Grounds control

Grounds control

Running a coffee shop would appear to be a perfectly stress-free way of running a business. Not so. Peter Baber talks to one man who woke up and smelt the reality.

Ask the average person slaving in an office what they would do if they ever decided to jack it all in and start their own business, and you can be sure that “open a coffee shop” will be fairly frequently mentioned. After all, people have seen the great success of the likes of Starbucks and Caffe Nero, and feel they want to emulate it.

In this country at least, such a plan might not be such a bad idea. Starbucks, far from being a giant ogre gobbling everything in its path, has in fact really benefited the market. The country has become so obsessed with coffee in the past few years (to levels we probably haven’t seen since the 18th century) that you can get away with charging at least £2 a cup.

By contrast, in Italy, the country which could reasonably claim to have invented modern café culture, an espresso usually costs around a euro. There, is, however, a downside.

Rents and business rates compared to many countries in Europe are disproportionately high in the UK, so a lot of the £2 you would be getting for each perfectly roasted cup will not be going to you, but to the landlord.

How do I know all of this? Well, these are just some of the views of David Cooper, founder and managing director of Coopers Coffee, a £2.5m Huddersfield company which for nearly two decades has been distributing coffee and other related merchandise to independent coffee shops right across the country – 750 at the last count, although Cooper says that figure is growing by on average 10 a month.

“Last month we had 11, the month before that we had eight,” he says. The company currently sources beans from 42 different coffees to make nine different espresso blends, ten different cafetiere coffees, and more than 15 filter coffees, all under the Coopers Coffee brand.

“We also bespoke roast for companies under their own brand,” says Cooper. Although he develops the recipes for these coffees himself, the company is focused on marketing and selling only.

“We stopped roasting our own products in 1996,” he says, “and thank goodness we did that, because it allows us to concentrate on what we do best. The dirty end of the business we now sub-contract.” But that does mean that he has a more than usually keen focus on what makes a coffee shop work, and what common mistakes people make who think they can set one up.

He should know anyway, because before setting up Coopers Coffee he himself opened and ran a coffee shop in York for 18 months before cutting his losses. You can see some of these suggestions in the panel on page 40. This is seriously elite coffee we are talking about here. Last year, for example, Cooper created a blend of Blue Mountain and Kopi Luwak coffee and sold it in aid of Macmillan Nurses. Blue Mountain is a well-known upmarket coffee from Jamaica, but Kopi Luwak is more exclusive still. For those not in the know, it is a coffee bean which is only harvested once it has been digested and – ahem – defecated by a civet cat that only lives in Sumatra. The bean ferments while it passes through the cat’s digestive system, and this is what gives it its distinctive taste.

“Only about 250kg of Kopi Luwak is available each year for obvious reasons,” says Cooper. “It sells for up to £1,000 a kilo. We sold our blend for £50 a cup and sold out in first day.” Earlier this year he also made an aphrodisiac coffee for a lingerie company, blending a high caffeine coffee with an oyster essence. The jury may still be out among scientists, but Cooper is convinced that certain well-known aphrodisiacs do have an effect.

“Chilli, ginger, cardamom – they all work,” he says. Again, the coffee sold out in a very short time – three days. If this sounds very much like caffeine for the aficionado, it is. David Cooper is unapologetic about that for three reasons. First because coffee is his passion – so much so, in fact, that his two teenage sons cower under the table whenever he and his wife Jackie order coffee at a restaurant. They know from bitter experience that a round of tasting, comparing notes and, on more than a few occasions, sending the coffee back will follow.

“I often send coffee back if it is undrinkable,” says Cooper. This passion was generated at a very early age. He says he became partial to espressos as a 17-year-old while working as a chef in an Italian restaurant in the 1980s – long before anyone had heard of Starbucks. He read up on the subject, and went on to sell espresso makers for a living.

“When I was made redundant in 1989 I made a coffee in my back bedroom, sold it to a restaurateur that I knew, and ended up with 22 customers within six weeks,” he says. “I really intended it to be a back bedroom business while I was looking for a job. But I never found a job – the coffee business just carried on growing. We did £133,000 out of that flat in the first year.” He is also a fan of high-end coffee, he says, because compared with the instant variety it has far less caffeine, and so whatever health issues there may be are dissipated.

