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Wake up to how coffee can drive revenue

Turn your c-store into a hot (beverage) destination

Screen Shot 2019-10-15 at 12.56.03 PMPouring effort into creating a positive coffee experience for customers has some serious perks, as both convenience store owners and their java partners can attest. Based on the sheer size of the potential market, opportunities to capitalize on it are abundant. Hands down, coffee is the most consumed beverage among Canadian adults, even more than tap water. It’s a $6.2 billion industry, including $4.8 million in foodservice sales, according to the Coffee Association of Canada. 

While Tim Hortons dominates the domestic coffee biz, there’s room for others to muscle in and grab some market share for themselves. And here’s another important number to ponder: 67% of Canadians visit a convenience store at least once a month, according to a Technomic study, which represents an opportunity to create a coffee following with a strong product.

Debbie RIx, owner of Lucky Penny

Debbie Rix, owner of The Lucky Penny

Debbie Rix, owner of The Lucky Penny, has attracted a steady drip of coffee drinkers to her location near Trinity Bellwoods Park in Toronto. She has focused on offering locally sourced products, like coffee from the city’s own Propeller Coffee Co., and fresh milk and cream from Kawartha Dairy. Her convenience/general store has also adopted green practices and cut down on waste by foregoing plastic stir sticks in favour of metal spoons and introducing a loaner mug program, which allows customers to fill up the mug and return it when they visit next. 

“It has been very successful,” notes Rix. “Most definitely, coffee sales have been important drivers for the business. About half of our customers come for grab ’n go items and half of that is coffee. The remainder come to pick up groceries and other items, from a mix of retro candy to romaine lettuce and Frisbees.”

Since opening five years ago, Lucky Penny strives to be responsive to the wants its clientele. That definitely applies to coffee preferences. “We’re not coffee snobs,” says Rix. “Our staff are trained to make a customer’s coffee just how they like it. We’ll try to make it happen.”

The store’s aim-to-please philosophy helps build loyalty, as does a points program that rewards customers for using reusable coffee mugs and for every dollar they spend. A downloadable mobile app helps track customer spending and point tallies. Fifty points gets you a free coffee and 100 earns $5 off an order. 

Coffee sales drive food sales

Coffee sales drive food sales

To encourage food sales, fresh baked goods are delivered daily, while yogurt parfaits are made on-site. As customers wait for their coffee order, they stand next to an enticing display of pastries. And before transactions are finished, they are offered a special deal of half a loaf to go along with their coffee. When prepping their coffee, clients can add soy/oat/almond/non-fat/full fat milk and sweeten with raw sugar, Stevia, simple or agave syrup, honey, plus a dash of cinnamon. It’s further evidence of the “have it your way” philosophy and reflective of consumers’ increased desire for healthier eating options. 

Coffee partners can play an important role in getting strong sales brewing, says Dave McQuillin, senior director of food services, Club Coffee L.P., based in Toronto. “We can provide support with branding of coffee in the stores with clear, modern visuals and clean, well maintained equipment. As well, we can provide graphic design for in-store merchandising and loyalty programs. It can elevate your store and make yours the destination over other retailers.”

But even the best branding won’t work without good coffee. While consumers want convenience and quality, the coffee itself cannot disappoint. “The coffee market has shifted and consumers are knowledgeable and able to recognize good coffee versus bad,” explains McQuillin. “A poor experience will absolutely turn them off.” That underscores the need for keeping coffee fresh and equipment pristine, up-to-date and in good working order. 

To sweeten the deal, promotions help drive sales. “The most successful ones have been ‘any size for a $1’ and bundle discounts, like coffee and a muffin or a breakfast sandwich. They do very well, especially in the breakfast space,” he says. 

Convenience store owners may also want to borrow a tactic out of the fast food playbook. In March 2019, Burger King introduced a coffee subscription program stateside for its BK Café. Through the company’s app, users can enjoy a small daily 12 oz. coffee for US $5 a month, which can whittle down the price paid to 17 cents per cup. For hardcore caffeine enthusiasts, it’s a potentially attractive perk, sure to keep the java flowing.

 

Hip sips: Coffee sales by the numbers

  • 16% of past-day coffee drinkers used a loyalty card, while 7% used a mobile app, when ordering coffee in the past week, according to the Coffee Association of Canada.
  • 3.2: average cups per day consumed by coffee drinkers.
  • 42% of consumers say they purchased hot brewed coffee/lattes/etc. at a convenience store in the last three months, making coffee the second highest ranking items in terms of sales, second only to fountain beverages, according to one U.S. study. 
  • 38% of convenience store customers who ordered coffee said they were interested in single origin and flavored coffee roasts, according to research firm Mintel. 
  • 56% of Americans who have visited a convenience store in the past three months feel that it makes coffee drinks as good as coffeehouses, according to Minitel data. It also discovered many consumers associate convenience stores with coffee. IIf a coffee program is done well, it is likely to boost overall foodservice sales.

Side bar: 7 ways to perk up coffee sales

  1. Channel your inner barista. Sophisticated coffee fans want to be able to customize their drinks with flavoured creamers and syrups.
  2. Stock healthier options. Mix up your selection of grab ’n go food-friendly items by offering things like vegan donuts, whole wheat or flax muffins, and fresh fruit.
  3. Upgrade your equipment. New self-serve Schaerer machines grind the beans and make pressure-brewed cups similar to French press versions. 
  4. Offer high-octane options. While sales of some coffee types have been flat, espresso sales have experienced a big leap recently.
  5. Go green. Consumers like to feel good about the coffee they purchase. Consider organic, fair-trade sourced beans, unbleached paper coffee pods, wood or bamboo stir sticks instead of plastic ones, and recyclable cups and lids.
  6. Just chill. Expand your coffee selection to include cold brewed coffee beverages, which experienced a whopping 80% jump in sales, according to one Bloomberg report. Frozen cappuccinos or smoothies spark coffee consumption during warm weather.
  7.  Celebrate! Build a promotion around International Coffee Day on October 1. That could include special pricing, new products, contests, social media blasts, or pairings with a food item.

