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Running a coffee franchise: tips and advice on getting it right

Sarah Stowe

Australian consumers love their daily dose of caffeine, and are keen on good quality. So how are franchise brands assisting franchisees can succeed with a coffee franchise? 

The coffee market has become extremely competitive over the last few years, says Darren Schulz, who heads up Xpresso Mobile.

“The general public has a far more discerning palate for good coffee. I see this as a positive as its weeds out the poor operators and makes way for well run businesses. It’s not as simple as putting a coffee machine and grinder on a bench and taking a barista course for a few hours.”

Jamaica Blue head roaster Jeremy Regan identifies greater diversification in the types of coffees people are ordering.

“Health has become a big consideration and people are looking at alternatives to regular milk such as soy and almond milk, eliminating sugar from their coffees and moving towards smaller beverages with less milk content such as piccolo lattes and espressos. That being said, the flat white still reigns supreme as the most popular coffee sold at Jamaica Blue.”

Tatiana Radzim, marketing manager at Cafe2U, part of the Retail Food Group portfolio, echoes Regan’s observation about diversified coffee choices.

“The Australian coffee drinker has evolved and there has been a phenomenal increase in popularity of mocha, caramel latte, vanilla latte, Frappuccino and last but not least the dirty chai orders.

“In Australia, Europe and many parts of the world coffee is quickly consumed while standing at a caf_ during the week. On the other hand there are countries where people carve out time to take their coffees every day, whether it is at home or sitting down at a caf_. In the US coffee is often taken on the go,” she says.

Cafe2U is tapping into the need for great coffee while at work with its mobile format.

Price is not an issue when the quality is good, suggests Radzim. “We find that consumers are generally willing to spend up to $5 for a good quality coffee.

“Cafe2U has won numerous awards in mainstream coffee competitions beating many industry heavyweights to medal at the Australian International Coffee Awards (AICA) awards on several occasions.”

Jamaica Blue caf_s serve three unique blends of coffee in-store every day, including the single origin Wallenford Estate® coffee from the Blue Mountains of Jamaica Blue. The business launched Signature by Jamaica Blue coffee capsules for customers to recreate the Jamaica Blue experience at home.

“However, it can be difficult to differentiate yourself purely based on coffee and this where the overall customer experience is important – customer service is key. We strive to create unique caf_ environments and train friendly efficient staff as well deliver awesome coffee,” says Regan.

“If the flavour profile of their coffee isn’t up to scratch customers will vote with their feet and go elsewhere.”

Differentiating the coffee business from competitors comes down to three elements, says Schulz: training, systems, ongoing support and the coffee itself. “Consistently great coffee in all of our stores is what we strive for everyday. Our branding is strong and each site has some individuality to it. We pride ourselves on not being totally ‘cookie cutter’ with our model.”

Managing costs in a cafe franchise

Schulz cites key challenges for franchisees as monitoring and controlling costs. “Accepting constructive advice on how to better improve their business by following a proven system can be a challenge for some.”

It is important for franchisees to be able to contain their outgoings in a traditionally labour intensive caf_ environment. “Once again it comes down to following a system,” believes Schulz. “If the head office (franchisor) has done their job, all costs should relatively easy to control. Through experience I’ve seen many step outside the system, for example, purchasing stock through non-approved suppliers because a couple of their items are cheaper and their cost of goods sold (COGS) blow out.

“Long standing relationships with suppliers is the best way to manage costs relating to coffee,” suggests Regan.

“Jamaica Blue’s coffee supplier Jahnus Speciality Coffee, manages the green bean purchasing, roasting and distribution of coffee and has been able to keep cost increases well below market.”

Regan explains milk, sugar and takeaway cups are also sourced centrally and the strong supplier relationships and volume across the Jamaica Blue network helps reduce the costs of these items.

Stephen Spritz is co-founder of Xpresso Delight, a barista style coffee machine for offices and workplaces. “Managing costs in our business is not really an issue apart from the consumables. Franchisees don’t employ staff, they don’t have shop rent or other costs just their normal daily living expenses.

“As far as making it easy for franchisees we have a very systemised approach to getting the franchisee “immersed and engaged” into their business quickly,” he explains.

“It is hands on with the master agent for three weeks and is a combination of in house training and being out in the field learning the ropes and then reporting on what they have done.

“We have interruption cycles built in and assessments every week on their progress which leads them to a post training review at the end of the fourth week.

“I also have a conference call midway and after the review with the franchisee and the master agent to get first-hand knowledge from the new franchisee.”

Getting help with a coffee franchise

Spritz investigates how their training has been going, what areas they may need more help in, how well they are adapting to their new business and ensures they are showing all the signs of “following the system” and coping with all the new information and processes they need to learn.

At Jamaica Blue, Regan says franchisees complete an intensive two week training course at our state-of-the-art training facility, as well as live in-store training. “This initial training is backed up by ongoing online training and regular support in the field from our expert coffee trainers.”

Transparency is the key at Xpresso Mobile, explains Schulz. “The incoming franchisee gets to see where their money is being spent. This ensures they get in for the best possible price. If we can save them money we will.

“Our franchisees are guided through the process to make it as pain free as possible. This can take several months from initial enquiry to opening their store.

The spread of Cafe2U franchises across Australia and beyond can be attributed to the low cost and low risk investment opportunity, says Radzim.

“More than 98 per cent of all of our franchisees have achieved or exceeded the level of success they aimed for prior to starting their business.”

In order to assist franchisees in their early days in business, Cafe2U has developed the Acceleration Package to help the franchisee make the most of their coffee franchise opportunities. This includes an income guarantee.

One benefit of the acceleration package is removing the cost pressures of a start-up, says Radzim.