Restaurant Coffee Trends

[rawal22]

Hi All,

I am embarking on starting a small roaster with some friends. Our goal is to sell into restaurants and build custom coffee programs for them. We are small enough where we can give individual attention to each account, and able to scale enough to handle a handful or two accounts total.

As we get started, I wanted to start a discussion around restaurant coffee. Are there trends any other roasters are seeing? What is the best approach to starting the conversation with owners? Any insights you all have from past experience...

Any thoughts are welcome and I would love to hear any success stories, and failures as I get this ship moving.

 

[CoffeeJunky]

It is funny you started this thread because I was just talking to my regular breakfast restaurant owner about carrying my coffee instead of national brand that they use.

For me, this was very easy question to ask because I go to this restaurant few times a week but for cold call, it would be much more difficult.

When I approach the owner, I would ask what type of coffee they use. Most of the restaurants use national brand or large coffee company which taste awful.

Their current coffee supplier probably been with them for years and they offer cheap and easy solutions for the restaurant owner.
The most of the time, the restaurant owners don't have much time to think about it or want to deal with new company. And also better coffee offer with higher price tag won't really make them want to change their coffee supplier.
The price is only motivation for them to even think about changing but that is not also for sure.

This is what I would share with you.
Most of the restaurant near by here pay around 7-7.50 per pound and they are in 2.5 individual pack.
What i have offer them was to sell them in 5 pound bag with measuring cup for 2.5 ounce. My price offer was around 6 dollars per pound(not very high profit margin). This means this restaurant will save around 14 dollars per day.
This was the worth it for the owner to think about since their saving is worth talking about.

I have talk to many other restaurant owners and most of them don't even want to talk about it unless you are their customer or you offer something for free but that again does not guarantee business.

Good luck....


O

 

[rawal22]

Thanks for the info CoffeeJunky. We are looking specifically at restaurants that have seasonal menus, farm-to-table offerings, and specific missions. The prices you listed were a little lower than we were expecting to communicate. We may need to go back and take another look at those.

I do think it is an interesting subject. Last year that was a great read in Fresh Cup around this and touched on similar issues. Thanks again!

 

[CoffeeJunky]

Yes the price is very cheap and not very much profit in it but good breakfast restaurants do use around 7-10 pounds of coffee a day. The profit margin might be only be around 1.50 -2 dollars a pound and that translates into around 10-20 dollars per day profit and also mean around 400- 600 dollars per month each restaurants can bring you. This is very competitive market we are tapping into. It would be much more lucrative to go after offices, church and other public gathering groups.... I currently sell to few churches and offices 5 pound bags at 7 dollars per pound and each church brings around 15-20 pounds per week. Its little higher profit margin but monthly profit is much lower.

 

[John P]

If you are competing on price, you are telling them, "Our coffee isn't better, but it certainly is cheaper!"

Be selective. Make it known you are offering coffee wholesale. Let them come to you. Don't sell your coffee to X place because they are willing to pay for it, they are representing your brand as well. Make them meet your standards, provide training.

And honestly... $6.00 a pound? What are you buying ?? My avg net cost roasted is higher than that. And 8 years ago, when I was buying whole bean from a top tier roaster it was $8.65 back then. The lowest I sell for wholesale is $14.34 #, and that's for a good friend.

For us, we are selective. It's not about the quantity of coffee, it's about building the brand and maintaining reputation and quality across the board. As for restaurants, we work exclusively with Forage, a small restaurant run by an award winning chef, and recent Iron Chef winner. I've had several other offers, but we told them "no" simply because they do not meet our standards.

The headache of dealing with lousy restaurants is not worth the mediocre return and damage to your reputation.

Proceed with caution.

 

[rawal22]

If you are competing on price, you are telling them, "Our coffee isn't better, but it certainly is cheaper!"

Be selective. Make it known you are offering coffee wholesale. Let them come to you. Don't sell your coffee to X place because they are willing to pay for it, they are representing your brand as well. Make them meet your standards, provide training.

And honestly... $6.00 a pound? What are you buying ?? My avg net cost roasted is higher than that. And 8 years ago, when I was buying whole bean from a top tier roaster it was $8.65 back then. The lowest I sell for wholesale is $14.34 #, and that's for a good friend.

For us, we are selective. It's not about the quantity of coffee, it's about building the brand and maintaining reputation and quality across the board. As for restaurants, we work exclusively with Forage, a small restaurant run by an award winning chef, and recent Iron Chef winner. I've had several other offers, but we told them "no" simply because they do not meet our standards.

The headache of dealing with lousy restaurants is not worth the mediocre return and damage to your reputation.

Proceed with caution.

This is very good to know. I am happy to see both sides of the story. Currently, are looking and prospecting more higher end restaurants. We agree that they are the main communication for our brand as we develop. I understand different markets call for different things so all this is very helpful!

What about customization. Does anyone here develop custom espressos or blends for different menus? Do restauarants feel this is important to have something that fits their menu?

Thanks again!

rawal22

 

[CoffeeJunky]

Yes there are many different ways to approach the customers. One ways to compete with price and another is quality. If you can offer both, I believe you can position yourself very well.

Most of the small boutique roasters do not have way to buy the beans that cheap. I believe most of the coffee drinkers do not really know much difference between fair coffee to great coffee. And if you are just after high end customers, you are only targeting about 10 percent of coffee drinkers who really would come to your shop for that 14-18 dollar a pound coffee. If you want to reach out to 90 percent of coffee drinkers, you should position your price accordingly.

I won't get rich from selling my whole beans to the restaurants but when the restaurants put my name on their coffee cups, to go sleeves, banner near the door, I will get free advertizing and I will get some residual income from the coffee sale.

