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.
Financing the Acquisition
Financing the acquisition of a franchise is not a slight affair, as with the legal fees, the initial fee, allocation for resource acquisition and various other expenses the cost raises significantly. Therefore financing often becomes mandatory in that situation. Mostly people concentrate on third party financing where they seek out investors and other debt or equity lenders for their financial needs. However, two of the most overlooked options are:
Should You Open a Coffee Shop Franchise?
At FranchiseHelp, we see thousands of visitors each month from budding entrepreneurs who think that selling coffee to their fellow caffeine addicts could make for an exciting and lucrative venture.
The Franchisee & Franchisor’s Point of View
Many of the characteristics of the perfect franchisee are shared by both a franchisee and a franchisor, but there are also some slight differences. A franchisor is more concerned with how an individual franchisee will fit into their business as a whole, and not necessarily how the single franchise will operate on a day to day basis (although that’s still important to them). Meanwhile the franchisee cares almost exclusively about the success of that individual.