Scaling specialty coffee means scaling both product and service

barista conveyor belt
  • Multinationals are increasingly scaling up acquired specialty coffee brands 
  • But one pitfall has been a reported decline in service as brands grow
  • 52% of surveyed consumers said customer service was the most important part of their experience after quality

CONSOLIDATION in the coffee industry is no breaking news – it has been quietly reshaping specialty coffee brands worldwide, and coffee shop service with it.

A wave of specialty coffee acquisitions by multinationals, including Nestle’s acquisition of Blue Bottle, Lavazza’s of Kicking Horse, and Peet’s of Intelligentsia and Stumptown Coffee, for example,reflects a trend towards scaling up high-end coffee brands to reach a wider audience. 

“Multinationals have seen opportunities to ‘acquire’ established businesses that are well loved, respected and needing investment to grow,” says Tim Sturk, Head of Coffee and Tea at Aimers Coffee & Tea. “They offer purchasing power, streamlined business practices, massive accounting departments, human resources input and global reach.” 

While these acquisitions offer opportunities for growth and market expansion, the challenge lies in preserving the essence of specialty coffee through both product and service scaling. Some see Blue Bottle as a successful example of this, balancing both replicating a high-quality product and a unique service experience, but others remain sceptical.

“Those loyal to Blue Bottle are looking for more of it wherever they go – and Nestlé can help with that – but the boutique style risks becoming corporate and can leave a bad taste in people’s mouths,” says Tim.

The most recent example of this is the replacement of the UK’s well-loved specialty brand Hasbean with Ozone Coffee – which first started out as a merger.  

“I loved everything Hasbean stood for and did – they were pioneers,” says Tim. “That is now gone, I have no feeling at all for Ozone.  And if I’m honest, this is one aspect of business I don’t understand.”

Investing in training, customer service, and ambiance becomes crucial in maintaining the allure and differentiation that define specialty coffee shop chains if they are to scale up.

“These acquisitions hold onto a promise that the quality and specialness will not degrade with the new ownership, and that typically lasts for one to three years. Then the talented staff move on and cost cutting efficiencies start taking hold,” says Pete Licata, Head of Coffee and Quality at Nomad Coffee Group.

Quality service has always been a cornerstone of specialty coffee

Specialty coffee has long been associated with a commitment to quality service and craftsmanship. Baristas undergo extensive training, invest countless hours perfecting their craft, and embody a sense of glamour and dedication in the coffee world.

There is an expectation of product excellence that is directly linked to the barista’s skills, beyond the quality of the coffee beans.

“Quality service starts with the end product,” says Tim. “Coffee, for many years, was an unrecognised skill, with staff being thrown at a coffee machine as an afterthought. There has been a lot of work done to change that and I’m proud to have been a part of this development. But it comes at a cost to businesses who must be prepared to invest.”

Customers entering a specialty coffee house not only expect exceptional coffee but also a curated experience that justifies the premium price. A survey made across specialty coffee consumers in the Gauteng area of South Africa found that 81%  of participants regarded coffee quality as a high priority, followed by 52% valuing customer service, and 31% considering it essential.

The barista’s role extends beyond brewing coffee to creating a connection with customers, educating them about the coffee journey, and elevating the overall coffee-drinking experience.

“That means hospitality, friendliness, a cheerful conversation, a new experience when desired, and coffee integrated into it,” says Pete. “I feel we fall short on the first half of this often in modern cafes.”

Indeed, one of the criticisms levied at specialty coffee shops that have scaled up through acquisitions or other means is that while the coffee may have retained its quality, the service has not. As Tim points out, upskilling and professional development comes attached with a price tag, and upscaling often means focusing on cost efficiency to enable growth. 

As the perception of baristas as disposable workers returns into the cafe space, professionals have started to seek recognition and fair compensation for their specialised skills. Blue Bottle workers unionising because they feel their skills are undervalued is a recent example. 

The pitfalls of scaling up specialty through acquisitions

While mergers and acquisitions offer a pathway for scaling specialty coffee brands amid economic uncertainties, the pitfalls lie in overlooking the importance of scaling a differentiated service alongside a unique product. 

Retaining the community-driven ethos that underpins specialty coffee and recognising the value of skilled workers are essential components of successful scaling strategies. 

The corporatisation of specialty coffee brands all too often misses that target. It often means longer labour hours, and less prioritisation of higher-earning skilled staff.

“When a smaller scale business is acquired, there is more scrutiny on the bottom line because shareholders need to profit,” says Pete. “The staff aren’t connected to the business because they feel it has forgotten about them.”

“They know when corners have been cut, when the boutique pastry supplier has been changed for a generic one, or when the highest paid staff get slowly let go. I’ve seen it time and again, and only on a few occasions has there been a good outcome.”

As the specialty coffee sector transitions from a niche community to an industry, maintaining the intrinsic value of the coffee culture becomes a critical consideration. A business strategy that not only focuses on product differentiation but also rewards and showcases the expertise and dedication of baristas can lead to a sustainable return on investment.

“To achieve the level of service of the original Blue Bottle Cafe for example, it takes time, patience, training, development, and investment in people,” says Tim. “When staff believe in the leadership and their vision, and feel it invests in them, they stay and go along for the ride. But all of this often gets diluted or lost at the expense of expansion and growth.”

The challenge of scaling specialty coffee lies in striking a balance between product expansion and service excellence. Preserving the authenticity, craftsmanship, and community spirit that define the segment while adapting to market demands and expanding reach requires a strategic approach that values both the product and the people behind it. 

“The creative minds that it takes to make some of these places special don’t tend to stay long in the highly corporatised world, nor are they valued as much as they should be,” says Pete. “If you want my advice for multinationals, I’d say this: Don’t underestimate the value of the right people getting paid what they are worth.”

“As much as the focus is on the leader, the people doing the day to day tasks are the ones that make it worth returning to. Those people can become future leaders in the scaling of the brand if given education on leadership and managing methods. It’s a long term vision, but the only one I know that has potential.”

Success in scaling specialty coffee involves not only growing a brand but nurturing a culture that remains true to its roots while adapting to the changing dynamics of the industry – whether or not this can be achieved remains to be seen.

Coffee Intelligence

Want to read more articles like this? Sign up for our newsletter here.