This article originally appeared in the September/October issue of Convenience Store News Canada.


7-Eleven Canada - $1 Coffee (CNW Group/7-Eleven Canada)

7-Eleven Canada ups its coffee game with $1 promotion

7-Eleven Canada - $1 Coffee (CNW Group/7-Eleven Canada)

7-Eleven Canada – $1 Coffee (CNW Group/7-Eleven Canada)

7-Eleven Canada’s 7Rewards loyalty members can now score delicious hot beverages for $1 every day of the month. In addition to this new limited time offer, every 7th coffee (any size) is still free and members can earn points with everyday purchases. Points can be redeemed for perks and rewards including free food and beverages as well as access to exclusive deals, contests, and events.

7Rewards members can explore the store’s ever-expanding 7-Eleven Brewed Coffee and hot beverage menu, which Hershey’s SKOR Hot Chocolate, Pumpkin Spice Latte, and the new Mexican Hacienda Miravalles Organic Coffee. 7-Eleven Brewed Coffee is ethically harvested, locally roasted and made of 100% Arabica beans.


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7-Eleven Canada promo offers free hot beverages on the 7th and 11th of the month

Screen Shot 2019-09-11 at 1.21.23 PM7-Eleven Canada is running a new promotion designed to make it a go-to destination for hot beverage drinker: Registered 7Rewards members can get a free small hot beverages on the 7th and 11th of every month until the end of the year.

The promotion encourages consumers to sign up for the rewards app and visit their neighbourhood store to claim a free, fully customizable hot beverage ranging from Pumpkin Spice Latte to Hershey’s SKOR Hot Chocolate and Mexican Hacienda Miravalles Organic Coffee, as well as the popular Rainforest Alliance Certified 100% Caldas Colombian Coffee, and come November, the Peppermint Mocha.

With no extra charge for endless customizations at the 7-Eleven coffee bar, customers can make their beverage exactly how they like. 7-Eleven is emphasizing that its premium 100% Arabica beans that are hand-picked, ethically sourced, and small-batch roasted locally to ensure a more consistent and fresher cup of coffee.

The convenience retailer is looking to compete in the coffee wars and attract busy consumers. In a release the company said: “With the added benefit of no lineups, customers can quickly grab a hot beverage while on the go.”


Packaged beverage options are exploding: 4 tips for boosting offerings and efficiencies in-store

From new ready-to-drink (RTD) coffees to infused teas to sparkling waters, packaged beverage options are at an all-time high, driven by innovation and consumer demand for variety.

BeverageBuyer-teaserBeverage manufacturers recognize that having diversity in their offering is critical and the same is true for convenience store operators, who want to keep customers coming back for more.

“Culturally, we’ve become so accustomed to having more choices than ever and from a consumer’s standpoint, beverages are low investment, low commitment,” explained Satoru Wakeshima, chief engagement officer at New York-based branding agency CBX. “It’s not a major decision and people like to try new things.”

Wakeshima predicts 2019 will see more of the rising beverage trends and new product explosion seen in 2017 and 2018, but with greater blurring of product types — more hybrids.

“Our expectations are higher than ever, and the bar continues to rise,” he said.

How can convenience store operators manage the packaged beverages category in a way that capitalizes on new and emerging opportunities, but maintains efficiency?

Beverage experts, offer the following tips:

1. Allocate intelligently

Because the category cannot expand infinitely, especially within the limited confines of the convenience store format, space needs to be allocated intelligently, which includes scaling back in some areas. It’s a simple concept that is not always executed.

“Reducing space for declining or slow-moving segments to make room for innovative or higher-velocity segments that attract shoppers to the store is the key to success,” says Peter Keaney, business analyst at Cadent Consulting Group. An example would be to reduce space for milk, where sales have been declining, to make space for more sparkling waters.

2. Rotate offerings with marketing support

“People want to discover new beverages, but they also want to be reassured that they’re making a good choice,” said Wakeshima. “Educating customers at retail, mobile or online to aid the deselection process becomes the expectation.”

3. Think like consumers

Thinking like consumers means in terms of “need states” rather than subcategories, as this is how consumers shop, according to Keaney. Moving forward, the plethora of packaged beverage options could be rearranged in the cooler by needs.

The NPD Group has identified four macro consumer needs: fueling, wellness, connecting and gratifying.

The NPD Group has identified four macro consumer needs: fueling, wellness, connecting and gratifying. These fundamental needs can then be broken down into more specific behaviors, known as need states. Examples of need states under fueling include “easy on-the-go” and “staying awake.” Meanwhile, need states under gratifying include “nostalgic drinks” and “morning drink favorites.”

4. Keep abreast of beverage trends

In addition to staying on top of the latest packaged beverage trends, retailers also should watch what’s trending outside the category, since trends often spill from one category into another eventually.

The fastest-growing packaged beverage segments currently are sparkling water, energy drinks and RTD coffee, all which are up by double-digits recently, according to Keaney.

Still and sparkling water continue to be big as consumers seek alternatives to carbonated soft drinks, he added. “In addition, plant-based and probiotic beverages are driving sales, as well as functional beverages and innovations like nitro cold brewed coffee. We’ll have to see how high CBD-infused beverages can fly.”

Originally published at Convenience Store News. 


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