December 2023

12
Dec
Coffee roasting - Hoboken NJ coffee business education
HOW’S BUSINESS?

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HOW’S BUSINESS?

Once upon a time coffee got its start (legend says so) thanks to a herd of goats and a very observant goat herder who saw his flock a bit more excited after eating some coffee cherries on their daily jaunts through the forests of Ethiopia. Those cherries found their way into a process at a monastery full of monks who turned it into a cup of coffee. So goes the legend of coffee’s auspicious start.

It’s doubtful that the goat herder named Kaldi and his connections at the monastery could’ve foreseen the world of coffee as we now know it. In terms of today’s coffee talk, can’t you just hear the abbot at the monastery seeing Kaldi and asking him, “How’s the goat business?” and Kaldi the omniscient herder proceeds to tell him about the cherries and goats’ excitement. There’s always something to discuss when coffee comes up. Today, something caught my eye as I was reading about anything coffee. No different than what a barista encounters at the bar when a customer asks about their unique coffee beverage and its origins, we emphasize being an informed and all-encompassing source of information no matter what role we play in the retail coffee business. I found myself reading about the coffee capsule market and the expectations of it significantly growing over the next 10 years. Given the proliferation of machines using capsules in corporate offices and the low-cost entry point of this type of a setup, growth shouldn’t be that much of a surprise. A compound annual growth rate (CAGR) of 5% from ’23 to ’33 certainly is an “eye catcher”. Now, for a coffee house or bricks and mortar facility emphasizing an “experience”, for which the gurgle of the Keurig machine cannot replicate, talking about capsules may seem blasphemous. However, as businesspeople in the business of coffee, we wouldn’t be too effective if we couldn’t handle a “softball” question about the capsule market and its considerable usage. Correlate it to the barista who doesn’t have an answer when asked where today’s brew comes from. As an owner of the establishment, you’d most likely have a chat with said barista with a map in hand.

Think for a few minutes about what the seemingly innocuous capsule question can conversationally lead to. For starters, the capsule market is dominated by the corporate world for convenience and cost reasons. Corporations have an approximate ¾ market share of the capsule world. With this type of majority and the prevalence of this coffee offering, what effect if any, is there with capsule usage. Perhaps you want to discuss or think in terms of quality of taste or maybe the health concerns of drinking coffee coming from an aluminum or plastic capsule. No doubt a conversation around health gets attention but questions about sustainability and the environment are prevalent too. Where exactly do all these capsules go? Are they recyclable? If one agrees with the CAGR of 5% then these questions become much more substantive as the discussion evolves.

What about the impact on coffee supply and pricing? Sourcing coffee may be at the top of your questions list now. Whether you are thinking in terms of Arabica or Robusta, or Brazil versus Vietnam, the ultimate question starts with, where are we getting more coffee from? While that question hangs in the balance, the demand for more coffee continues in new markets. Further intensifying the need for new players in the coffee world. India continues to evolve as not only a producer and exporter of coffee, but the consumption of coffee grows within the country too. India at last check is the 5 th largest exporter of coffee and 6 th largest producer of coffee. As one goes down the pricing “rabbit hole”, its quickly apparent that depending on what reading material you source from, you may think that prices are going up with a lack of supply due to weather events like “El Nino” or the advent of a new rule on the exchange for coffee (ICE) about no longer posting older inventories. Something like this clearly is a supportive component of a stable coffee price. What exactly is the price of coffee in the futures market? This futures market is where roasters can price hedge themselves given the dynamics of coffee beans. The “C” price is what its called and it represents Arabica green beans that qualify under a lengthy set of criteria to be met (sourcing and delivery of beans to certain warehouses). Lastly, the farmers, of course, deal with pricing extensively. The “C” price tends to be lower than market pricing for beans. Farmers dealing with the transaction in “C” pricing terms may not reap the full benefit of a market price.

