The coffee shop market is earmarked to be one of the fastest growing sectors over the next five years, with more than 7,000 new sites poised to open. But as the sector becomes more crowded, can we expect the catering equipment expectations of operators to change? FEJ investigates.
here is a coffee shop renaissance happening right now, and it isn’t going to end anytime soon. According to an Allegra World Coffee Portal report last year, there are more than 18,000 specialist coffee outlets in the UK, each striving to take their own sip out of a £7 billion market growing at more than 10% a year.
Out of that figure, the branded coffee chain segment is worth some £3 billion and around 6,000 stores. Costa Coffee (1,821 outlets), Starbucks Coffee Company (824) and Caffè Nero (590) remain the UK’s leading brands with a combined share of 56% of the branded chain market by outlet numbers. Physical expansion by leading chains is undoubtedly a driver of growth. Market leader Costa added 151 UK outlets and achieved 15% sales growth in calendar 2014.
The successful chains have quickly cottoned onto the fact that image is important and that brand values must be retained in order to engage increasingly progressive consumers. In an effort to deliver the consistency that customers have come to expect, there is a stark realisation that the back-of-house operation needs to be up to scratch.
Justin Stockwell, managing director of Caffeine Ltd, a distributor of coffee machine brands such as Schaerer and Gaggia, feels that in order to be different from their rivals, coffee shop operators are having to be obsessive over the products they sell and the type of equipment they use.
“The main operational demand is the need for speed. The design of both the front-of-house areas to assist in the speed of customer movement through the store — while encouraging them to browse and spend money — and the back-of-house areas to ensure speed of service, ease of payment and ease of service. The key to success in a coffee shop is the speed in which the flow of customers can be served — especially at peak times — to minimise waiting times.”
The competitive nature of the market that Stockwell refers to is also manifesting itself in other ways where catering equipment is concerned. Mark Hogan, marketing and sales manager at FEM, says that the recent explosion of coffee shops on the high street has meant that anyone offering hot beverages has had to up their game to keep hold of market share.
“As cafes and coffee shops look to expand past their hot drinks offering, many are purchasing easy-to-use food prep equipment that takes over manual tasks and speeds up food preparation. Light catering equipment can usually be plugged into a 13A socket and can be sited where required, making it ideal for small coffee shop kitchens or front of house. Examples include blenders, food processors and handheld mixers, panini grills and small induction hobs.”
Additionally, says Hogan, the way that food is displayed can really influence customer choice. It has seen evidence of this in café-style operations where it has supplied Alto-Shaam heated merchandisers. “To maintain food quality, heated display units should have a heating system that overcomes the drying out problems associated with keeping food hot for any length of time,” he says.
E&R Moffat is another company with expertise in the display and merchandising field. It is also keen to talk up the virtues of putting the food offering in the shop window, so to speak. Sales and marketing manager, John Wannan, comments: “Coffee shops tend to have to cope with large volumes of customers in a shorter time, so in order to attract brand loyal customers, it’s important to create a memorable customer experience by providing appealing products and efficient service.
“With more and more coffee shops opening up, shop owners are trying to create a point of difference in a competitive market, as well as encouraging regular repeat customers and word of mouth endorsements. Having a bespoke counter can create the perfect look while providing functionality and flexibility to meet menu changes and keep up with consumer demands.”
Michael Eyre, product director at Jestic Foodservice Equipment, has also noticed a willingness among coffee shop operators to expand the range of kit they use to deliver a more varied menu. “The demand for professional blenders and juicers has seen a substantial rise in recent years, fuelled primarily by a trend in healthy, nutritious alternatives,” he says, adding that brands it carries, such as Vitamix and Zumex, can now offer the sort of customised and blended production techniques that allow operators to increase their chilled beverage margins.
This trend can also be seen on the food side, too. Jestic recently began importing the Atollspeed oven into the UK market and Eyre says it is just the kind of high speed, quality appliance that coffee shops are looking for.
“With coffee shop food offerings becoming more and more sophisticated, yet the requirement for speed when it comes to service stronger than ever, the demand for hybrid ovens using rapid cook technology is something that manufacturers have taken note of.”
The key to success in a coffee shop is the speed in which the flow of customers can be served”
Panasonic puts forward a similar case. Sales and marketing manager, Iain Phillips, suggests coffee shops face a conundrum in that many will naturally invest in a good coffee machine, while cold food doesn’t really require much CAPEX in terms of equipment. Yet when it comes to equipment to heat and cook food, they are spoilt for choice.
