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Big Interview: easyCoffee

25/04/2018
Big Interview: easyCoffee

With last week’s news that easyCoffee was seeking funds to open 200 stores over the next three years, Coffee Business World’s editor Kate Oppenheim speaks to CEO Nathan Lowry to find out more.

Low prices are at the heart of easyCoffee, the concept co-founded in 2016 by Nathan Lowry and easyJet’s Stelios Haji-Ioannou (pictured below) as part of the easyGroup family of brands. With plans to open 200 stores (with the majority to be run as franchises) nationally over the next three years, it’s seeking to raise second stage capital of £3m, having secured £2m in 2017. The business is currently valued at £25m.

It was two-and-a-half years ago that Lowry first wanted to launch a new brand into the coffee sector – but with the clout to be able to roll it out at scale. The partnership with easyGroup has provided Lowry, who previously worked in property and hospitality, with easy access to funding, sites and a great network of franchise operators, which will all come together to help easyCoffee reach its target of 200 sites.

“The coffee world was burgeoning and I wanted to do something that was quite - I hate using the word, but - disruptive,” said Lowry, who felt that people were paying too much for their coffee in the UK and set out to provide an alternative.

In February 2016, when easyCoffee open its first site on Earls Court underground station forecourt, with espresso and lattes priced at just £1, Stelios Haji-Ioannou rubber-stamped easyCoffee's value ethos: “I am delighted that we are going into business with another young, ambitious entrepreneur like Nathan, in order to bring London something very simple but yet so difficult to find: a great cup of Italian espresso coffee for just a pound. I think this industry is another example of allowing prices to carry on rising without good reason. Three pounds is a lot of money for a paper cup of espresso. The strength and name recognition of the ‘easy’ brand will encourage consumers to try it for themselves when in Earls Court.”

While the price of a cup of coffee has subsequently risen, it is still 20-30% cheaper than other major high street coffee chains, with the revenue being made up by customers coming in to take advantage of the price, but then buying food and snacks along with it.

The coffee itself (there's a new but unnamed supplier coming on board soon) will be an exclusive, ‘fair trade’ blend, branded as an own-label with a 70/30 arabica/robusta mix, which Lowry says gives a bolder taste. The machines are Cimbali S39 and Astoria.

With a quality coffee offer available, Lowry says loyalty is key to success. “It’s the ‘easy’ name that gets them through the door and by saving more, customers tend to spend more and so food is the blend for us to get the overall margin we need,” he explained.

The ‘easy’ brand has also opened the doors for some great property deals. “There’s been a softening of rents overall,” said Lowry. “But we have got some good deals with the landlords – they see the brand name and the systems we have in place.”

These property deals have, continued Lowry, provided sites at the equivalent of 10-20% less, with capital contributions from landlords and base/case turnover rent leases – which allows easyCoffee to “insulate” itself.

It has also established relationships with seven ‘area developer partners’ – individuals and companies which have operated other successful multiple-franchised businesses (from pizza delivery and sandwich chains to petrol forecourts) and will help roll-out the easyCoffee venture in Scotland, the north west, Greater Manchester, Liverpool, east Midlands, Yorkshire and the south east.

Eight corporate-owned sites are already open, with sites around the country in places as far flung as Hastings to Blackburn, which were used to test the success of the easyCoffee concept.

In Blackburn and Burnley, student towns, easyCoffee is offering 15% discount across the range of hot and cold drinks and food, something Lowry hopes to repeat in all the major student towns and cities across the UK. Student locations in its sights are currently Liverpool, Manchester, Glasgow and Edinburgh.

In addition, easyCoffee has established an ‘on the go’ concept, putting vending machines into convenience stores, grocers, petrol stations and even a large supermarket chain – details of the supermarket deal will be released in the next few weeks.

The vending machines offer quality bean-to-cup coffee, which retails at just £1.60 a cup. For the retail operators, the machines are free and they make money from the moment the first cup is served. “They get a fair slice of the action,” added Lowry, “in a sector where consumers can be paying up to £3.85 for a roadside coffee. It’s a big market for us.”

A table top sized, self-vend machine, which requires no plumbing, is also available for small pubs and hotels.

Back in the coffee shops, customers have a wide choice, with a range of hot drinks, iced coffee, frappes, smoothies and milk shakes. It uses Thornton’s for fresh chocolate flakes and chocolate powder drinks.

“When people see the branding on the high street they do a double-take, but having the easy name gets people into the shop and once they find it’s good coffee they come back. If the coffee wasn’t any good, they wouldn’t... but it’s a very positive experience for them.”

All the staff are well trained and Lowry explained they look to hire highly experienced baristas as managers in the new stores. A ‘centre of excellence’ training facility for staff, as the business grows, is also on the cards. easyCoffee currently employs about 60 people in the shops and 12 at head-office.

“We’ve built a really successful team of professionals, working behind the scenes at the head office on training, property, the coffee and design,” he added.

Asked about the impact easyCoffee is likely to have on the coffee sector, Lowry replied that all feedback had been positive and he saw only opportunities, no challenges, ahead. “If anyone’s to be hit it will be the big name chains, not the independents. Customers of independents are paying for the individual, well-thought through coffee experience, whereas we provide good coffee in a quality shop environment.”

He continued: “Everyone has to have a coffee these days, and customers value the fact that they’re not being charged too much.” A 60g latte costs £1.95, a small espresso £1. Plus there’s a loyalty card, offering the seventh coffee for free, which has seen a 20% take-up among customers.

By the end of 2018, Lowry estimates that 12-20 new units will have opened, with Brighton, Oxford, Cambridge, Swindon and Cardiff all on the hit list as priorities, with the speed of openings set to “ramp up” next year to reach the 200 target.  

In January 2017, easyCoffee was named as ‘the one to watch in 2017’ by MCA Eating & Drinking Out Market Insight – and with Lowry of the firm belief that there is a gap in the market for another branded coffee franchise, easyCoffee is likely to be one to watch in 2018, 2019, 2020 and beyond.

  • La Cimbali is exhibiting on stand E14 at European Coffee Expo, London Olympia, May 22-23. Register here.

 

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