A great coffee franchise is a perfect blend of beans and business. What starts with the coffee bean, the blend and the roasting ends with cost management, writes Sarah Stowe.

Gary Alford, head of strategy at Retail Food Group, which includes Donut King, Esquires Coffee Houses and MichelÕs Patisserie in its portfolio, believes coffee in Australia is just beginning to hit its stride, particularly in the espresso and cafe market.

Market potential

“The last decade has seen the coffee market open up more and more to young teenagers. It is now becoming one of the social drinks of choice for this group. Today it is common to see 13 and 14 year olds calling into their favourite cafe on their way to school to pick up their latte or flat white.

“This new wave of coffee drinkers will continue to push demand for coffee and coffee centric outlets. It means that the pool of coffee drinkers will be joined by younger members. It also means that the pool will expand at a rate never before witnessed in this country.”

And with this will come heightened expectations, he suggests. “Only those who respect the demands of this new coffee consumer will prosper. The days of simply turning out Ônear enough is good enoughÕ are over.”

Emmanuel Drivas, founder and director at The Coffee Club agrees. “There is massive potential for the coffee marketplace in Australia. With coffee consumption increasing year on year, those companies offering a good product and great service will be the winners.”

At Cafe2U, the Australian-based mobile coffee delivery service that has gone international, managing director Derek Black believes coffee is a product that can be categorised as recession resistant.

“Our experience is that as coffee is a small personal reward, consumers tend to maintain their consumption habits. Coffee green bean prices appear to have stabilised at the moment, and our alliance with our coffee roaster provides us with some degree of certainty as to price fluctuations over the coming months, within the bounds of a normal and reasonable price movement.”

Monitor the finances

Yet while the coffee market appears healthy, itÕs advisable for franchisees to maintain a stringent monitoring of their daily business, suggests Kenton Campbell, who founded ZarraffaÕs Coffees 10 years ago.

He says “Often when things are going well in the industry many businesses take for granted the market conditions and donÕt use the breathing space to reduce their risk. Those who are doing well still need to look closely at their businesses, especially their debt, cash flow and day-to-day operations as things may turn quickly and sooner or later factors such as competition and economics will have a huge impact.”

What is CampbellÕs advice? “DonÕt take advantage of the opportunity that a strong coffee marketplace is giving us, donÕt become complacent and always plan for a rainy day.”