Article by Abbie Napier, 9 July 2016 - www.stuff.co.nz
Christchurch cafe owner Bink Bowler has cut the cost of making a flat white in half. In the last six months, he's watched his coffee costs drop by 50 to 60 per cent under a new system designed by businessman and importer John Robson.
Bowler knows all too well the high price of doing business in the hospitality industry, having watched his first business venture go under in early 2014. Lessons have been learned, and his second effort, Black and White Coffee Cartel is doing so well there are plans to expand to a second site next year.
"It's a hard, hard business," he says. "It's a struggle."
Despite what some consumers may think, top notch cafes typically make very little profit on a cup of coffee. Most of the good ones pay a lease on a premium shopfront site, buy high-end ethically-sourced coffee, pay higher wages for quality staff and put some effort into fitting out the space they use.
As Bowler would no doubt attest, delivering a quality product every single time costs the cafe owner some serious dough.
Robson, with considerable hospitality experience and market knowledge under his belt, says about 80 per cent of cafes don't survive the first three to five years of trade.
He says it's the coffee roasters who are creaming it. As the price per cup of coffee grows, coffee drinkers usually blame the cafe for hiking the price.
Like oil, the price of green coffee beans moves with market predictions. If analysts predict a freak stormy growing season, the price of coffee beans soars. Civil unrest in a major growing region? Yup. Prices go up.
Roasters, faced with higher bean cost, load their roasted beans price and the cafe coughs up more per kilo. The cost of a coffee might go up by 10 cents, but chances are, this only happens now and then as usually cafe owners try and protect the consumer from inflated prices.
When the price of beans comes down, the price of a coffee stays the same as cafe owners scramble to recover their lost profits.
"It's bloody hard at a retail level," Robson says.
In years gone by, finding a quality small scale coffee roasting machine was nigh-on impossible without spending a small fortune.
Bowler, a knowledgeable coffee roaster himself, says the machines were closer to a microwave than a micro-roaster. Equipment inadequacies coupled with restriction of coffee roasters within most city limits in New Zealand meant cafes had no choice but to buy roasted beans from commercial roasters.
In Christchurch, machines roasting 5 kilograms or more per cycle need a costly resource consent and roast far more than a cafe needs.
There was no credible or affordable alternative, making cafes beholden to large companies selling beans at a high price.
Enter, John Robson and his company.
Robson had long been importing coffee equipment to New Zealand. About three years ago, he found some breakthrough technology which turned the micro-roasting industry on its head. The new wave of smaller roasters could easily cater for a cafe, dealing with one kilo of green beans at a time
They were small, affordable, and above all, effective. Cafes now had the potential to roast their own beans, cutting out the huge cost of buying from a roastery.
Robson's model works on collective buying power. The Coffee Workshop buys green beans from a large scale importer, and with 20 cafes on its books now, has the flexibility to make larger purchases, distributing custom green bean orders to their clients.
The roasters are set up in cafes and pre-programmed to roast the perfect batch, every time.
Each cafe can have its own custom blend beans and roasting recipe, setting them apart from the competition, and promoting their own in-house blend of coffee.
IT'S WIN WIN!
Late last year, Black and White Coffee Cartel installed a Coffee Workshop roaster in the cafe, capable of roasting one kilo at a time. It paid for itself in four months.
Bowler no longers pays a roaster for his beans, preferring to turn out the cafe's custom blend. The change means his coffee beans cost has been cut in half.
"It's consistent," he says. "You're roasting really good commercial grade coffee. "I think people are scared that roasting is hard, but it's just a recipe. Making an actual cup of coffee is harder. "Business is hard, so if you can get your head around doing business, you'll be fine roasting."
Robson says his model means cafes have much lower overheads. He charges for the sale of the roaster, then charges a service fee for sourcing the green beans and customising each order. Cafes pay for premium beans which then pays a premium price to coffee farmers. Even then, the bean cost is less than half of what roasteries are charging.
"This is the difference between these cafes being here this time next year, or not," he says.
"The margin on what they're selling across the counter is so much better.
"Our intention is to pay the farmer more and charge the cafe less. If we can cut out the layers to improve either end of the process, the ends that matter, well, that's a good thing."
The Coffee Workshop has about 20 cafes already using their system. At the moment, Robson supplies cafes in Blenheim, Prebbleton, Christchurch, Geraldine, Wellington, Kapiti Coast, Martinborough and Dannevirke. He hopes to announce cafes in Tauranga, Nelson and Auckland very soon.
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