Few restaurateurs will ever deny their customers a cup of tea or coffee. But at what point does it become more bother than business? Alexander Gilly reports.
“I’ll have a three-quarter soy Swiss water decaf cappuccino, please. Do you have cinnamon sprinkles?”
“Certainly. And to eat?”
“Oh, nothing, just the coffee.”
It’s a conversation that will cast a shadow over any restaurateur’s sunny disposition: a three-dollar sale to a woman with eight thick sections of weekend newspaper under her arm who has just installed herself at the best outside table. She’s here because of the coffee and tea, but is it worth having her?
You bet. At first blush, a customer who sits on a three-dollar sale for two hours doesn’t sound like good business. But there are reasons not only to get customers like that through the door, but to keep them coming back.
There’s the margin on a cup of coffee, of course—although in practice, it’s pointless to try to put a per-cup value on coffee because there are so many different types of fixed and running costs involved. Do you factor in the cost of the machine? If so, did you buy it, or are you leasing it? What about barista wages? How many coffees does he make an hour, anyway?
The margin is one of the less important factors in coffee sales, but for argument’s sake, let’s say the cappuccino cost you 50 cents. With mark-ups like this, it’s easy to see why coffee is so attractive.
So attractive, in fact, that many small coffee shops have become huge multinationals. For 16 years, Starbucks was a coffee bean retailer in a second-tier US city. Then, in 1987, it opened a coffee shop. Now there are more than 15,000 Starbucks stores in 42 countries. Another chain, Gloria Jean’s, is among the fastest-growing franchises in Australia. The first Gloria Jean’s in the country opened in Miranda, in Southern Sydney, in 1996. Last year, the brand opened its 400th store in Alice Springs.
Now the Golden Arches wants a piece. In January, Danya Proud, spokeswoman for McDonald’s USA, told The Wall Street Journal that putting cappuccinos and other coffee-based beverages on its menu was expected to add some US$1 billion to the burger chain’s annual sales. McDonalds has started hiring baristas and installing coffee machines in prominent positions in their outlets.
Tea, which requires less labour than coffee due to the lack of barista, is even more profitable—especially herbal tea, which doesn’t require milk or sweetener. Vin Ramanadhan, who represents Sri Lankan tea producer Dilmah, points out that tea is the second-most consumed beverage in the world behind water.
It’s an apt comparison: tea is becoming hip just like bottled water once did. When consumers are willing to pay for something as ubiquitous as water, it’s not hard to see why they’ll pay an equally big mark-up on a cup of tea.
They do it because they want more than just what’s in the cup. They want the experience. Melissa Choi moved from Sydney to London in the early noughties and set up Choi Time, a retailer and wholesaler of specialty Chinese teas. The company, which specialises in flowering teas, has blossomed.
“The whole specialty tea market is booming,” says Choi. “The sales in my flowering teas are increasing every year—consumers are becoming more discerning about what they drink as they are becoming more aware about the health benefits of teas.”
Ramanadhan agrees. “Market research indicates that consumers, particularly younger ones, are willing to forego monetary considerations when presented with products that are healthy and stylish. It’s not just style for the sake of style, but style with substance. Tea is calming. It eases the burdens of life in its quiet elegance.”
There are also prosaic reasons for drinking it. “Chinese teas like puer and oolong are starting to get trendy,” says Choi, “as celebrities like Victoria Beckham claim that it helps them lose weight.”
It’s true that tea has an appeal beyond what goes into the cup—as long as it’s done right. An old teabag just won’t do. When people order tea today, they expect a pot of loose-leaf, and they want it to be presented nicely.
“I see leaf tea making a comeback as more people shift away from the ‘quick fix’ of a teabag to enjoying a proper cup of tea with family and friends,” says Ramanadhan.
“There’s an increase in sales of fine tea accessories. I don’t see the generation of today brewing their teas in the ‘nanna’s teapots’ of yesteryear.”
So how do you hook customers with your tea and coffee menu? You start with good products. When it comes to devising the menu, the main thing to keep in mind is to cater for everyone. Apart from milk and soy, there are few perishable items on a tea and coffee menu (fresh mint, ginger, a few spices), so you can buy in bulk and hang on to them for a long time. Get all the syrups, sprinkles and flavourings. If you’re in an urban area with lots of coffee shops nearby, but you’re the only one with cinnamon sprinkles or rooibos, you’re going to be ahead. Real chai is a must-have in cities, even though it’s labour intensive. You’ll also need every conceivable variety of milk and soy, decaf, black and green tea, plus herbals and a few exotics.
You’ll need to listen to customers to find out what new types of tea or coffee people want (puer and oolong, for instance), and then add them to the menu. Remember: teas keep. Customers are fickle.
The idea is to have all the ingredients in place so that you can focus on creating a unique drinking experience—a buzz that will never be found at Starbucks or in a McCafé.
When putting together your hot beverages menu, also consider the demographics of your location. For instance, in Pyrmont, you’re surrounded by two television networks, three radio stations, Fairfax Media, and a host of media small fry—custom publishers, small ad agencies, web designers—floating about like clownfish in anemone. There are many discerning coffee (and oolong and chai) drinkers working in the area. There are also dozens of cafés, yet on a weekday morning, people will wait 15 minutes for a take-away coffee from Café XXII on Union Square rather than going to the guy around the corner. That’s the undeniable power of buzz.
Ben Hallgren, barista at Café XXII, knows why customers are hooked on his coffee. Hallgren buys his beans green, then roasts his own coffee. He has created a winning blend—so popular that the café now sells it on to other establishments.
Understandably, Hallgren is a bit cagey about what’s in it—“a mixture of Central American, Indonesian and African beans,” is all he’ll say. But he concedes that, while every cup has to be good, it goes beyond that.
“I have no problem throwing away three espressos until I make the right one,” he says.
“Our coffee keeps the regulars coming in,” says owner of Café XXII, Tanya Koeberl.
“In turn, they bring newcomers, and it spreads by word-of-mouth. Then, maybe the newcomers will try breakfast. The buzz builds.”
So in addition to having good quality coffee, you also need a good barista.
It isn’t difficult to make one good cup of coffee, according to Hallgren. “The craftsmanship comes into it when you make every single cup to a standard that you would be happy to drink yourself.”
That’s how you create loyalty. “Your primary objective is to keep the customer coming back,” says Koeberl.
You also need waitstaff who are knowledgeable about the menu. They should know details such as how an Assam differs from a Darjeeling (the first is ‘robust’, the latter ‘musky’). They’ll need to know the particularities of teas from all the major producers (China and India produce half the world’s tea between them) and, if you’re really serious, the smaller ones, too, like Sri Lanka, Japan and Africa.
If you decide to offer a choice of coffee beans rather than just the one standard house blend, you will need to ensure your staff know the differences between each one.
In short, your tea and coffee menu will be impotent without competent baristas and knowledgeable staff who are able to sell it for you.
For a busy restaurateur, all this messing around with tea and coffee menus might seem like a lot of hard work for very little return. But you can’t afford to get it wrong.
As Katherine Herron from coffee bean wholesaler, Allpress Espresso, points out: “Coffee is the last taste that a customer will be getting and therefore, the final impression of a restaurant.”