At the Intersection of Office Coffee, Subscription Revenue Models, and Opportunity
In a $400+ billion global coffee market, office coffee remains the great untapped opportunity (cold brew pun intended).
And as with so many other crossover consumer and business categories, there's a new, subscription-like office coffee model poised to take hold in the segment: Xpresso Delight.
Several factors are driving the shift toward office coffee-as-a-service versus the old drip and coffee pod models:
- Consumerization of the office (i.e., Employees as Consumers). Consumer preferences, consumption patterns, and expectations are rapidly crossing over into the business to business realm. Less than a decade ago, many people used an iPhone at home while keeping a Blackberry or other corporation-furnished device for work. As the Blackberry failed to keep pace with the innovation and quality of the iPhone, habits changed: these days most people bring their personal device to the office, where it and the various productivity and communication apps on it serve double duty. Similarly, onetime consumer-only tools like instant messenger have gone fully enterprise, with products like Slack and Microsoft's Teams introducing emoji-laden chat apps into even the stuffiest of business environments. The days of pretending employees aren't consumers (who expect the same quality of products and services at work as they're accustomed to at home) are well, well behind us. That spells bad news for the current office coffee incumbents: stale drip coffee and instant coffee-tasting tasting pod solutions.
- Environmental concerns. The coffee pod is, frankly, an environmental disaster. According to Greenpeace USA, Keurig K-Cups, Nespresso Capsules, and similar office coffee products are "one of the best examples of unnecessary single-use plastics that are polluting our planet. Many end up getting incinerated, dumping poison into our air, water and our soil." That may have been ok by employees in times past, but few people these days want their morning or after-lunch caffeine fix to end up destroying the world's oceans. Even the K-Cup inventor regrets the enormous negative impact his creation has had on the Earth. The door is wide open for an environmentally sound office coffee service to displace the polluting disposable coffee pod.
- Rise of the subscription model. Just like the consumer market, the business world has undergone a massive shift toward flexible subscriptions: from buying to renting; from acquiring goods to contracting services; from 20-year leases to hot desks in coworking spaces, rented by the month; from major one-time software purchases to smaller, recurring licenses (SaaS). In other words, a shift form CapEx to OpEx. Office coffee (and other employee perks) are set to follow a similar pattern. Rather than buy, install, and maintain expensive coffee machines, employers are looking for coffee service providers that they can easily contract, then dial up or down based on the usage requirements of their workforce, all without distracting from the day to day work of their business.
Put it all together -- the blurring of B2C and B2B tastes, growing concern over the environmental impact of coffee pods, the rise of flexible subscription models, and the billions of dollars spent annually on office coffee -- and you have what could be the next great beverage opportunity.
Franchise Mergers and Acquisitions
There are several reasons for franchises to consider acquiring another franchise. It could give them the opportunity to add new products without the risk or cost of developing these offerings internally. It could help the buyer add new markets, geographically or demographically speaking, with an already strong existing brand. Acquiring a franchise supplier or distributor could build efficiency through vertical integration. Acquisitions can also help a franchise develop sufficient scale to compete with a larger rival more effectively.
Choosing Between a Product and a Service Franchise
There are basically two types of businesses that can be offered by an individual. They can offer Products to their customers which are tangible goods meant for the customer's consumption or they can offer them Services which are intangible and work to make the life of the consumer easier and more convenient. With technologies advancing rapidly and the global demands of consumers changing there is a very thin line dividing the service and product segment of the consumers demands. An example of this can be the purchase of a car from an auto dealer. The dealer not only offers the vehicle at a competitive rate but now has to offer different services as well, such as financing options, after-sales services, ready documentation and other non- tangible services. This kind of merging has made it very difficult to draw a clear line as to the service and product industry but for the sake of argument we will consider a theoretical perspective where you have to choose a traditional product franchise or a service franchise.