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rusholts monitoring center

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.


He is an expert on practical transformations in the non-fuel businesses of large Russian gas station chains.
He is a member of the Expert Council of the Russian Duma’s Energy Committee.

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.

My many years of experience in managing the coffee business for various network clients has convinced me that telemetry options work effectively only if there is a 24-hour dispatch monitoring center (MC) with multi-level technical support (at least two levels). When a customer has 200+ points of sale, it is advisable to create such dispatch monitoring centers for each customer and locate them in secure data centers.

Examples of the creation of individual Monitoring Centers for the dispatch management of a chain coffee business include the following: the Monitoring Center (MC) for the Infrastructure of the Gazprom Neft gas station chain (Russian Federation, Belarus, neighboring countries), the MC for the coffee business of the NIS gas station chain (Serbia, Bosnia, Bulgaria, Romania), and the United MC for RusHOLTS (Magnit, Dixy, VkusVill, DoDo, Surgutneftegaz gas stations + about 400 other customers).

So far, there are only two coffee business management systems like the one I have described. These are The Grid by British Costa Express (owned since 2019 by Coca-Cola), and BMS Coffee Control, which is in the public domain and is offered to customers for implementation under their own brands.

Scott Martin, who created The Grid in England, sold it with his coffee company Coffee Nation in 2011 for £60 million to Costa Coffee. He stayed on as CEO in this business and last year helped sell the same Coca-Cola business for $5.1 billion.

I want to emphasize again that the remote monitoring of coffee machines is only one of the components of the modern coffee business that sells coffee through a network of automatic beverage preparation points. The real breakthrough is achieved when the customer uses an integrated coffee business management system.

This system consists of four modules:

Theoperating module is a round-the-clock dispatched audit of the operation of equipment and the actions of the staff who maintain the coffee zone at the points of sale. This is actually technical support that has the ability to quickly contact outlets and remind employees of the need to perform certain actions both with the coffee machine and with controlled areas of the coffee zone (replenishment of dispensers, coffee been containers, emptying garbage containers, solid and liquid waste).

Live dispatch is much more effective than push notifications, which the staff of stores tends to ignore. Naturally, push notifications are also generated by the system. They can be converted into goals with automatic begins and ends. A corporate block is needed for this, the functionality of which I will describe below. All applications for calling service mechanics go through the dispatch center. This method of tracking applications significantly reduces (up to 50%) the number of trips of service mechanics and decreases the downtime of coffee machines.

The service module controls all types of interaction with service companies servicing coffee machines. It does this through a service mobile application and a dispatch center. All applications, service certificates, checklists, ordering of spare parts, consumables, and other documents, are maintained using standard electronic forms that are stored in a single customer database. Closing of service acts occur with the help of an electronic signature of the responsible employees at points of sale. The customer has access to the service contractor’s operational analytics of compliance with the terms of the contract for the maintenance of coffee machines and other equipment of the trading floor (for comprehensive service maintenance).

The corporate module exchanges information between all participants involved in the customer’s coffee business. This is a mobile service application (it is more advanced than the service module application) in which communications between different groups of respondents are configured. Both store employees and suppliers of goods and services can exchange information with each other.

They are given the opportunity to ask questions with a guarantee of feedback, create tasks for counterparties, and also—when there are deviations from regulations—receive tasks from the operating module, with automatic closure after the completion of the necessary procedures. It also provides training and rapid testing of employees. The module includes additional options: “auto-order,” “automated merchandising” and “cleaning control” (which is relevant for points of sale that provide customers with the opportunity to use bathrooms, for example, at gas stations). This module is best suited for solutions such as Intelocate, Bitrix24, and others and can be implemented according to various monetization schemes.

The client module is based on an application through which clients can pay for coffee, set up individual recipes for coffee drinks (increase or decrease the strength of the drink, change (within reasonable limits) the amount of water, milk, or milk foam).

The mobile client application allows for:

a) the implementation of various promotional mechanics related to the purchase of coffee;

b) targeted offers from the retail chain, including personal offers (birthdays, individual pre-orders, delivery orders, etc.);

Naturally, such a client mobile application allows you to implement customer feedback, which helps business owners respond flexibly to their customers’ requests. It is important that the options for implementing my “coffee” client mobile application allow for its seamless integration with similar corporate customer products, that is, use it under a white label.

Conclusion: When designing your own coffee-to-go business, I strongly advise retail chains management not to waste time looking at fragmentary telemetry solutions. Instead, they should roll up their sleeves and create their own automated systems for managing their coffee business. In this case, I am sure that in the next 3-5 years, the efforts of any retail chain to create its own coffee business will pay off tenfold.