Most of the good quality coffee beans like Colombia Supremo are being sold for around 3.70-3.95 a pound, we can surely afford to sell the roasted blend coffee bean at 6 - 6.50 to make couple of dollars profit.....

 

[cotatiadam]

So my question is, how are the Restaurants who are purchasing high end coffee preparing it for their customers?
How is quality ensured?


Thanks

Adam

 

[CoffeeJunky]

This is very good to know. I am happy to see both sides of the story. Currently, are looking and prospecting more higher end restaurants. We agree that they are the main communication for our brand as we develop. I understand different markets call for different things so all this is very helpful!

What about customization. Does anyone here develop custom espressos or blends for different menus? Do restauarants feel this is important to have something that fits their menu?

Thanks again!


As i have mentioned before, most of the restaurants(even the high end restaurants) will not buy 10 dollars a pound coffee for their customers. I frequently dine at many high end local restaurants and after few tries, I simply do not order coffee at these restaurants simply because they do not have very good coffee. They will buy 30 dollar cake but they will not carry 10 dollars a pound coffee.....

I have seen many different coffee roasters and coffee house who try to cater high end customers fail because we all think if we can offer the best coffee, people will flock in. However, that does not always work.....
You need to have good business plan, marketing, and tons of luck.......

Cheers

 

[CoffeeJunky]

Most of the restaurants rely on their supplier to help train their staff to run their coffee/espresso machine.
So it is very hard to compete with large coffee roaster in your area since they have the men power to help these restaurant sell their coffee where most of the small roaster can't really do.

 

[John P]

CoffeeJunky,

It is evident from the nature and content of your posts that it would be in your best interest to clearly understand the concept of positioning. Why it matters, how to establish it, and how to effectively use it as a marketing tool and a means for continued motivation.


Adam,

So my question is, how are the Restaurants who are purchasing high end coffee preparing it for their customers?
How is quality ensured?

When a high-end restaurant and high-end roaster begin a relationship, it is (should be) the roaster's job to take control of the coffee program, from equipment, to brewing methodology, water chemistry, and training. A restaurant should be willing to make whatever changes necessary to meet the standards of the roaster.

This kind of relationship should only be for the purpose of by the cup brewing, and for a restaurant, the easiest, most consistent way to ensure quality and consistency would be to brew press by the cup.

This is what we did for the restaurant we work with:

1) Upgraded grinder and changed all large press to single-cup presses. (of course they pay for all equipment, and supplies. A roaster should never give equipment, just bring it to them, and bill them for it.)

2) Tested water chemistry, installed filtration system to correct water chemistry (while waiting for the installation, I hand delivered water in 5 gallon containers from our already calibrated supply)

3) Implement brew program. Calibrate grinder, write down brewing parameters from preheating cup, to dose, grind, and brew times.

4) Train front of house staff. Have a tasting, explain the WHY of the methodology.


5) Set pricing (We deliver fresh roasted coffee every two weeks. Everything is seasonal and small-batch, we change coffees every time, provide tasting notes, and pricing. Our coffee pricing ranges from 5-10 per cup. The restaurant follows our parameters exactly.)


6) Invite staff for tasting session.


7) Revisit to ensure they are maintaining standards.

For us, we have an excellent relationship with the chef/owner, and the staff all "get" it, so we have no worries about consistency. They know not to falter.

These (or similar) is what I would consider a minimum that any reputable roaster should do.

If roaster and/or restaurant is not enthusiastic about doing these kinds of things, there is no point in them doing business together. Somewhere between the two is a weak link, until it is remedied, it will be a flawed relationship at best, and both will suffer for it.

 

[eldub]

We provide coffee for a "farm to table" restaurant which just opened a couple of months back. They serve a blend that was developed just for them (and named for them) as well as a decaf in french presses.

 

[rawal22]

We provide coffee for a "farm to table" restaurant which just opened a couple of months back. They serve a blend that was developed just for them (and named for them) as well as a decaf in french presses.

Hi eldub,

I love this story here. Is this something restaurants are interested in? Our focus is on more of a Farm to Table niche of restaurants.

Let me know, I would love to hear more!
rawal22

 

[CoffeeJunky]

I was just in the restaurant owners meeting couple of days ago here in Michigan. There were about 250 restaurant owners there from lower end of the spectrum to high end. There were few of the owners wanted to know the differences between coffee from the national suppliers to small coffee house roasters. At the end, the price is the main priority. second is the quality. I asked if they would change the coffee supplier with best quality of coffee but need to pay 5 dollars per pound more and answer was Big "NO" The shocking things is the most of the these restaurants don't even have water filter for their coffee machine unless they were installed by the coffee suppliers.

Yes I am sure there are many restaurants owners would buy high end coffee and would pay 14-15 dollar per pound but I bet it won't be where you can make living off of them....

Another funny thing about coffee business in Michigan... There is a very fast growing coffee chain called "Bigbee coffee" used to called "beaners" and they chanced their name pretty quickly after complains about the name. But i just found out they get their coffee from one of the biggest local roasters with one of the worst coffee you can find in the industry. But then again they are the one of the fastest growing coffee chain.... I wonder what is the recipe for great success on coffee business...... It surely doesn't seem like the best tasting coffee we all love....

 

[cotatiadam]

I’ve been running the numbers on a business plan for a high end small roaster, but it seems like a more stable approach would be to focus on fresh affordable good coffee rather than the highest quality. Which is a little disheartening because I got into roasting because it was the answer to the my quest of finding the best coffee for myself. Now, 7 years later I can go to the grocery store and there are 5 amazing local(ish) roasters to choose from.

I may have to rethink this a bit.

And thanks for the answers John.


Adam