Do Customers Like Coffee Shop Franchises?

A small article in the Huffington Post BC slipped by many readers. It is most significant to us at the VCSFA not because of what is on the list, because instead what is not on the list.

Before reading the article, it is important to preface that the author Jesse Ferraras used the term ‘franchise’ towards Artigianos where was not a Franchisee/Franchisor business model but instead a corporate structure.  Be it known that Caffe Artigiano does not sell individual franchises as is therefore not on the VCSFA list.

Why this article struck us as notable was that we could not find one – no, not a single solitary name – coffee shop franchise. Don’t believe us, do your own comparison.

The VCSFA Comprehensive List of Vancouver Coffee Shop Franchises

The Huffington Post article of ‘The Best Coffee in Vancouver’ list

Not a single coffee shop franchise wowed the people enough to make it into this list which begs the two obvious questions:

What makes a coffee shop desirable?

Why aren’t coffee shop franchises desirable?

In defense of all those who were not included in this list, we at the VCSFA do not consider Yelp to be a reliable form of research data.  We have had many discussions with cafe and restaurant owners who have had very positive reviews end up ‘filtered’ at the bottom of their page, not contributing towards positively to their star count.  Further, we know of some horrific cafes that have been reviewed accordingly and those awful 1-star ratings still sit there filtered today, not lowering their star count to where it should be.  Finally, we believe that every food and beverage business needs a ‘jubilee’ every 1 or 2 years where all their entire ratings and history are magically erased and reset to zero and the business gets a chance to right the wrongs of the past, starting again with a clean slate.  Can you name one food/beverage business where the same bad (or good) staff are still working there two years later?  Or, is it not possible that a new owner has taken over and has improved upon or killed the previous owner’s work? For this reason, we acknowledge that the data source is not a reliable enough to be considered conclusive.

With that preface, Yelp is good for one thing: collecting the ‘extremes’.  So, if a review does make it through the Yelp filters, it is likely that the person who wrote it is pretty fired up in the positive or the negative.  It is even more unlikely that someone will blog a positive review so all the kudos to the shops that got some.

With all that preamble behind us, here is the important stuff that we have pulled out of this work:

What seems to make people like these shops:

  • quality food
  • unique atmosphere
  • niche java (ie. serving South American style, Clover machines, freshly roasted, organic/fair trade, etc)
  • niche skill (ie. latte art)

One reason why a Franchise coffee shop may not have made it on the list is because people, by the nature of the way they view a multi-location chain, don’t consider it special.  They may get a good drink but because it’s part of a big chain they might not consider that experience unique enough to blog.

The VCSFA is well aware that the food programs at most if not all coffee shop franchises is abysmal.  In many cases the owner of the store is forced to order over-priced product from a vendor that has no idea what the customers in his neighbourhood are demanding and/or has no authority or ability to provide a solution.  In one case, a group of franchisees from a major Vancouver chain reported to us that their sandwiches were made in Vancouver and then shipped for sale to their store in the Okanagan!  We could understand this model for a low-priced, high-volume chain, but we were shocked that this was occurring in a chain claiming to be trying to carve out a piece of the high-quality market.  Needless to say that as soon as the customers found out, sales slumped.

Coffee shop franchises should be on alert and take much heed to this casual list.  Franchisees of the chains that were not included on this list (which is every last one of them) should start immediately asking their Franchisors what went wrong.

 

 

Business in Vancouver’s Biggest BC Franchise List – A Coffee Perspective

This list was published by Business in Vancouver not that long ago and deserves some attention.  First of all, we commend Business in Vancouver for putting together lists like these and for gathering data as it’s very useful for the public, especially the potential buyer of a coffee shop franchise.

Here are some pieces of information that we pulled out of this related to coffee, but first, please familiarize yourself with the VCSFA’s exhaustive Francouver. (Franchises in Vancouver) page.

1. Out of 80 franchises, only 6 are coffee.  That’s only 7.5% of all franchises in the list – pretty low numbers, I thought, actually.  And is Tim Horton’s really a ‘coffee franchise’ or is it a ‘food franchise’?  That discussion is up for debate.  We will give them the benefit of the doubt as well as add McDonalds to our Francouver list since it’s not there at the time of writing this article.

Here is the list with our running commentary:

#2 Tim Horton’s: Not much to say here except I’d be carefully watching the golden arches if I were them

#3 McDonalds: They are definitely into coffee now and much better in fact, than many of their competitors – they are in a new game now and I would not be surprised to see them start to seriously eat away at #2’s coffee share.

#13 Blenz: Sheer numbers.  They were cranking out new locations until about two years ago when everything seemed to come to a grinding halt.  Economy?  Other?

#39 Waves Coffee: Very similar situation to Blenz the way they were cranking out new stores. In fact, they may have out-cranked Blenz this year… I’d like to see those stats. Waves may be heading into other provinces to crank further whereas Blenz doesn’t seem to be doing much with North America.  Let’s see where these numbers sit between Blenz and Waves next year.  They are, if you didn’t know, rivals to say the least.  We will hopefully publish that story one day but feel free to dig in yourself. It’s very interesting!  We’ll leave that for a rainy day which will likely be soon. And, apparently another Vancouver coffee franchise will be joining this story in based on some new announcements from one of these chains.

#62 Esquires: They are huge elsewhere but I was actually impressed with their footprint here (respectable numbers!)

#65 Second Cup: Still hanging in there with their Ontario fanclub.  Not much expansion in BC but apparently heading quickly into the states.

Notes for Potential Buyers

From our experience in the coffee shop franchise arena, there is a small guage that is worth looking at on this list that would likely go unnoticed. You’ll note that there is a column for ‘number of locations’ and then ‘number of franchises’.  Typically speaking you would be looking for the number to be the same and that would indicate a better health.  You should not see the gap between the number growing and if you do, you would want to ask why.  Typcially what is happening is the owner of the store is going bankrupt, or, they have been forced out by the head office and they are running it.  We would very much welcome our readers to email us your comments as I think this would make a good discussion.  For now, however, we would recommend considering a fluctuating number here to be an indication that you should ask more questions about the health of the chain. Here is how those numbers look:

#2 Tim Horton’s: 289/289

#3 McDonalds: 166/207

#13 Blenz: 62/64

#39 Waves Coffee: 24/24

#62 Esquires: NP (Not Provided!)/12

#65 Second Cup: NP (Not Provided!) / 9

We would be concerned about a ‘not provided’ answer.

We would recommend monitoring the number of locations from one year the next and especially keep an eye on that gap mentioned above from one year to the next.  If you see an increase in the gap you know that head office has taken over another store and you would want to investigate why from both sides.

We hope this coffee shop franchise perspective on this famous list was useful and don’t forget that we always welcome you to email us with your feedback.