How IT solutions of my companies help to fight against COVID-19

The COVID-19 pandemic has had a powerful impact on all areas of public life, including catering and retail. The threat of the spread of the coronavirus and the associated restrictions have made adjustments to consumer behavior and daily habits. Thus, according to the research agency Nielsen, two-thirds of consumers among others have become much more likely to wash their hands and maintain social distance.

It became obvious that the world needs new technologies in the areas of retail, services and catering that will help to systematically fight against COVID-19. Such technologies may be described as “contactless”, “remote” and “antivirus”. They have become top-priority technologies.

All these technologies can be divided into three groups:

  • Technologies aimed at reducing contacts between consumers (clients) and working personnel.
  • Technologies for protecting the surface of goods from viruses.
  • Surface disinfection systems that destroy existing viruses and microbes.

Many of my innovations have already been tested in the past years, but the pandemic has accelerated their adoption to customers and the beginning of commercial operations. By the beginning of 2020, within the perimeter of my businesses, there were a number of successful IT solutions that were already used by companies in 10 countries – large food retailers, oil companies, catering and fast-food companies. For example, the BMS Cloud platform began to be used by the largest companies from the North America to the UAE long before the pandemic, but the pandemic was an important catalyst that showed the particular importance of the technologies that we developed, because they became effective fighters against the spread of COVID-19.

However, there were also technologies that were in the stage of unreadiness of the market for their large-scale application. They were developed by my IT company to a certain high degree of readiness, tested, but were not put into commercial operation. Some of the technological developments were “lying on the shelf” for very obvious reasons – justifying their necessity and benefit would take more resources than the commercial profit from selling them. Therefore, the developments were postponed in stand-by mode and were waiting in the wings.

But at the beginning of 2020, events took place that turned our lives upside down. And oddly enough, some of the technologies put off for the future suddenly became incredibly valuable in terms of the systemic fight against the Covid-19 pandemic.

IoT platform for managing coffee businesses “BMS Coffee Control”

The platform, which proved itself long before covid times, helps companies not only reduce the cost of servicing of coffee equipment, but also more than 3 times reduce the number of visits of service engineers to retail facilities. In 2020, the usefulness of the platform in a pandemic was even more evident. As a rule, coffee equipment requires a visit by a service engineer almost every month, service visits occur during business hours or before the opening of let’s say a cafe. At the same time, it is clear that no matter what precautions are taken by the service personnel or the cafe staff, additional contact of people is inevitable. A service mechanic can become a carrier of the virus, because in one working day he travels around several points. It is obvious that the 70% reduction in the number of contacts, which we are achieving at 4 thousand points of sale of customers connected to BMS Coffee Control, makes a significant contribution to the general front of the fight against the pandemic. Remote monitoring of the condition of coffee machines using BMS technology allows you to reduce contacts and prevent the possible spread of COVID-19.

Photo: the interface of the BMS Coffee Control mobile application for monitoring the condition of the equipment.

Creation of networks of automated self-service coffee points

In addition to the mentioned above, the BMS Coffee Control platform allows the development of such a format of catering establishments as automated self-service coffee corners. When you buy coffee yourself, you are not in contact with baristas, waiters and other employees who previously met with a huge number of people and may be virus carriers. You prepare a drink at the touch of a button on the coffee machine or using your smartphone without even a single touch of the coffee machine. Thus, you not only get high-quality coffee in a convenient way without queues and tedious waiting, but also reduce the likelihood of the spread of coronavirus.

Photo: automated coffee point Vortex Coffee

Mobile application “I’m a barista” for remote coffee ordering with control of coffee strength and milk quantity

Another technology that is certainly useful in a difficult epidemiological situation is the “I’m a barista” system. The solution allows customers of self-service coffee points to order and adjust the taste of coffee using their smartphone. Even before the onset of the COVID-19 era, the technology began to be used by more than 1000 convenience stores of Vkusville, Gazpromneft and other companies. The pandemic has opened up additional benefits. Now you can order coffee at a self-service coffee point without touching the coffee machine at all, but using only your own phone. It is enough to point it at the QR code and then all the actions for preparing the drink are performed only on the phone. As a result, you make take-away coffee without unnecessary contacts and touching potentially unsafe surfaces.

Photo: VkusVill, menu of the application “To myself barista”

The UV-treated automated coffee cup dispenser in a weatherproof enclosure 

It is a technology that has been gathering dust on the shelf only because it was a norm to store paper cups for coffee to go in the open space. For catering outlets, it was the norm that cups lay in a stack on a shelf and all visitors could freely touch them. Even those who will not drink coffee. That time the degree of the possible threat was not clear, but COVID-19 changed the situation. The highest demands are now being placed on the safe storage and dispensing of disposable tableware. Our dispenser dispenses cups automatically, one at a time. All cups are stored in a protected case, where germs and viruses can not get, for example, when visitors sneeze. Moreover, each cup is automatically disinfected before being dispensed using built-in ultraviolet lamps of the same type, which disinfect the air in medical institutions.

