Brewing Up Hot Dispensed Sales

As retailers look to grow hot dispensed beverage sales in 2022, sprucing up the coffee bar offering can help lure coffee and tea customers back.

Howard Riell • Contributing Editor

Having weathered the dip in sales caused by the pandemic and concomitant withering of the morning daypart, hot dispensed beverages are staging a comeback.

The best-selling hot beverage items tend to be single-origin coffees, fl avored coffees and syrups with a natural element such as honey. Interestingly, stores are seeing stronger sales behind decaffeinated varieties, suggesting a possible consumer movement away from caffeine, and/or that more consumers are choosing to consume hot beverages later in the day. Don Burke, senior vice president for Management Science Associates in Pittsburgh, has some unique advice. He believes that sales were down, in part, because consumers were less than fully confi dent when buying a beverage with self-service cups, lids and condiments

and self-dispensing during the first few waves of the COVID-19 pandemic. He recommended the more hands-on approach of Starbucks, which saw sales rise during the same timeframe.

TWO TYPES OF CONSUMERS

There are two types of consumers for hot dispensed beverages, suggested Oliver Herting, category manager and buyer for FastBreak Convenience Stores.

“The traditional one wants a basic coffee quickly and to maybe add some creamer,” he said, “and the other wants customization that only Starbucks and Dutch Bros. can offer.”

FastBreak’s approach is to first satisfy its traditional loyal customers at its 33 c-stores in rural eastern and southern Oregon and Northern California.

“They get their basic, quick coffee on a regular basis. (We) draw some of the Starbucks/Dutch Bros. customers to our stores by offering some customization, quality coffee with a bean-to-cup machine, convenience and better value,” Herting said. “Marketing, limited-time offers, flavors and ways to customize — sweeten — their coffee are crucial to get that customer into the store when they fill up on gas and/or get their attention by having a good-looking coffee corner.”

RIPE FOR UPSELLING

“C-stores are ripe for upselling specialty hot beverages,” said veteran foodservice consultant Arlene Spiegel, Foodservice Consultants Society International (FCSI), and president of Arlene Spiegel & Associates in New York City. “Customer counts are up, and it’s the perfect time to establish your brand as having premium products through beverage offerings.”

Spiegel recommended a few simple steps: • Make the hot beverage section of the store visible, accessible and easy to make quick decisions in through clear signage and layout.

“Make the customer journey special, easy and memorable,” she said. • Showcase the origins of the coffee beans, and describe the roast and flavor profiles. Display a sign on each dispenser. Provide dairy and nondairy creamers, ground cinnamon and syrups. • Showcase the blends of the tea selections, and offer fresh lemon wedges and ground spice. • Offer dark, milk and spiced hot chocolates in a hot beverage dispenser with choice of marshmallows or flavored creamer. • Provide hot beverages in two or three sizes in branded, compostable cups with lids. • Include an app-based loyalty/frequency program — for example, “tenth cup on us.” • Implement order-ahead, with pickup service similar to Starbucks. • Sell ‘home sizes’ of whole bean/ground coffee as a retail upsell. • If traffic warrants, develop a barista program with the coffee supplier to supply equipment and training. • Bundle coffee, tea and hot chocolate sales with breakfast offerings.

PLACEMENT AND SIGNAGE

“Merchandising for hot dispensed starts with the category’s placement in the store,” suggested Steven Montgomery, president of b2b Solutions LLC in Lake Forest, Ill. “Ideally, a customer should be able to see the hot dispensed offer two steps inside the store. The path from the front door should be easily traversed. The same is true from (the station) back to the cash register.”

The signage, including traditional or electronic menu board, should be highly visible. Information should include not only the hot dispensed items but all the offers, such as a coffee/pastry combo. The pastry offer should contain the same information.

“The condiment area should be close to but separate from the brewing area,” Montgomery added. “The layout should not require customers to backtrack for condiments or lids.”

His company recommends its “Five C” layout for the customer’s path: cup, cover/lid, coffee, condiments, cashier. CSD

fast facts:

• From bundling hot drinks with breakfast to offering spices and non-dairy creamers, retailers can make their coffee bar more enticing for customers. • Customers should be able to see the coffee bar when they enter the store, with a clear path to the area, to ensure the segment is a destination for shoppers.