Culture Club: Coffee Culture Celebrates 10 Years of Brewing Success

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As one of the Canadian coffee segment’s best-kept secrets, Coffee Culture Café & Eatery has been methodically and strategically expanding its footprint of European-style cafés across the country since 2006. Operating under the banner of Mississauga, Ont.-based Obsidian Group Inc., Coffee Culture has grown from a single 10-table location in Woodstock, Ont. to 52 Canadian units (with an additional 18 stores in development), boasting an average footprint of 2,000 sq. ft. and 50 to 60 seats. “From the small-town roots of Woodstock and other remote markets, we’re beginning to entrench ourselves into the GTA,” says Perry Ouzounis, vice-president of Operations for Coffee Culture. “But one thing we’ve stayed connected to — and this comes from the top, from the owner — is if we’re truly going to make inroads into this very competitive market, we need to offer something no one else offers.”

Differentiating itself from the competition is at the core of Coffee Culture’s business plan and has helped the brand achieve $30 million in sales in 2015. “We wanted to be different from the other guys,” says Kurt Hein, the chain’s Culinary Development manager. “We never wanted to be Tim Hortons; we wanted to be a European-style café, a destination.”

The original Coffee Culture menu reflected that philosophy, with simple, easy-to-execute fare. “We had some of the same items as the other guys because we had to have familiar items,” explains Hein. “But we also had unique offerings and that’s really been the core of our differentiation from the beginning.”

Beyond its four custom coffee blends and numerous specialty beverages, Coffee Culture offered a selection of fresh-baked goods, made in-house daily, and gourmet, made-to-order sandwiches and wraps. “In the beginning we had a unique sandwich carrier,” says Hein “It was a ciabatta half-moon bun made by hand in Toronto. It was on the menu for nine years and we developed a lot of sandwiches on this bun — it became our thing.” But, he says, changing demographics and customer preferences have made the iconic bun “a bit passé and it fell by the wayside.” The new hot-seller is the Asiago bagel, hand-made by a U.S. supplier. ‘”We run with products we feel are unique to us,” says Hein, adding he plans to introduce a new cheddar ciabatta bun this fall.

When choosing suppliers, such as current partner, Mississauga-based Ace Bakery, Coffee Culture gravitates towards those that can offer crafted and home-made looking products. It has also begun serving European-imported products, including a new line of Italian pastries coming soon.

“We’re really focusing on bringing back the European café element to our menu, whether it be baked goods, sandwiches or cakes,” says Hein. “We’re looking at adding some old-school items — tiramisu, Black Forest cake, [foods] that are traditionally European — that’s where we’re going to put our flag in the ground.”

More than 80 per cent of the products used in Coffee Culture’s operations are from Ontario and Quebec, including its chicken, turkey and the fresh local eggs used in the brand’s famous breakfast sandwiches. “Our standards are pretty high,” says Hein, adding the menu is changed at least twice a year and limited-time offers, such as the recent Reese’s promotion, rotate every 10 to 12 weeks. Coffee Culture executives meet with a franchisee marketing committee four times a year and get feedback on what consumers are asking for, as well as opinions on new products/initiatives.

Recognizing the changing trends in foodservice, Hein’s team will be introducing a gluten-free bun as well as gluten-free pastries and cakes. Many menu items are already non-GMO and some are even dairy-free or soy-free. For the past 18 months, nutrition and allergen information has been available for all Coffee Culture products.

COME FOR THE TASTE, STAY FOR A VISIT
A trip to Coffee Culture is about more than just the food, it’s about the experience, says Azim Akhtar, Marketing manager. “When we started, we had booths and fireplaces and TVs — that just wasn’t being done at the time.”

In partnership with Toronto-based designer, Squarefoot Design, Coffee Culture has perfected the comfortable, warm and relaxing atmosphere that has become the brand’s signature. “People like to sit on comfortable seats, especially if you want them to stay,” says Akhtar.

To celebrate the brand’s 10th anniversary this year, it embarked on a redesign of the cafés. “A lot of our new locations and many of our renovated stores boast a new feel. New marble tables, couches, fireplaces and floors have been added to create a lighter tone, an elegant ambiance and an updated, European-inspired flair,” says Akhtar, adding that a significant investment was also made in patio furniture and exterior LED signage.

“[The redesign] was an extremely collaborative process,” says Ouzounis. “We were careful to stay close to our roots; enhance the image without going too far left or right. It’s been an evolution and we’re not stopping — we’re excited for the future.” In addition to its Ontario outposts, Coffee Culture has four stores in the Manitoba market (with one more on the way) and is considering partnerships in Saskatchewan. Outside of Canada, the brand has found success in Erie, Penn. with a combination of stand-alone units and kiosks in medical centres. The company is now focusing on making inroads into the GTA.

“Our approach is somewhat changed,” says Ouzounis. “We want to raise the brand awareness with a focus on the GTA. Not necessarily the downtown core; that becomes a very expensive proposition but the outlying communities such as Ajax, Mississauga and Brampton.”

By the end of 2016, Ouzounis says Coffee Culture will have nine locations in the Durham, Ont. region where “people know Coffee Culture like they know Tim Hortons.” But expansion, he says, is a lengthy and tedious process. “We need to ensure [new locations] financially fit our business model. From a community perspective, [we need to] look at does our brand lend itself to the community we’re about to invest in? We want to choose a market that will allow us to be the “go to” place — where we’re going to be the community café.”

Currently, all of the stores are franchised with a handful of corporate stores in transition. According to Peter Karamountzos, Obsidian Group’s VP, a Coffee Culture franchisee has to be “passionate about the coffee business, quality products and excellent service; someone who will be invested in their business and be a hands-on operator.”

A new store costs franchisees $350,000 — all in, including franchise fees. The average investment is $160,000, with the difference coming from a bank loan. “Our franchising department watches what’s out there in the industry and who is moving where,” says Ouzounis. “Often you want to follow where others are, but sometimes you get into a competitive community where that pie can only absorb so many slices.” “We’re looking for planned growth that puts our franchisees in the position to succeed. Just because they have interest, we don’t just give them any location,” explains Karamountzos.

Competition in the already crowded coffee space is always an important factor for his team, says Ouzounis. “We need to understand what the competition is doing and where they’re at with their concepts. We want to be trend-setters.” The company’s strongest competition comes from coffee chains such as Second Cup and Starbucks but, adds Ouzounis, they’re indirect competition. “We’re in a space nobody else is in right now.”

Ouzounis has seen tremendous growth in the 26 months since he joined the Coffee Culture team but he says the brand has no plans to slow down. “We’re determined; we believe we can take this brand to 125 stores in the next four to five years.”

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