Establish a marketplace niche, deliver a more cohesive dining experience with coffee and tea service

History tells us Kenny Howard isn’t afraid to gamble.

When Howard opened Fireflour in 2012, he bet that blue-collar Bismarck, North Dakota, would embrace artisan pizza. A year later, Howard doubled down. He took over an adjacent storefront and carved out space for a full-service coffee bar, investing $25,000 in equipment and considerable man-hours into learning the coffee trade.

“We just weren’t taking our coffee as serious as our pizza and we needed to stop cutting corners,” he says.

After teaming with Minneapolis-based Dogwood Coffee to secure beans sourced from Ethiopia, Burundi and Sumatra and dedicating himself to execution, Howard’s calculated wager produced a winning hand. Coffee now represents 10 percent of overall revenue at Fireflour, a rising tally as the shop continues securing business across dayparts and generates swelling attention from locals.
“Our coffee program now matches the quality of our food,” Howard says.

While few operators might be willing to replicate Howard’s all-in raise on specialty coffee, ditching generic coffee and tea options for a more robust beverage program continues to intrigue pizzeria operators, specifically those mindful of sourcing and consumer trends.

Demand for specialty coffee continues to rise with nearly one-third of all U.S. adults drinking gourmet coffee on a daily basis, according to a 2013 survey from the National Coffee Association. Meanwhile, loose tea continues its mushrooming popularity. Throughout the last decade, out-of-home tea consumption has accelerated at a double-digit annual rate, the Tea Association of the U.S. reports.

“There’s a wider culinary theme pushing toward products with craft attention and that’s certainly driving interest in specialty beverages,” Dogwood Coffee Director of Wholesale Dan Soukup says.

As the battle for customers intensified during the recession, Chicago-based Home Run Inn scraped its dull coffee and tea options for bolder, more thoughtful alternatives. The nine-store enterprise began sourcing coffee from Intelligentsia, a celebrated Chicago roaster, and tea from China Mist, a premium, loose-leaf brewed tea program that replaced Home Run Inn’s existing bag-in-a-box program.

“It was a conscious decision on our part to remain reliable and competitive,” Home Run Inn Director of Food and Beverage Jeff Hursh says. “This was about building a support system around our pizza.”

Indeed, delivering a more cohesive customer experience compels many operators to explore specialty coffee and tea, both of which claim a longstanding synergy with Italian cuisine.

“If you’re a pizza shop proud of making excellent pizza, then you don’t want the last thing your guests to taste to be burnt, old or poorly made coffee,” Soukup says.

Matt Milletto, vice president of the American Barista & Coffee School in Portland, Oregon, an organization that advises retail coffee businesses, says having a quality-focused specialty beverage program can also help pizzerias seize the market’s attention.

“The primary focus is always your signature product, but you can complement that with high-quality coffee or tea to differentiate yourself from the competition,” Milletto says, noting that some accommodating roasters will even create custom coffee blends to provide restaurants an added shot of exclusivity.

To Milletto’s point, Howard says Fireflour’s specialty coffee program provides a compelling counter to Bismarck’s chain-lined streets.

This helps separate us from everybody else in town,” Howard says.

Then, there’s the allure of added revenue. With quality in-house beverages, pizzerias can capture customers who want to enjoy coffee or tea with their meal rather than those diners bolting elsewhere.

“One way to grow your business is to sell more to your existing customers and having a specialty coffee program can be an added profit driver,” says Milletto, adding that the margins on specialty coffee and tea products hover around 70 to 75 percent.

Though pizzerias will have to pay more for specialty coffee –– about $10 or more per pound compared to $3 to $8 for a generic option –– they can also charge more, thereby maintaining margins. When Home Run Inn made its switch to Intelligentsia coffee and China Mist tea, for instance, it raised its per cup prices about 50 cents.

“The costs went up, but so, too, did the credit we received for offering better quality,” Hursh says.

Though creating a specialty coffee and tea program demands a financial investment in equipment and goods, people remain the biggest investment. Operators must train staff on using the equipment, preparing the product consistently and, perhaps most importantly, discussing the elevated beverage options with customers.

“This is another level of craftsmanship and the staff have to take this journey with you,” Howard says.

Milletto sees far too many restaurants jump into specialty coffee or tea before the owners and staff are ready to deliver a strong, uniform experience. As a result, the program suffers.

“There’s no doubt (specialty coffee and tea) can be a valuable profit center, but you cannot take shortcuts or think it can run on autopilot,” Milletto says. “There’s a competency you need to gain from the very beginning.”

Fortunately, specialty coffee and tea vendors are often accessible partners willing to share resources and expertise in addition to wholesale product. Dogwood’s Soukup, for instance, helped Howard curate Fireflour’s coffee program, calibrate equipment and train staff on pour-over coffee and espresso.

“There are specialty roasters like us all over the country who provide personable, full-service coffee support to restaurants,” Soukup says. “It’s experience you can and should leverage.”

The initial costs of a specialty coffee program

For most pizzerias, brewed coffee remains the easiest gateway into a specialty coffee program. For this, operators need a coffee brewer ($800 to $1,500) and a grinder ($700 to $1,200). In some cases, vendors will help operators land –– if not altogether cover –– the cost of such equipment.

“For a relatively small investment and a modest footprint in your store, this would allow you to brew in small batches,” says Matt Milletto of the American Barista & Coffee School.

Adopting a full-service model, the up-front costs, space needs and training escalate. Restaurants need at least 48 inches of counter space, a commercial espresso machine ($4,000 to $12,000), an espresso grinder ($900 to $1,200) and undercounter refrigeration ($1,500 to $1,900) alongside likely plumbing and electrical upgrades.

“It’s a more sizable investment, but also greater revenue potential,” Dogwood Coffee’s Dan Soukup says.

Chicago-based writer  Daniel P. Smith has covered business issues and best practices for a variety of trade publications, newspapers, and magazines.