“What actually gives you the stimulation in a good quality coffee is the crema,” he says. “That’s a complex emulsion of oils and sugars that’s quickly absorbed into the bloodstream. Caffeine is, if anything, a cheapener.” Cooper is someone who should know about addiction, as he admits that in the 1990s he drank more than 100 espressos a week. He jokes with his sons that he is in the drugs business – he does, after all, take imports from Colombia.

But coffee’s addictiveness is one of its key USPs, he says. It is what has made the café industry so resilient throughout the recession, he believes – and that’s thethird reason why he sticks to the high end of the market.

“We all thought all our customers would be suicidal when the recession started,” he says. “But the opposite was the effect. Once they have tasted it, people will not forfeit their daily cup of quality coffee. It’s an affordable luxury. The high street coffee market is set to grow by between four and 12% in 2010/11.” After that, things are looking rosier still. He says: “2011 is set to be the first time in the last decade that the supply of coffee of the quality that we buy will be less than demand. That scares my industry, but I welcome it, because it will drive the price up. We will all have some pain, but there is so much margin in it.

“As long as these prices are passed on to the end user it will keep the quality up and, more importantly, the farmers will get a good price.” Coopers does sell a full range of Fairtrade, organic and Rainforest Alliance-approved coffees, but Cooper says the market has grown so much in recent years that he knows of many Fairtrade producers who are trying to decertify themselves, because the minimum price Fairtrade offers is now well below the going market price.

“Four years ago Fairtrade was less than 2% of our annual tonnage in volume. Now it is 24%. My friends in the US and Australia find that hilarious, because as a brand Fairtrade is totally insignificant outside the UK.” Coopers’ focus on the high end of the market means that it does not do discounts, preferring instead to offer customers a loyalty scheme. There is a generic unbranded price-fighter coffee available, but it is not offered on the website or in the company catalogue, and is mainly a way of winning large new contracts in the hope that the customer will soon upgrade.

“We do not sell on price, we sell on added value and quality,” says Cooper. The added value is quite considerable; Coopers offers barista training for all of its customers’ staff on an ongoing basis. It can also supply the necessary equipment without forcing the customer into a lock-in – equipment sales alone were worth £500,000 last year. And its in-house graphics team can provide brand designs and menus.

If the new customer hasn’t opened the venue yet, Cooper tries to go and see it, and offer advice (hence the panel). He is not afraid to say if he doesn’t think the venue will work.

“We are very good at pointing out the stark reality,” he says, “because if we don’t it’s potentially a bad debt.” Nevertheless, there have been some changes in the past few years. The company has planning permission to expand its current Huddersfield office – a superbly done-up portable cabin it moved from a site in Garforth 15 years ago – but hasn’t done so yet. Three years ago it also had plans to grow by 40%. This was subsequently reduced to 15%, but come January, Cooper wants to scrap all sales targets completely and just get his staff to go for as much as the company can afford, with rewards setting in once 10% growth has been reached.

“There is as self-defeating nature to setting targets because you either just get near them or just achieve them,” he says. As it is, the company is already converting 35% of the 35 new business calls it gets each month into new customers. But what about future plans? After all this success, has he never been tempted to try again at retail? He ponders. It turns out the company already runs a café in Huddersfield, but purely as a means of testing products. Anything more than that would be tricky.

“I don’t have time and can’t get over the fact that we would be competing with customers,” he says. “And to do the kind of emporium I would want would cost several hundred thousand pounds, and I could use that kind of money more wisely. But I am not saying never. I do see Jackie and I having a flagship store one day.” In the meantime, there are other developments too. If you are a coffee hater, preferring the other kind of perk-you-up drink, you will be happy to know that Coopers also sells a range of teas, and these are currently getting him really enthused.

“Tea makes up 4 to 5% of our total sales at the moment,” he says, “but year on year those sales are 400%. We think it will be a major growth area.” Watch this space.