“It is easy to see how operators end up spending thousands of pounds on many items of kit for toasting, grilling, heating, re-heating and baking, and as such they become challenged for space. An option that they are becoming more aware of is buying one piece of equipment that does it all and collectively costs less in the long run,” he says, proposing the Panasonic NE-C1275 as the answer. “It is a microwave, a convection oven and a grill, so it can pretty much replace all other items of equipment — even those required to bake pies and jacket potatoes, and toast sandwiches and Paninis. It has a 13 amp supply for ease of location and a three-year warranty.”
Branded coffee shop operators owe some of their success to the fact that they can utilise very small premises, although this also means they need to be able to offer a menu with sufficient choice, usually from a limited inventory of catering equipment.
It is a scenario that impacts heavily on the equipment choices that operators make, as experts point out. Diane Ho, commercial brand manager at Glen Dimplex Professional Appliances, the supplier of Burco water boilers, says: “The significant increase in the number of hot and cold beverages being offered by many coffee shops and the move to more speciality flavours and blends has rapidly created the need for versatile equipment at an affordable price and backed by excellent after-sales packages. When combined with the often limited space available in coffee shops, it is clear to see why the coffee shop sector is one of the most diverse yet challenging markets for manufacturers to serve.”
Angus McKenzie, managing director of Kimbo UK, says that in terms of coffee equipment, traditional espresso machines remain dominant in coffee shops, while bean to cup and capsule solutions have their place, too. But he also notes that alternative brewing solutions are becoming increasingly fashionable — from the AeroPress to drip coffee and other, larger filter solutions. “At Kimbo, we have rediscovered the Cuccuma — a traditional Neapolitan coffee pot which celebrates using gravity rather than pressure to brew coffee. Where traditional machines are concerned, Kimbo is finding an increased popularity in on-demand grinders to prepare coffee beans. They raise the bar in efficiency, ease of use over manual grinders, and often come with features which measure the humidity and pressure in the room.”
But aside from unique ways of brewing coffee, have we reached a point where every base is covered as far as catering equipment for coffee shops is concerned? Laurent Valbret, managing director of Creeds, which supplies bakery- and sandwich-making equipment, thinks so. He believes the growth in coffee shops means there will be more catering equipment sales to be made, but not necessarily any substantial change in the kind of equipment required.
“The current trend in coffee shops is predominantly to serve great coffee with a small selection of ‘grazing’ food, such as cakes and Paninis,” he suggests. “Selling coffee is a high margin business with huge profit to be made. I believe that if coffee shops move into a more food-based offering their margins will significantly fall — this will put people off changing the existing coffee shop model. Therefore, the implications for the catering equipment market will not substantially change.”
If coffee shops are to succeed, Laurent insists that consistency of product quality, continuity of supply, speed of service and attention to presentation are all essential. “In a coffee shop everything is in front of the customer, so presentation is key. Equipment must be easy to clean and easy to keep clean.”
There is one other area that coffee chains are advised not to neglect as their footprints get larger: service. Caffeine Ltd’s Justin Stockwell says operators need to make sure they receive the after-sales support they need. “Coffee shop owners should be careful, there are too many coffee equipment suppliers out there who are more than happy to supply the machines but then rest on their laurels, leaving customers in the lurch. Espresso machines aren’t simple bits of kit. Back-up service is vital. It’s no use investing in the best equipment in the world if it breaks down and nobody’s around to fix it.
There are too many coffee equipment suppliers out there who are more than happy to supply the machines but then rest on their laurels, leaving customers in the lurch”
“Equipment suppliers need to get their act together when it comes to after-sales support. Operators have the right to expect service support that’s fast and efficient, and that their supplier will carry a range of spare parts, so that the engineer can provide a first-time fix.”
Whatever happens, this is a sector primed for unbridled growth. Allegra predicts that by 2020, the total UK coffee shop market will be worth £16.5 billion and exceed 27,000 outlets. Much of this growth will be driven by branded coffee chain expansion and non-specialist operator growth.
Early estimates suggest that the UK has the long-term potential to comfortably host more than 9,500 branded coffee shops. All, at one stage or another, will require their fair share of foodservice equipment. The coffee shop renaissance is far from over — in fact some might argue it is only just beginning.