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State of the Office Coffee Service Industry: 2020 Was Hit Hard, but Innovation Will Hasten Recovery

State of the Office Coffee Service Industry
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A flash in the pan or permanent change? The rapid transition to working from home during the pandemic took a dramatic toll on the office coffee service industry. According to Automatic Merchandiser’s State of the Office Coffee Service Industry, sales in the OCS channel declined from $5.9 billion in 2019 to $1.5 billion, or 75%, in 2020.

COVID-19’s effect on office worker populations reversed decades of growth in what had been a continually advancing segment of convenience services. OCS had enjoyed consistent annual growth between 2010 and 2019. Moderate increases in white-collar workplace populations, greater ranges of refreshment products, new brewing and pure water technologies, and improved operating efficiencies collaborated to expand the OCS market through those years.

During that period of growth, the performance of OCS—and vending, micro markets and contract foodservice—was tied to employment levels. But relationships between these service segments and their clientele changed in 2020; vending and micro markets experienced a 45% sales decline last year, too. While the U.S. unemployment rate was historically high in April 2020 (almost 15%), it was the immediate swing to at-home work that dealt the hardest blow to the OCS sector—not employment levels. By December 2020, Pew Research found that more than 70% of office workers were doing their jobs from home most or all of the time.

As a result of these vast reductions of location staff, compounded by restrictions on access to shared breakroom amenities, 90% of operators surveyed by Automatic Merchandiser reported a decrease in sales last year, with a majority reporting a loss between 50% and more than 80%.

Despite the dramatic downturn in sales, providing high-quality coffee and high-tech brewing options continued to trend in 2020, and the deployment of app-based touchless solutions, bean-to-cup brewers and attention to quality coffee became more common where OCS remained open. Following are seven pandemic-driven ideas to help OCS operators revitalize their office refreshment programs and rebuild sales in the new (post-pandemic) normal.

1. Offer Coffee from Local Roasters

If you are not already, now is the time to double up on making local-roaster offerings a major part of your OCS product mix. Make sure you know the story behind your local roaster. A good story about locally roasted coffee should talk up:

  • Flavor. Locally roasted coffee offers greater control over the flavors you’re aiming to achieve.
  • Aroma. Raw coffee beans possess the antecedents of complex flavors and smells.
  • Variety. A local roaster usually sources different bean types from respectable suppliers around the world.
  • Farmer support. Adequately compensating farmers for their beans at fair-trade prices is important to more and more OCS clients. Many local roasters work with reputable suppliers who conduct ethical transactions with farmers.
  • Community support. When you incorporate any locally sourced products into your business, you are supporting the local economy. It makes good business sense.

2. Step Up Your Bean-to-Cup Placements

Continue or start to invest in bean-to-cup brewing. If a client has been resisting the placement of one, now is the time to offer a bean-to-cup machine and your revenue should grow. Remember to fill those bean hoppers with premium local roasts. This year’s National Coffee Data Trends Market Research Series reported that bean-to-cup brewers in offices grew 5% in 2020. And bean-to-cup machines were the only equipment category to show growth last year in AM’s State of the Office Coffee Industry report.

3. Get Ready for “Green-to-Cup” Onsite Roasting

While bean-to-cup technology replicates coffeehouse quality in the office, imagine having the ability to roast raw green coffee beans in a compact appliance that integrates with a brewer. That may sound farfetched, but “green-to-cup” will soon be possible, thanks to coffee tech Ansa. The Israeli company has developed an on-demand coffee roasting solution that is compact, clean and automatic – and is compatible with any bean-to-cup machine (top mounting). Called the Micro Roaster, the unit will be coupled with a subscription of premium green coffee beans. This creates an opportunity for OCS operators to increase their margins by switching to purchasing green beans. It also allows them to differentiate themselves from the competition by offering a premium, fresh and environmentally-friendly solution to their customers.

4. Go Back to Pantry Basics

Offer clients the idea of a pantry service on “training wheels.” Suggest they start with free beverages and a modest selection of snacks. When that type of amenity newly appears in an office, it’s a big deal for employees.

5. Stock Premium Coffee Station Accompaniments

It’s a great time to introduce premium teas, flavored creamers (traditional and plant-based) and cold-brew coffee. If a client is ready to put away of their pre-COVID frugality, make plenty of suggestions.

6. Provide Ice or Cold/Hot Beverage Services on Countertops

Countertop icemakers are a nice addition to any office. Follett Corp. now offers Touchless SensorSAFE dispensing technology; users just wave a hand near the sensor to enable a drop. How about adding a stylish countertop font? Marco Beverage System’s FRIIA water dispenser installs under a counter and all the client sees is a sleek font. It dispenses cold and hot water, still and sparkling.

7. Serve Up Frozen Novelties in 2 Minutes

ColdSnap will soon introduce a countertop machine that makes everything from ice cream to frozen yogurt to coffee drinks. Prototypes are being launched soon. The ColdSnap appliance is ecofriendly, has no clean-up issues and is totally recyclable. For the amenity-hungry office, ColdSnap could be the answer when it becomes available. Described as a “Keurig for ice cream,” ColdSnap was an honoree in CES’s 2021 Innovations Awards program.

The timing is right to seize some of these opportunities that drive sales in office coffee service sector. Breakroom refreshment options have never been this versatile and dynamic. At the same time, existing and new clients are increasingly turning to convenience service operators for ideas to help restore workplace morale. You can find more ideas here to accelerate recovery and maximize the performance of your OCS, micro market and vending businesses.

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