Coffeehouse-QSR borders blur amid menu maneuvers
by Carolyn Walkup
Reprinted with the permission of Nation's Restaurant News
Leading coffeehouse chains are ramping up meal choices and convenience offerings, including drive-thrus, using tactics long employed by traditional quick-service chains to lure consumers. Despite the clear dominance of segment leader Starbucks Coffee, other coffee brands, both young and old, are brewing up changing menus and store formats in bids to gain favor with the nation's diners and java lovers.
Meanwhile, Starbucks continues to introduce hot breakfast sandwiches market by market within its 8,350-store domestic system while adding to its fleet of nearly 1,300 drive-thru units in North America.
"About half of all new stores this year will have drive-thrus," Starbucks spokesman Alan Hilowitz said. In apparent trade-offs by rival segments, the changes at Starbucks have been countered by new, more robust coffee offerings at traditional fast feeders.
McDonald's, Burger King, Chick-fil-A, Carl's Jr. and Del Taco all have launched richer brews from darker roasts in recent months, while several quick-service brands also have bolstered their breakfast menus. Doughnut chains, especially Dunkin' Donuts and Tim Hortons, also are growing more competitive in the coffee and breakfast arenas, as are such bakery-cafe chains as Panera Bread and Au Bon Pain.
"The lines are being blurred between what is a quick-service restaurant and a coffeehouse," said Maria Caranfa, director of Mintel Menu Insights, a Chicago-based market research firm. Citing examples ranging from Dunkin' Donuts to Starbucks, Caranfa said more chains are "on trend with portability and fitting within the premium [coffee] movement."
Despite enduring differences, chains like McDonald's and Starbucks often compete for the same time-pressed customers, including those who go to whichever outlet is closest to their home or office, Caranfa said. "Our customers have asked for convenience; they want to get breakfast all in one place" Starbucks' Hilowitz said of the chain's addition of breakfast sandwiches in some markets, which provides one-stop shopping for people wanting protein with their morning lattes or at other times of day.
Starbucks sources five kinds of warm sandwiches, served on English muffins, from local purveyors in five cities - Chicago; San Francisco; Portland, Ore.; Washington, D.C.; and Seattle. "We look at [breakfast additions] market by market," Hilowitz said, explaining that the sandwiches generally are available all day.
The $2.99 sandwiches are Starbucks' first warm-food product, and they require the addition of convection microwave ovens, Hilowitz said. The varieties offered are Black Forest ham with egg and Cheddar; low-fat turkey bacon with cholesterol-free egg and low-fat Cheddar; eggs Florentine with baby spinach and Havarti; peppered bacon, egg and Cheddar; and sausage, egg and Cheddar.
Cold luncheon sandwiches and salads are available in about 3,300 Starbucks stores in North America, not counting airport locations, which operate under a separate licensing program, Hilowitz said.
Smaller coffeehouse chains also are taking closer looks at building drive-thrus and offering more foods other than pastries. Seattle-based Tully's Coffee, which currently has just four drive-thrus among the system's 150 stores, just opened its first new-generation drive-thru at its corporate headquarters location, said Rob Martin, Tully's vice president of merchandising and production. "We will go to the field as we look at new locations," he said. "Drive-thrus will be very much on the radar screen."
Tully's also is testing morning sandwiches in 15 to 20 locations, including office towers and commuter centers. Three versions of egg sandwiches on bagels are being evaluated. The Tully's outlets already have toaster ovens, which are used to toast bagels, for heating the sandwiches, which are made by local purveyors and delivered daily. "If it brings in significant business, there would be capital expenditures to increase sandwich capabilities," Martin said.
The Flushing, Mich.-based Coffee Beanery chain plans to build more drive-thrus in suburban locations as it expands, said chief executive Joanne Shaw. The 160-unit chain has about a half-dozen drive-thrus currently. The Coffee Beanery continues to add more food items, which it first introduced in 1995 after operating for 20 years with a flavored-coffee focus. "It's not an easy transition for a coffee store to add food," Shaw said.
However, she has found that broadening her concept into more of an all-purpose cafe has paid off. "We worked with a chef to develop the menu, including toasted sandwiches, and the customers like it," she said. "We're focusing on quarterly, seasonal specials that have been very successful to give customers something new."
Dunn Bros Coffee Franchising of Minneapolis has augmented its drive-thru program, now included in 31 of the system's 74 units, said Skip Fay, Dunn's vice president of operations. "There are a lot of sales done through the drive-thru," he said, placing that volume at 40 percent in prime locations.
Conceding that it's challenging to serve made-to-order espresso drinks quickly in a drive-thru format, he said Dunn Bros had learned the standard quick-service building design trick of distancing the menu board far enough from the pick-up window to make it seem to customers that little time has elapsed between placing and receiving an order.
Dunn Bros also is increasing its food offerings by extending existing product lines. For breakfast, the chain serves various egg-and-meat combinations on biscuits or English muffins, purchased frozen from purveyors.
Au Bon Pain, the 225-unit bakery-cafe chain, also is going after a bigger share of the breakfast sandwich and espresso drink market. This fall, the Boston-based chain expects to roll out a new bagel sandwich, consisting of salmon with wasabi cream cheese on an onion-dill bagel, spokesman Ed Frechette said. Later this fall the chain plans to expand its menu of espresso beverages.
Panera Bread recently introduced a ham and white Cheddar scone to its breakfast pastry offerings at the chain's 900 bakery-cafes. That protein item supplements Panera's existing line of $2.89 baked egg soufflés, which is available only in the morning. As premium coffee and food pairings become more commonplace, a few superpremium companies are looking for a share of that growing market.
Lavazza, a century-old family-owned Italian wholesale coffee company that sells its products in 70 countries, has opened its first set of retail coffeehouses, choosing Chicago for the foray. With three shops open in downtown office centers, Lavazza's fourth-generation owners are hopeful that Americans are ready for their Italian-style espresso specialties. "
Starbucks did us a great favor," said Joerg Oberschmied, Lavazza's divisional vice president of operations. "They blazed a trail for everybody by introducing the broader public to American espresso and cappuccino. Now we don?t have to educate people." Lavazza cafes also carry a line of croissants, baguettes, grilled panini and grilled focaccia sandwiches as well as salads, gelato and assorted bakery items. Everything is available for takeout, but Lavazza prefers that customers dine in so they can see the artfully layered coffee beverages served in clear glassware.
cwalkup@nrn.com
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