Can We Regain the Prominence We Once Enjoyed in the Coffee Marketplace?

By Jack W. Rugen, Editor, Soundwave Magazine, Former President, UFOLINY

In the Fall 2007 issue of Soundwave, I wrote an article entitled, “It Ain’t Broke! So, Why Fix It?” At the time, SEI was in the process of changing their coffee program, and I maintained that altering the coffee program was not something corporate should often do because 7-Eleven’s customers had grown to expect specific offerings that fit their taste preferences. However, SEI was panicking over the state of its coffee numbers in the then-Northeast Division and went ahead with the program without the proper due diligence. I believe that drastic action is why SEI’s coffee program has struggled to compete since.

A few months earlier, I attended the Northeast Coffee Task Force. Attendees included SEI middle management and representatives from the Bunn-O-Matic Corporation and Mother Parkers Coffee & Tea Company. The objective of the summit was to investigate the reasons for—and to devise a plan to reverse—the then-recent negative trends in the Northeast region’s coffee numbers. The average decline, at the time, was about 30 cups per day, Divisionwise. On Long Island, where unique numbers had dominated the region for the then-past 25 years, some stores were experiencing declines of 60 to 300 cups per day. Many issues about taste and quality, local customer profiles, consistent delivery, grind and brew specifications, water temperature, and competition were discussed.

During the first day of the meeting the then-Hot Beverage Category Manager shared research findings which showed—not surprisingly—that 7-Elevens were losing market share nationwide. More alarming was that 2005 market share ratings showed c-stores at 49 percent, McDonald’s at 26 percent and Dunkin’ at 25 percent, and 2006 ratings clearly showed McDonald’s picking up an additional 11 percent and Dunkin’ another 9 percent, successfully cannibalizing more than 70 percent of the national market share. Also, it was learned, that ONLY 13 percent of our customers were aware we ground fresh beans, while 60 percent knew that Starbucks, Mickey D’s, and Dunkin’ did. So, it was apparent—SEI had a substantial amount of communication to do. However, there was none, as usual. They just remodeled the coffee bars, installed new equipment, and increased to a 3-ounce frac pack.

Bunn representatives also presented a new coffee grinder that would have accommodated 30 different recipes, one recipe per hopper, with the same 30,000-pound or three-year Bunn warranty as to their other models. Pilot programs were underway in Chesapeake, Boston, Pennsylvania, and California, which would have made it possible to customize this program to suit local preferences. Corporate thought this was not the way to go. In my humble opinion, this was a big mistake!

Day Two was to begin with competitive store visits, which did not occur either. Taste testing and quality assurance showed subdued results in the two test stores: one utilizing a 3-ounce throw weight that lacked improved aroma and taste compared to 2.5 ounces, and the Columbian coffee frac pack, disturbingly, was indistinguishable in flavor and smell from the fresh ground. The other store was dispensing too much water, which was within corporate’s specifications, and the store operator was complaining that the water filter had not been replaced for over a year despite repeated requests via CHD online and telephone attempts.

I shared with the group that I had been very successful using less water than that specified by corporate for the Northeast Blend, using in-store grinders. But I also noted that the store operator needed to “stay on top” of throw weight, consistency and particle size. A suggestion from SEI Maintenance that the EverPure water filters be replaced every six months fell on deaf ears but definitely would have solved the taste problem. What’s more, all the attendees agreed that corporate should have documented throw weights and flavor consistency, water temperature and filtration, and preventive maintenance and replacement schedules to ensure enhanced quality before implementing recommendations, as well as the use of a more flavorful, higher quality blend. All these suggestions also fell on deaf ears.

My research for the best coffee in the cstore marketplace led me to the following: In 2014 America voted and determined that the QuickChek convenience store chain makes the best cup of coffee in the country (according to a Technomic survey). Other score leaders included Wawa for food taste and flavor, Kum & Go for a convenient location, and Circle K for pleasant, friendly service.

Buc-ee’s in Lake Jackson, Texas is the highest-rated gas station coffee in America for the second consecutive year, according to the latest study from GasBuddy. In honor of National Coffee Day on September 29, Gas-Buddy data scientists reviewed more than 3 million coffee ratings covering more than 150,000 retail locations where gasoline is sold. Buc-ee’s captured the highest scores in the nation as being the best gas station c-store for a cup of Joe. On the state level, Tulsa, Oklahoma-based QuikTrip Corp. captured the top spot in seven states, while Pennsylvania-based Wawa Inc. and Framingham, Massachusetts-based Cumberland Farms Inc. tied for second place, both popular in six states.

For 7-Eleven convenience stores to be competitive in the foodservice space, they must benchmark against not only other cstores, but quick-serve restaurants as well. And one of the stiffest areas of competition happens at the coffee bar. With that in mind, Convenience Store Petroleum magazine set out to see how consumers score some of the leading c-store brands’ coffee programs. The study, conducted by Consumer Brands Metrics, lists 25 great coffee programs that included many c-stores, including QuickChek, A-Plus/Sunoco, Cumberland Farms, Dunkin’, Starbucks, even Krispy Kreme and Cinnabon’s cold brew scored highly for their coffee programs. Consumer Brand Metrics surveys about 700 recent customers per chain. The scores were based on the percentage of current customers who rated the chains’ coffee quality as “very good.” The results showed big wins for c-store retailers holding their own against restaurant giants. Surprisingly again, 7-Eleven’s coffee program didn’t make the grade in this survey, either.

As traffic growth to large coffee chains is slowing, and traffic to small coffee chains and independent shops is declining, consumers are noticing the growing number of other options available to them.

So, what are the lessons learned from the studies, research, and personal experience?

We learned that:
• Coffee should support the entire store.
• Coffee and foodservice go hand-in-hand.
• C-store customers have come to expect quality roasts from their local convenience stores.
• Attention to customer demographics will help determine the best selection.
• Freshly ground beans are more desirable over packets.
• 7-Eleven franchisees and SEI employees need to hold and keep equipment service providers accountable concerning specifications and preventive maintenance.
• Our competitors have raised the bar on brewed coffee.
• The competition in the coffee category is getting tougher as we chase the same consumer for the same dollar, and in many cases the same 7-Eleven customers for the same dollar.
• SEI’s lack of media attention and advertising is affecting coffee sales negatively.
• The best coffee, improperly brewed, isn’t going to taste like the best coffee—and your customers will go elsewhere.
• Training on proper brewing techniques and monitoring coffee for freshness is critical to your bottom line.
• A team of coffee experts should train your staff, as well as provide brewing and cleaning instructions to ensure the perfect cup of coffee, every time.

While Suffolk County, New York did at one time rule the hot-brewed, dispensed coffee market, this does not ring true today.
Consumers are showing they are willing to pay more for a great product coupled with experience, especially, the millennials. Millennials are the future, and their purchasing power is becoming more relevant every day.

Coffee is a category that many have invested in heavily, so don’t sit back and let others take your coffee customers. Let’s stand up and brew a better coffee program! It is my humble opinion that the time has already passed to reevaluate the hot and cold-brewed coffee program in 7-Eleven stores to compete in today’s coffee marketplace. Too much has been left to corporate to make ALL the decisions, when it seems they place cost above quality.

The question remains: Will we regain the prominence we once enjoyed in the coffee marketplace? Or is it too late?

Note: The opinions expressed in this column are the author’s own, and do not necessarily reflect the views of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF).