Coffee in hotel industry - please help

[goethe]

Hi there. I'm an MBA student working on a class project (fun!). The story is that we're a mid-size coffee roaster wanting to penetrate the hotel industry - both in-room coffee makers and restaurant/room service, etc.

We're having a hard time finding resources about such a specific segment of the industry. Do you know anywhere we can find FREE information on this subject? Or do you have any expertise (or anecdotal information) that might help me out? Anything you can share or suggest would be most appreciated.

Thanks so much,
Beth

 

[pstam]

Hi there. I'm an MBA student working on a class project (fun!). The story is that we're a mid-size coffee roaster wanting to penetrate the hotel industry - both in-room coffee makers and restaurant/room service, etc.

We're having a hard time finding resources about such a specific segment of the industry. Do you know anywhere we can find FREE information on this subject? Or do you have any expertise (or anecdotal information) that might help me out? Anything you can share or suggest would be most appreciated.

Hi,

This is what I planned for a quite long time. It is not only for hotels, but also for any similar places, where they need some special ways of servicing.

It includes restaurants (western/eastern), bars, clubs, room service, exhibition and conference, news reporting, and so on. Almost any king of requirements can be satisfied.

If you are interested in it, please contact me, through my e-mail address.

But, this is not a free staff. You can do it with me personally, or with our company. Our company is a small group of people, who spent many years on coffee business, its knowledge and skills, and commercial respects.

Up to we know, one cannot find such a service, neither consultant, even free. This is something never find around.

Feel free to contact us.


pstam

 

[javahill]

Here is the deal.

In room coffee is a non-revenue product for the hotel. It is part of a package of amenities. Every hotel decides how much they can spend per guest night on amenities, how much on things like brewers and ironing boards.

If the in room coffee is too good, the hotel misses a revenue opportunity in the restaurant, bar, etc. If the in-room coffee sucks, they are breaking an implicit promise to the customers.

Many hotels get brewers from the roasters, so you can expect to front about 20 bucks per guest room plus some inventory in case of breakage. You might get a 50 cents, buck fifty tops for an in room coffee package. Your coffee cost is maybe 10 cents. The cost of goods is in the packaging - the coffee is in a filter pack and each of those is individually wrapped. If you put in sugar, stirrers and creamer, you can add a lot of cost. Best plan those as a condiment pack. Once you add in all your product related costs, you're making maybe a 40 to 50 percent margin on the coffee. They you need to layer in delivery, sales, general, admin, get an ROI on the brewers.

Put those assumptions in a spreadsheet and you'll quickly find it is go big or go home.

The money in hotel coffee is in cash operations. Dining, banquets. Then you need to model seats, events, etc. plus whether you loan, sell and service the brewing equipment. If you have a good brand, you can cross promote from in room to cash operations. As a small or regional roaster, you'd need some amazing coffee and a well known brand to cross promote and have a measurable result.

Oh yeah, one other thing. Distribution. You can sell one hotel at a time. But if you are dealing with chains, they may want you to use their distributor. Trim another 10 percent off your margins.

And Starbucks. If you are looking at hotels, be ready to go toe to toe with a $6 billion company. You'd have to beat them in room, in food service, cash ops... and coffee carts. Those are big in hotels these days. Expect them to run about $5-30K depending on how you build it out. Labor, health benefits, etc.

In coffee, you don't have the luxury of mediocre competition. When you win, you've done a damn good job.

 

[goethe]

Thank you!

Javahill, that's great information. Thank you so much.

I'm wondering - do you happen to know anything about RFPs in the industry, or have an example of what one might entail? Any other resources you know of?

Thanks again,
Beth

 

[javahill]

Most of what we've worked with is just direct selling not responding to RFPs, so no, I don't have anything I can share.

There are going to be a few components.

The opportunity:
Dining, in-room, catering (meetings), conferences, lobby coffee, in-room and gift shop. You'll need a volume estimate for each.

Equipment and service.
You'll also need different brewing and serving solutions. The equipment requirements can get heavy, especially if they need espresso. How are you going to service the equipment with what response time? If any part of a hotel does not have coffee, it gets ugly fast.

Training
If you have espresso certainly and possibly other brewing solutions, you'll need to provide training. This is a relatively high turnover indsutry so you will likely need to make an ongoing training commitment.

Delivery
Depending on the hotel, they may be able to take a delivery from one of your trucks. They may require/prefer you to go through one of their current distributors. There will likely be restricted delivery hours, just like most supermarkets. You need to understand what you will deliver to where when and how often.

Merchandising.
If the hotel is going to be spending more for your coffee, they need to be able to communicate that to their guests. How are you going to support coffee sales in a way that fits with the overall positioning and look of the hotel.

That's all I can give your way. The only other advice I have is don't overextend yourself. In my experience, these can be very demanding, low margin accounts with longer pay-back times. The good news is that once you hvae them, they tend to stay. Unless Starbucks comes in. Then they get very, very expensive to hang onto.

 

[John_Arthur]

Can you please update your contact details as I would like to reach you, we are a modern coffee company in 2020 and are trying to find partners around the world. Our coffee company is focused on coffees with prints on it. It is a new technology allowing us to print any image on the surface of the coffee drink. The last time we implemented these coffee machines with prints was last month in Las Vegas hotel and people were really happy with the coffee and prints on coffee. The hotel also made us a clean hotel program by Westgate and that was really kind of them. Hope soon we will be all around Vegas and then we will reach other states.

 

[anonymous1989]

Can you please update your contact details as I would like to reach you, we are a modern coffee company in 2020 and are trying to find partners around the world.

Please contact me on [email protected] regarding prints on coffee, we are interested.