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Focus on hot beverages: boiling point?

By Daniel Woolfson

- Last updated on GMT

Even through the summer, there's money to be made by investing in a solid hot beverages offer
Even through the summer, there's money to be made by investing in a solid hot beverages offer

Related tags: Coffee

Despite strong competition from a seemingly relentless horde of newly opened coffee outlets, licensees are in the ideal position to take advantage of growth in the category. Daniel Woolfson looks at ways licensees can capitalise over the coming summer.

Summer solutions

One option for operators looking to keep their coffee offer strong during the hot weather is to take a more European approach and readjust the types of hot beverages on offer, says Barry Kither, sales and marketing director at Lavazza Coffee.

“Pubs do compete when it comes to hot beverages, just look at JD Wetherspoon [Tim Martin’s chain is estimated to sell more than 50 million cups of coffee a year].

But, Kither says, “People aren’t interested in drinks containing a lot of milk in hot weather. Shorter drinks are much more appealing in the sun – you have to be willing to adapt.”

Some of the more European-style drinks Kither recommends offering include the flat white and the cortado; espresso cut with a small amount of warm milk and typically served in a glass.

“And stay away from large mugs during the summer,” he says. “It can really put people off.”

Ambience

Kither stresses the importance of atmosphere as a selling point for pubs wanting to draw in hot beverage sales.

“With our culture it is as much about environment and ambience as it is about product,” he says. “If you can get a non-alcoholic zone in your pub where customers are drinking coffee and tea and reading the paper your sales can go up exponentially.

And, he says, the potential to fill the down times that pubs typically experience between services with coffee sales is huge.

The potential income from those sales is not to be laughed at. “[Coffee] has a much higher margin than any alcoholic drink – considering the average latte costs an operator roughly 14p,” says Kither.

“In pubs, any price below high street level will be seen as good value – pub operators aren’t putting all the overheads against coffee like somewhere like Starbucks is,” he adds. “It’s an incredible opportunity.”

Coffee dedication

At the Dog and Whistle, Hertford, head barista Lyndsey Ollard runs the site’s dedicated coffee section, which is open from 9am until 5pm when it is closed for staff to focus on alcohol sales.

As well as hot coffees and takeaway coffees for on-the-go customers, the section - which features an industrial Viva coffee machine - serves up a range of iced coffees during the summer, which Ollard says sell incredibly well.

“We take pictures of our iced coffees in the morning and share them on FaceBook, Twitter and Instagram,” she says. “People eat with their eyes – so once you’ve got a social media presence and a solid, attractive product it virtually sells itself.”

Brand strategy

Ollard’s team take the same approach to social media with hot drinks during the winter months. However, whilst iced coffee sales rise considerably during the summer, hot coffee sales remain consistently strong year round.

The Dog and Whistle only uses Dear Green organic coffee and Ollard believes advertising the fact that you provide a specialist brand can prove lucrative as a selling point, attracting repeat customers who like the brand and – in this case - its sustainable credentials.

Ensuring all staff members are fully barista trained is fundamental to the site’s coffee trade. “I’m quite a coffee snob,” says Ollard. “If I go somewhere and the coffee is too bitter or the milk is burned it can be a real turn off, so I make sure all the staff members know exactly what they’re doing.”

Serving social

The Social bar on Portland St, London, which is owned by record company Heavenly Recordings and the Breakfast Group, functions as a ‘Wi-Fi café’ by day and a more drink-focussed outlet at night.

As well as providing coffee and free Wi-Fi (as well as alcohol and food), specialists from London tech support business Sussed IT are on hand from 11:30am to 5:30pm on weekdays to help out guests with computer and gadget support.

“We’re not just a Wi-Fi café,” says Tim Crompton, general manager at the Social. “We have people coming in for repairs and support and because of that we’ve got quite a good stream of regulars who know they can come and work here.

“It’s usual for people who work in London but don’t have offices to come in because they have a relaxed workspace. In the summer we start doing iced coffees but really I find that people drink more alcohol in the summer.”

Crompton left the Social in 2007 to manage another bar before returning in 2013. “There used to not even be a coffee machine,” he says. “People used to come in and just drink alcohol in the day.”

Now though, he says roughly 85% of daytime sales come from coffee.

