Coffee and bakery form natural synergy

As Americans continue to feed their java fix, bakery operators are brewing new sales opportunities.

How much do Americans crave coffee? If a recent survey by Dunkin’ Donuts is any indication, they would rather give up sex (25 percent) than their daily cup of java (19 percent). America’s infatuation with the bean isn’t surprising news to Dunkin’ or to a number of other bakery product retailers across the country.

According to the Specialty Coffee Association of America (SCAA), about 56 percent of American adults consume specialty coffee on a daily basis. The Long Beach, Calif.-based trade organization defines specialty as “coffee that has no defects and has distinctive flavor in the cup.” Only 9 percent consumed specialty coffee daily in 1999. The bottom line in terms of daily consumption is a grand total of more than 300 million cups of coffee a day.

But it’s not just the big guys who benefit from consumers’ bond with the brew. Tom Ivory, owner of Baker Street Bread Co., an artisan bakery in the Chestnut Hill suburb of Philadelphia, reports coffee sales of about $50,000 from a 15-sq.-ft., self-serve station. Even more, he estimates that he sells an additional $50,000 worth of bakery products to those coffee drinkers.

Coffee and bakery routine

“Many customers establish a daily routine of stopping in for their cup of coffee, some more than once a day,” Ivory explains. “And when they come in to get their coffee, they usually end up buying a muffin, cookie or loaf of bread.”

Even with a Starbuck’s right across the street, Dinkel’s Bakery in Chicago has not felt the need to expand into espresso or take the leap into lattes. In fact, says Eric Dinkel, manager of the more than 40-year-old bakery that has consistently maintained a modest menu of regular, French roast, decaf and one flavored selection per day, the java juggernaut has not had much of an impact on his operation’s coffee sales since it moved in about 10 years ago.

“The other day my dad (third-generation owner Norm Dinkel) was saying that my grandfather would have thought it was crazy for a bakery to sell coffee,” Eric notes. “Now customers who come in to buy a donut expect to be able to buy a cup of coffee to go with it.

”Kate LaPoint, owner of To The Point Business Imaging, a Seattle-based firm specializing in marketing and public relations for the specialty coffee industry says that customers expect the coffee they purchase at bakeries to be on par with the quality of the other products available there.

“Customers are much happier when they can find the best cup of coffee at the same place where they can find the best donut, muffin or pastry,” LaPoint says. “And the quality of the one category of products reinforces the perception of quality of the other.

”While coffee isn’t the biggest seller on the menu at Bear Rock Café, it has definitely played a big part in establishing the upscale image of the 38-unit restaurant chain, says Deneen Nethercutt, vice president of marketing for the Cary, N.C.-based company.

“It is also a great source of incremental sales without requiring any additional labor,” Nethercutt notes.

In addition to four different blends of drip coffee, which are brewed fresh hourly, Bear Rock offers a full line of espresso and cappuccino drinks. Most popular is the Bear Latte, a signature sipper made with espresso, steamed milk, honey, vanilla, spice and a crown of whipped cream.

Coffee also perks up pastry sales during off-peak late morning, afternoon and evening day-parts at Bear Rock, Nethercutt says. The company is currently working on a line of iced specialty coffee beverages for introduction in the spring.

To satisfy his customers’ cravings for espresso-based drinks, Raul Porto, owner of Porto’s Bakery in Glendale, Calif., added them to his regular coffee menu about seven years ago. But it wasn’t until he moved his brews from a station in the corner to a dedicated coffee bar with expanded seating, its own signage and trained hat-and-scarf-clad baristas that his beverage sales doubled and bakery products began to move at an accelerated rate.

Hired a beverage manager

Based on this success, Porto is putting coffee “center stage” at his newly opened second location in Glendale. He also hired a beverage manager specifically to handle the coffee operations at both stores.

Rick Boone, owner of Rick’s Bakery in Fayetteville, Ark., also discovered the importance of proper positioning when he invested somewhere between $35,000 and $40,000 into a 12-sq.-ft. coffee bar. Customers loved the coffee, he says, but didn’t like waiting on one side of the L-shaped building for their barista-made beverages, then having to wait in a second line across the store for their bakery products.

Combining the two components didn’t help much either as core pastry and donut sales were slowed up as employees tried to juggle the jobs of making espresso drinks with filling bakery product orders. Changing to a centrally-located self-serve air pot system has solved Boone’s problem and boosted coffee sales. However, he’s still not ready to totally abandon the idea of baristas.

“I really feel that there’s a place for barista-made coffee drinks in this bakery; we just have to work at becoming more efficient to make it work,” he says.

Offering flavor shots

For Dunkin’, flavor customization is the next frontier. Last spring, the company launched “Flavorology,” a new program that allows customers to mix and match up to three of nine sugar-free “flavor shots” (options range from caramel to blueberry to marshmallow) to create their own signature hot or iced beverages. The result of two years of testing, flavor shots make it possible for the company to offer more coffee and hot chocolate variations without having to brew or hold a separate pot of coffee for each one.

“Because we only have to brew two types of coffee–regular and decaf–we have less waste even though we’re offering more flavors,” says Dunkin’s Ellen Rogers, manager of coffee excellence.

When it comes to coffee, today’s consumers are thirsty for quantity as well as quality. At Rick’s Bakery, Boone says that a growing number of customers are requesting coffee in one-, three- and five-gallon containers. To accommodate these volume orders without slowing down by-the-cup sales, the bakery is adding a six-gallon quick-brew station.

Last year, Dinkel’s also added a 10-cup cardboard container with a thermal plastic pouch to its coffee options for customers who want to tote the bakery’s brew to office meetings. Ivory is considering adding a 20-oz. cup for serious aficionados.

Maintaining maximum freshness throughout the day is probably the biggest challenge for bakeries with coffee service, Dinkel says. To make sure every customer gets a hot, fresh cup, the bakery downsized from a large 30-cup container with spigots to small air pots that can be refilled more frequently with minimal waste.

“The only downside I can see with coffee service is not doing it,” Porto says. “I wish the rest of our business was that easy.”