Franke: Riding the coffee boom at gas stations

PetrolPlaza was invited to visit the Franke Coffee Systems plant in Switzerland on a snowy December morning. After walking around the modern assembly plant, we got the chance to sit down with Roman Probst, VP Sales Europe, and Caroline Martin, Global MarCom Manager, to discuss the coffee boom at petrol stations, retailing opportunities in the digital age and others.

Coffee sales at convenience stores and petrol stations has grown by 30% over the last years, offering retailers a new way to attract customers, create loyalty and increase profit. Franke Coffee Systems is one of the companies riding that wave. The Swiss-based distributor is the number one supplier of coffee machines in a number of European countries such as Russia, Ukraine, Switzerland and Belgium, while its business is growing in the U.S. after signing distribution deals with Kwik Trip and other retailers.

The Franke complex, located in Aarburg, Switzerland, resembles a city in itself. Along large buildings dedicated to its other business segments – residential kitchens and bathrooms, professional foodservice and semi-/public washrooms – one can find the Franke Coffee Systems plant in front of a large, metallic coffee bean. With around 250 production workers working one shift at the assembling plant, between 40,000 and 45,000 coffee machines can be produced a year in these facilities.

Q. When and how did Franke start distributing coffee machines at service stations? How did you realize this was a potential market?

A. We’ve been delivering coffee solutions to customers at highway stations in Germany for many years. Initially, the main customer need was to offer coffee to commuters. Many c-stores then wanted to upgrade their coffee program to premium coffee in order to attract more commuters. And with more commuters stopping at c-stores for their coffee intake, intuitive touch screens and automatized payments for self-checkout have become more and more important. We recognized this trend early on and launched the FM850 with its large and intuitive user interface (Franke was the first mover in the industry) to help serve more customers at high traffic stations with a premium coffee offering. Today, the A600 and A800 of our new A-Line are the top dogs in Europe’s C-stores.

Q. Obviously, there is a clear trend in the fuel and convenience industry towards quality coffee and sales are growing by the year. How has this market developed in the last years?

A. There are more commuters on the road and railroad on their way to work or study today than ever. Mobility matched with a shift towards on-the-go consumption represents new business opportunities for the convenience industry. At the same time, convenience and retail stores need to adjust to shifting consumer trends. Traditional categories like cigarettes or print have been declining sharply, and will continue to do so. On the other hand, coffee as a category is an exciting business opportunity for convenience and retail outlets. Out-of-home coffee consumption has almost doubled within the last 5 years, while c-stores have seen growth rates in the same period of over 30%.

Q. What are the key factors behind this growth?

A. Younger generations, which drive the out-of-home consumption, are increasingly enjoying gourmet coffee instead of quick-served brewed coffee. A recent study from the U.S revealed that gourmet coffee represents now 60% of coffee consumption. As more and more C-Stores are upgrading their coffee program from filter or vending machine coffee to a premium coffee outlet, commuters and travellers become more aware of their choice to enjoy a premium coffee while on-the-go, boosting premium coffee consumption at C-Stores.

Q. What makes Franke coffee machines suitable to gas stations?

A. The key success factors for a successful coffee program for gas stations are consistent premium coffee quality, day in and out, cup for cup, machine reliability for uninterrupted operation, and hassle-free operation thanks to a fully automatized cleaning program. Our A-line, our super automatics line, stands for best-in-class in-cup quality with unmet drink variety thanks to our Flavor Station^TM, FoamMaster^TM with state-of-the-art milk foam, and an intuitive touch screen that guides the consumer through an unmet variety of drink choices. We support different operating modes, self-checkout at the coffee machine including automated payments, couponing payments to redeem vouchers, or print a receipt to pay at the cashier. Another key benefit is the flexibility of our products that allows gas stations to customize the look & feel of the screen to their preferences.

Q. In terms of coffee at service stations, what machines are retailers and consumers currently demanding the most?

A. Thanks to our new A-line platform, our customers can serve the best-in-class in-cup quality at all levels of daily throughput. Starting from a small retailer that does less than 80 cups a day, up to a high traffic location with 300 cups per day. From a purely coffee based offering, to three or six flavor stations, same look and feel and attractive touch screens to promote the respective drink menu. Our A800, positioned for up to 250 cups per day throughput seems to be currently the most popular model, followed by the A600 with up to 150 cups.

Q. Are there significant differences in the demands coming from the various parts of Europe? How about between the U.S. and Europe?

A. In the US, the share of filter brewed instant coffee is still fairly high, around 45%, but shifting rapidly towards Espresso based or fresh brew to cup machines. In Europe, the penetration of Espresso based machines is much higher, and the shift from vending machines towards table top super automatics has started earlier. Another difference is that many C-Stores have started to charge the use of serviced toilets against a consumption voucher that can then be redeemed in the store. Adoption of automated payments at the coffee machine instead of at the cashier is so far also higher in Europe than in the US.

Q. Other than the consumer favourites cappuccino, latte and other traditional forms of coffee, what products that you offer are experiencing the biggest growth?

A. Latte, Cappuccino, Espresso have seen the highest growth in the last five years according to a recent study in the U.S. Other drinks experiencing significant increase in popularity include Café Mocha and Macchiato. Our chilled drinks, like cold latte or Frappuccino, are also becoming very popular, in particular in the summer.

Q. How does the internet of things and cloud solutions affect coffee machines?

A. IoT allows us to better service the machine through deeper understanding of performance behavior and incident analysis. It also allows us or the service the machine remotely, thus decrease down-time, and to better understand consumption behavior, and create new offerings.

Q. Could you briefly explain what is Franke’s “iQ” for coffee?

A. iQFlow represents a revolution in the traditional espresso preparation. To extract an excellent espresso, three important parameters must be controlled: gram throw, grind, and extraction time. These parameters are influenced by humidity of beans, air pressure, and wear of the mill depending on the use intensity. All of these factors influence the extraction and, therefore, the taste profile. With previous systems, whether sieve carriers, semi-automatics or super automatics, taste profiles are created based on a reference product, and extraction time is influenced indirectly based on grinder re-adjustments. This new system assures unmet taste extraction and flavor variety for each cup, every single day. And no more grinder adjustments!

Interview by Oscar Smith Diamante