These are just a few thoughts that run through my mind when I think about my day and fielding questions about coffee, capsules and the markets touched by them. For someone in the business of retailing coffee in any type of operation, knowing this transaction flow and the players involved can yield a better return on the business and positioning of your business accordingly. I think an intrinsic benefit comes from the fact of asking or being asked the question, “How’s Business?”. While it’s very vague, it can offer an opportunistic answer of choice. Perhaps you too may see the coffee capsule, and its ability to ultimately become a sustainability question or one of a farmer not obtaining true value for their efforts, as a vehicle to explain the experience of your cafe, thus answering the “How’s Business” question. If nothing else, your customer will walk away thinking more about the value you and your cafe offer in so many ways. Kaldi had an answer for the monks when they posed that question and thankfully those monks ran with his answer to making a cup of Kaldi. “How’s Business?” is such a great opportunity to change the world. Let’s take advantage of it!
by new-jersey


06
Dec
That Shop
THAT SHOP

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THAT SHOP

The most prevalent discussion points or questions that I encounter when I am with a Café owner or manager is to help find them a barista to work within their café operation. Without fail my all-encompassing question to them about “What’s Going On?” is always met with, “Can you find me some baristas”?

I’d be remiss if I didn’t write that most businesses in food and/or hospitality are generating the same type of sentiment. Labor is and has always been a major component of the bottom line not only in terms of profitability but perhaps equally, in terms of a business’s viability for long-term success and survival. The pressing concern these days, which I don’t seem to hear or see being met by most cafés, is the workforce’s demand for a host of things beyond just the per-hour compensation agreement. Would-be coffee workers want to work with people they like and respect, and that are looking out for them in a variety of ways. This isn’t a new concept, but it feels a bit heavier than it used to be.

Study after study, post pandemic, speaks to “must haves” like shift flexibility, mission driven issues, social impact, career growth and a host of career-oriented things typically around personal development. These are all in addition to the compensation schedule. It’s a difficult managerial course to navigate, in an industry typically driven to a seasonal labor force of high school and college age students to fill in the gaps amongst permanent staff members. Shift management is already a yeoman’s effort to complete without factoring in class schedules and holidays with this type of demographic amongst the café’s operation. 

All said, while it is a tough equation for most businesses, it is one that can and must be dealt with. That’s evidenced by the very successful operations we all encounter from time to time. If one was to inquire about a café staff’s average tenure at a successful shop, you’d probably hear it answered in terms of years and not weeks or months. If you then asked, “why so?”, you’d probably hear, coffee related trips to seminars, conventions, great people, educational and managerial opportunities etc. Today’s workforce seeks a fair and honest wage AND to be inspired for the future in a super business environment. A café bricks and mortar operation does not have to answer the question of whether one can work there forever but it should be able to succinctly answer the question of “Will you help me each and every day to better myself and prepare me for my promising future”? Think about the student summer jobs of years gone by in an ice cream shop, a bowling alley, or a bakery to name just a few. Now think about the stories told from those places by countless former students who did their respective times there and beam with pride years later when they talk about their own success formulas being shaped there. The work ethic they developed shoveling Rocky Road after Chocolate Mint Chip after Sugar Free Cherry Ice cups and cones in the swelter of an August night was second to none.

They all worked at “That Shop” which was managed by an owner who cared or understood the value enough to know his/her workforce sought out a great place to work, with positive energy and an eye on their future skill development. Now, it’s called “culture”! These stores and shops had a battle tested formula for developing the employee’s softer skills to be utilized somewhere down the long road by the employee. The wide-eyed student took a leap of faith on it, as that was all they could do. Only a life lived, and more experience would prove it worthwhile. When they went on that first career entry interview post high school or college and were asked about: Leadership, Teamwork, Handling pressure, Problem Solving, Conflict Resolution, and just dealing with people, they all had plenty of experiences to pull from. Experiences that any hiring manager quickly understands how to calibrate them. The mom’s and pop’s (so to speak) at “That Shop” had done their instructor job well and in return had a reliable and able-bodied workforce throughout the years. The names and faces changed but the quality of service and work did not. Isn’t that really what a customer craves with each transaction? Isn’t that what your customers implicitly ask for when they get in line at 8am for their cappuccino?

Today’s café operations and their seemingly insatiable need for reliable and quality workers need not deviate from those mom’s and pop’s operational formulas. By offering a competitive wage and driving a culture of teamwork and collaboration emphasizing the need to satisfy a customer, will always be an attractive employer to a discerning employee. Combining that with being an instrument for an employee’s personal development and showing them just how much they are an asset to the business and to the team, will not only have the buzz about a café being the success story of the neighborhood, but many will refer to you as that place where all those good and great people work or have worked at. Just become “That Shop” and employees and customers will come looking for you.

by new-jersey