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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.

Even A Wise Man Stumbles

Any professional community should have a strict hierarchy based on some fundamental criteria. The hierarchy is supposed to feature both proven leaders and outsiders as well as highlight bold rookies and former jet sets in a particular industry. Everyone takes an appropriate position that fits the level of trust and reputation.

How to Develop C-Store Foodservice: from Basic to Premium Level

Defining an industry is crucial for c-store chains as well as independent retailers. According to the latest report, the level of foodservice in the United States is not as high as it may seem. 89% of players are still on the basic level of their development able to offer only some fundamental products, snacks, drinks and customer service.

IT Solutions for Non-Fuel Business and Gas Station Chains

What does the term “smart gas station” mean? What features it should have? How can IT solutions boost its operation in relying on all aspects of the non-fuel business and gas station chains? These are the question we are going to discuss in this article.

New Business Niche Brings Coffee to the Office

Today, we can hardly imagine a modern office without coffee. It is not just a casual beverage for employees. The drink may influence the level of productivity as well as create a harmonious atmosphere for communication and creativity. On the other hand, coffee may turn a typical office into a beneficiary niche from business perspectives. Is it possible to turn a coffee room into an efficient business model? It certainly is. We will tell you how.

Starbucks to Conquer the Chinese Market

The world’s coffee giant seems to have serious intention to conquer the Chinese coffee market by means of mobile technologies. The company is launching its new “Sayitwith Starbucks” service in collaboration with the largest social network in China featuring over 846 million users.

What’s New in the Coffee Cup Economy in 2017?

Coffee is doubtlessly one of the most important products available in the market. On the one hand, it can boast great tonic features. On the other hand, it brings different people from different parts of the world together forming a huge global community of dedicated business professionals. The role of coffee should never be underestimated, as its importance for the global economy is the same as finances, oil or other market-defining products.

Moreover, coffee highlights some extra features such as flexibility and some other resources letting the product change in accordance with the market development and met its expectations in the long run.

McDonald’s Opts for Healthier Food Taking Fast-Casual Direction

Things change, as time goes by. What was created as a symbol of the fast food industry, calories and junk burgers may eventually turn into healthy food provider. McDonald’s tends to change the strategy in the nearest future obtaining a brand new look customers have never witnessed before.

The food giant is about to correct its strategy and focus on a so-called healthy fast food highlighting some fitness diets in addition to a separate food consumption propaganda. The new concept will feature a selection of recipes that can boast an optimal nutrition formula for people aimed at keeping fit. In other words, McDonald’s may turn into 100% opposite concept we are used to introducing some venues of the new healthy concept in different parts of the world. The extended menu includes a range of soups and salads, healthy sandwiches and main courses.


Why сonsulting does not always work?

Alexander Kuzmin, RusHOLTS CEO, spoke at the conference “Global and local markets of oil and petroleum products: the analysis, pricing, trade flows“, presenting the report on the non-fuel businesses of filling stations. Development and marketing of modern gas station chain have become relevant and even a prime-time topic for Russian gas station chains, both large and small. Request for an effective program of roadside service comes from the top of the Vertically Integrated Oil Companies’ management which is good. On the other hand it is sad that in the minds of many leaders the level of understanding of the non-fuel business development remained at the 2010 level.

Recently, representatives of the world’s leading management consulting companies have spoken a lot about the need for Russian gas stations chains to develop their potential of non-fuel businesses. In most cases, to the audience’s attention are offered the “best practices” based on the experience of more mature foreign markets with no less than half a century of history. Why are these recommendations still not massively implemented in the Russian conditions?

Is it possible to get the “George Clooney effect” coffee sales at the gas stations?

Let’s talk about the habit of drinking coffee outside the home in Europe, Canada and Russia. Drinking coffee at the gas station, taking a cup of coffee to go on the way to work are the new habits of the modern metropolises inhabitants which change the coffe-drinking traditions in different countries around the world.

Mornings in the establishments of the Canadian coffee chain  in any city of Maple Leaf Country starts in the exact same way. The crowd of visitors sweeps stocks of coffee and pastries in the blink of an eye – the nation is one of the most coffee-addicted in the world, which is confirmed by the impressive figures of consumption and the degree of prevalence of drink among absolutely all categories of citizens in terms of monthly income, place of residence, occupation, etc. .

In 2015, the country has topped the list of 80 countries in terms of coffee consumption, calculated in liters per capita that are bought and cinsumed in catering establishments – mostly in the cafes. In terms of absolute consumption, including the volumes of coffee beverages drunk at home, Canada is the third in the world with 152 liters per person each year. Ahead are only Netherlands and Finland coffee fiends, confirms the authoritative Euromonitor study.


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