Photo: coffee solution equipped with an automatic UV dispenser

Technologies of contactless payments for coffee on professional automatic coffee machines

My company was the first in the history of Canada to introduce contactless payments on professional WMF coffee machines. The WMF company is the world leader in the production of automatic coffee machines with the largest share of the world market, however, the peculiarities of Canada’s payment systems and WMF software did not allow solving the problem of connecting payment terminals to coffee machines without updating the software. I created a working group that unites NAYAX and other service companies to implement a project for connecting payment terminals to WMF coffee machines. Several months of hard work and testing allowed us to solve the problem and bring the Canadian market closer to the large-scale introduction of self-service coffee corners.

Many technologies developed within the BMS Cloud platform have shown their effectiveness and profitability for business long before the coronavirus pandemic. But in the current times, they have demonstrated even greater market demand, and now I am putting great emphasis on developing technologies for public catering and retail that will further reduce the likelihood of the spread of COVID-19.

Despite self-isolation and social distancing, people, as in the past, want and will go to shops and cafes, buy their favorite drinks and eat deliciously. “Digitalization of business” and the introduction of safe technologies, in my opinion, is one of the few ways to comply with the new pandemic “rules of the game”.

And you don’t need to go far. Why do customers more often choose “convenience stores”?

These days people are buying at discounters and convenience stores rather than in large format hypermarkets. Nielsen analysts have also mentioned these noticeable changes in the trading formats. 

There is an obvious fact that the market is being changed and the largest Russian retailers are not an exception. The retailers are rapidly reformatting retail shops.

X5 Group announces that the hypermarket market in Russia will be reduced by 0.3 trillion rubles, but the convenience store segment will be grown by 1.5 trillion rubles. Regarding this trend, the retailer has abandoned the Karusel hypermarkets and opened the Pyaterochka convenience store. The Lenta retailer and the Utkonos online retailer have also announced their intention to develop the convenience store segment. 

What’s going on? I propose to consistently find out the reasons for the changes. 

The convenience store is a format that has gotten an increased interest from consumers around the world for a few years. The Russian market is not an exception and the local shops where people can find almost anything they need has become more popular especially during a period of pandemics and restrictions. The main advantage of the convenience store is proximity. Buyers do not want to waste time and money to reach distant hypermarkets and prefer to visit the shops 10-15 minutes away from home. Retailers understand these needs and make changes according to a new trend. 

New compact formats implementation

Large retailers have begun to actively implement the new formats. What are the reasons for these business decisions? I definitely can announce a complex of factors. 

1. Decreasing hypermarket traffic;

2. Pandemic restrictions and the need to shop in the stores with a few visitors.

Bright trends of consumer behavior have been formed and taken by large retail chains. 

1. Rare store visiting and buying for future use

As I have already mentioned above, the pandemic has affected store visiting. 

People do not want to visit large stores where hundreds of customers are in line and choose local stores next to their homes. These days they do not go to the stores often, but make purchases for future use. Retailers are talking about a decrease in-store visits and an increase of the average check by 20%. During the pandemic, groceries, meat delicacies, household chemicals, and cosmetics sales have been increased significantly.

2. Discounts hunt

Consumers tend to save money and look for promotional products. Every second shop visitor check contains discount goods. As a result, we get an increase in private-label goods and promotional goods sales.

3. Cooking at home 

Remote work, pandemic restrictions, and income decrease affect the habits of Russian consumers. People buy stock products more often as well as they cook at home.

 In addition to cooking, people also make cosmetic procedures, do sports at home. As a result of these changes, there is a trend of increased demand for private labels in such categories as grocery, confectionery, dairy products, and household chemicals. 

The retail sphere is being changed as well as the customers

The “poor health” of hypermarkets and changing consumer habits make Russian retail reformat. Retailers are reducing their shop space and opening city-format stores — with an area of ​​less than 5 thousand square meters. 

Convenience stores, discounters, retail outlets are perhaps the fastest-growing format in 2021. The Magnit retail chain plans to open 1–1.5 thousand “convenience stores” annually until 2025. «Lenta» retail chain has launched the first «Mini Lenta» store and as the future business strategy wants to launch small area shops equipped with built-in trade equipment, coffee machines, a grill area, and vending machines.

I am sure that the current trend will be popular. And I mean not only the local retail stores, which are usually located on the first floors of residential buildings but also gas station shops. 

The technological base they are built on gradually turns them into modern complexes of various services and makes them attractive for thousands of consumers. 

You can always rely on the experts when there is a need to launch a successful roadside shop and develop small-format stores.

For many years the Rainblade company has been implementing technological solutions that are efficient to reach high business performance especially in shops with limited space and traffic, and we also know how to make this business meet the latest modern trends.

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