Why Coffee is a Franchise Category to Watch in 2019

There’s just something about coffee.

Coffee is a lucrative franchise industry to watch in 2019.  

There are various studies devoted to the physical and mental health benefits coffee can provide. For example, a study released in April by the UC Davis Graduate School of Management and published in the Journal of Psychopharmacology found that just grabbing a cup of coffee with coworkers can make us feel better - and even more productive.

1851 Franchise spoke with coffee pros who shed some light on why potential franchisees might want to follow the bean.

It’s (relatively) easy

Oksana Fisenko of Alex & Associates, a company that provides learning opportunities for people who want to open coffee shops, in addition to onsite consulting, barista training and more, noted that coffee often comes with name recognition. A person who decides to get involved in a coffee franchise can benefit from that.

When customers experience one coffee location, “they will recognize it in another as being high quality, same as what they had before,” Fisenko said.

“If I see one in one location and I travel to another state and I see another then I know I’m getting about the same quality because it should be consistent,” Fisenko said.

Coffee is also a relatively cheaper product to provide.

“Coffee in itself is very profitable,” Laina Sullivan, the director of franchise development, real estate and construction for the sister companies of Gloria Jean’s Coffees and It’s a Grind. “You’ve got beans and you’ve got water, and those are two inexpensive items.”

It’s also a “very high-margin product,” Sullivan said.

A way of life

Sullivan noted that coffee is not a trend. It’s not a fad item like small hamburgers or specialty donuts.

“Coffee is something that people have been drinking for years and will continue to drink for years,” Sullivan said.

Sullivan noted that what has changed is the flavoring, the embellishments, not to mention the range of coffee products offered, from lattes to frappuccinos.

“Those things have enhanced and raised the price for coffee items that we purchase,” Sullivan said. “But the main source of everything in a coffee shop is a cup of coffee, and most people have a cup of coffee every single day.”

Coffee, Sullivan said, is part of our culture.

“People come to a coffee shop to have a meeting or to have an interview,” Sullivan said. “Coffee is such a mainstream in our culture. It’s a staple in our diets, so that’s why I think it’s a lucrative industry to be in.”

Hiring is a cinch

In terms of hiring, coffee has a few advantages over, for example, the fast food industry.

“It’s kind of cool to be a barista,” Sullivan said. “It’s kind of cool to be able to serve coffee to people.”

Working in fast food, Sullivan said, can be tough on a high school or college student.

“Coffee is clean,” Sullivan said. “You’re not standing over a fryer. People come in every day. You learn your customers' names, you learn their drinks. It’s very attractive to the segment of the population that we’re looking to market to become employees.”

Also, a coffee shop labor force doesn’t need to have a highly-specialized skill set.

“Not that it’s not challenging, but we’ve never had a problem hiring or collecting great employees for our stores,” Sullivan said.

A chance to create a great environment

Sullivan noted that a Gloria Jean’s franchisee, whose store is located in Northern California, has made it “a very cool place to work” for his employees and has very little turnover. Employees at that location, she said, even visit it on their days off to chat with their work friends.

“You can really create a great environment for your employees and they’ll love their work and they’ll communicate that by providing great customer service to your customers, and there you have a successful store,” Sullivan said.

Creating a great environment also extends to the customer experience. Fisenko has been working in the coffee industry for many years, and she loves being able to show people how to drink good coffee.

“The communication with the customer, the relationship with the employees - it’s just everything rolled into one,” Fisenko said.

And when you know what to look for...

Franchisees who are wondering whether a coffee franchise might be the right fit for them should do their research and look for longevity, Sullivan said.

“You really want to make sure that where you’re getting your coffee is sourced sensibly and ethically,” she said. “You want to make sure how the coffee is sourced, where it’s sourced, how it’s roasted. Look at your supply chain so you’re sure of what you’re getting because that’s a critical part of it.”

They should also look out for companies that have integrity, know what they’re doing and have track records of success, Sullivan said.

“Take a look at the people that are running the franchise, what’s their length of time in the business and the franchising industry and their background in coffee, because when you’re buying a franchise you’re buying air and a promise, and you have to trust the people that you’re buying the business from or buying the franchise from,” Sullivan said.

Fisenko echoes the sentiment and urges prospective franchisees to review the company’s profit and loss, see the revenue that’s coming in and also look into company’s restrictions on what franchisees can and cannot do.

“See the viability of the location,” Fisenko said. “Check it out. See how traffic goes and so forth. It’s pretty expensive to buy into a franchise operation generally so all of those things have to be taken into consideration.”