The Social also stocks Tim Peaks, a unique Fairtrade coffee brand owned by Tim Burgess, lead singer of indie rock band the Charlatans.

Crompton says: “The environment has to be great and people have to want to come and stay there – the coffee is almost secondary to that. Not that we don’t do good coffee, but for me almost all of it is about creating the best environment.

“It applies to everything, from coffee to service to food and drink.”

Cold courage

“Frappe-style drinks are growing in popularity, especially among younger consumers” says Graziano Moroni, head of coffee at beverage distributor Peros.

But, he says, “recipe innovation is essential in order to drive sales and your supplier should be able to help you with suitable ideas. Look at flavours you already have and try using them in different ways.

Another advantage of serving frappes and similar drinks, according to Moroni, is that the equipment used to produce them can often be used to make other high-margin cold beverages including blended crushes, shakes and smoothies.

Brewed up

Moroni says: “Cold brew coffee is the latest innovation to hit the speciality coffee scene and – because it’s riding a wave of popularity and availability – operators need to be aware of how to use it to drive sales, particularly during the summer months.

“Customers who haven’t tried it before might need to be persuaded that it really doesn’t taste like hot brewed coffee that’s been left to go cold. However, if made correctly the cold brew coffee will taste clean and refreshing – an ideal summer drink.”

Premium growth

Despite the hype around coffee, over 165 million cups of tea are still consumed daily by the British public. However, the last year has seen a surge of interest in premium, herbal and green teas. Apparently a builder’s just isn’t good enough anymore.

“For pubs, where hot drinks are not the core business, this untapped tea market is an opportunity that can be exploited more easily than coffee, which requires a greater investment in equipment and staff training,” says Allan Pirret, director of sales at Novus Tea. “Operators need to get this offering right by serving a tea experience on a par with the very best artisan coffee.

“To increase revenue you need to provide great value from your premium tea, so, apart from getting the range right, you need to convey this sense of value through the presentation and serving of the tea, as well as the ‘selling’ ability of your staff.”

Pirret says bestsellers Earl Grey and English breakfast tea should always lead a premium tea offer, but that it is important to provide a wide range of alternative options.

“Your supplier should offer in-depth training, product support and business development sessions to help you maximise your opportunities,” he adds.

Hello, is it tea you’re looking for?

UK master tea sommelier Ajit Madan, owner of Camellia’s Tea House, on Carnaby Street, London, has said he expects to see more and more tea houses popping up on UK high streets as demand for the drink grows.

He said that believes despite the influx of coffee shops onto British high streets, the tables will turn in the next five years as the UK begins to follow global trends in tea consumption.

He says: “There is a massive demand from the US consumer for things that promote health and well-being. Also, as people get older they can get less tolerant of coffee and don’t want that massive caffeine hit, so people are moving away from that and drinking different types of tea.

He adds: “There has also been a massive boom in tea culture around the world tying in with the renaissance of all things vintage. Going for tea with friends and pouring it out of beautiful tea pots is very cool again.”

Hot beverages news in brief

Coffee concept rollout

Cornish brewer and pubco St Austell Brewery is planning to open a string of standalone coffee shops following the successful rollout of its Brewer & Bean concept at its managed pub sites.

This comes after coffee sales across the company’s portfolio rose by 27% last year, with the brewer eyeing Plymouth as a potential location for the first standalone site.

Jeremy Mitchell, marketing and communications director at St Austell, said: “While we haven’t opened any standalone coffee shops yet, we are ensuring new pub purchases and refurbishments include a strong focus on coffee sales and provide a welcoming, relaxed ambience which appeals to people throughout the day.

“The strategy is definitely working, with overall hot beverage sales up 37% YTD. This year our net coffee sales in our 25-strong managed estate will exceed £1m. We are also reviewing our Brewer & Bean cakes and snacks offer to help increase spend per head among coffee customers.”

Are you watching closely?

SA Brain chef executive Scott Waddington has said pub operators should look to coffee shops as inspiration for how to draw customers back from the off-trade.

He said: “There is a lot pubs can take from the sort of dedication and focus on serve that is commonplace in coffee.

“A pint and a cup of coffee are not a dissimilar price and both are readily available for people to drink at home – but with coffee shops there is a real focus on the artistry of the serve and customers are willing to pay extra for that. Pubs and cask ale in general should be doing the same.”

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