global trend to digitalize all types of activities. They have not ignored the sale of coffee to go. Today no one doubts the fact that hundreds, sometimes thousands, of automated coffee points operated without salespeople require IT solutions for their centralized management. One of the tools for such management is the remote monitoring of coffee machines.

Under this obscure term, many developers suggest to the owners of automatic coffee machines that they need to “make a breakthrough in the digitalization of their coffee business.”

Before spending money, however, it is very important for the owner of coffee points to understand what the aims of such digital innovations as remote monitoring of coffee machines on their network’s trading floors are.

I believe the sole goal of any retail chain considering such innovations ought to be the increase in coffee sales (or increase the percentage of client traffic covered by purchases of coffee drinks).

It was not for nothing that I touched upon this aspect of the introduction of remote monitoring. Many solutions (and there are enough on the market already) do not have this as their main goal. Sometimes it does not even exist.

For example, all the telemetry products of European coffee machine manufacturers have a priority focus on the sale of services and original spare parts. In fact, they are a kind of “auto-order”, reminding the owner of the coffee machine when it is time to order periodic maintenance or carry out the routine replacement of certain parts of the operating equipment. Does the owner of a gas station or coffee shop really need such a telemetry option? Experience shows that they do not.

Many other developments have as their core function the gathering of statistical data from one or more coffee machines without the possibility of generating group management reports allowing central office managers to receive information systematized in strict accordance with their requests.

Nine out of ten fully automatic professional coffee machine (PCM) monitoring solutions involve a one-way “PCM-server” information flow. Only a few IT products allow for a two-way, “PCM-Server-PCM,” which is critical for the effective operation of any remote control system.

Another important point: most sellers of IT solutions discuss the “remote monitoring of coffee machines” with their potential customer when the effective management of a coffee business requires “remote monitoring of the coffee sale area.” This is due to the fact that control parameters such as the presence of glasses in dispensers, the presence of water in supply containers, monitoring the status of water filters, and the managing of the content of an external electronic menu, have a major impact on the sales of coffee drinks.

An extremely effective management function is the availability of mobile options for connecting different users to the monitoring system and reporting on events occurring in the retail chain coffee business perimeter.