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How drive-thru and ecommerce could shape the coffee industry post-pandemic

The COVID-19 pandemic shut down many of the world’s economies, but not consumer demand for coffee. One year on, leading coffee businesses reflect on how drive-thru and ecommerce platforms have changed the delivery game, creating a new cohort of shoppers wanting their coffee in fast, efficient, and safe ways.

City centres are best remembered for their imposing silhouettes of office skyscrapers, the hustle and bustle of workers, and jammed lanes of honking traffic. 

As office workers made their morning commute, the aroma of caffeine lured them into their favourite shop. Then, seemingly overnight, a global pandemic brought traditional routines to a halt. Shops shut their doors. Office workers retreated to suburban homes, and city streets were filled with nothing more than the sound of silence. 

The global lockdown challenges traditional methods of work and social greetings, and even coffee consumption. According to the Spring 2021 National Coffee Data Trends Report, while workplace coffee consumption dropped by 55 per cent in the United States, on-the-go options such as drive-thru and app-based ordering both increased 30 per cent since January 2020. Drive-thru rose 15 per cent from September 2020 to January 2021 alone, while app-based ordering saw its greatest increase in the earlier stages of the pandemic, spiking 63 per cent from January 2020 to September 2020.

“COVID-19 kept many Americans home, but they clearly wanted to take their coffee with them. The pandemic didn’t change how many Americans drink coffee each day – about six in 10 – or how much coffee they drink at nearly two cups daily per capita, or nearly three cups per coffee drinker. Drive-through and app ordering allowed Americans to keep up some of their coffee routines, in ways that are healthy, safe, and consistent with COVID-19 restrictions,” says NCA President and CEO William ‘Bill’ Murray.

British coffee chain Costa Coffee was forced to close the majority of its stores in 2020. Those allowed out on “essential trips” could still purchase Costa Coffee through its Costa Express machines, via mobile ordering, takeaway, or delivered direct to home. But it was Costa Coffee’s drive-thru service in the United Kingdom that proved its strength in 2020 in terms of sales performance compared to 2019. 

“We know that on-the-go customers were still looking to purchase from retailers and food and beverage businesses when out for essentials or travelling for work, and that they wanted to be able to do so in a safe way. If they weren’t able to visit stores, or preferred to purchase while remaining in their cars, drive-thrus were seen as a great solution,” says James Hamilton, Property and Store Development Director, Costa UK and Ireland. 

“Our drive-thrus offer a limited contact service and also deliver speed of service, with a pay-at-window option, a full, clear view of all Costa Coffee products available to purchase, and an extendable shelf so they can collect their order with minimal contact.”

Costa Coffee opened its first drive-thru store in May 2011 at Nottingham Castle Marina. It has since accelerated drive-thru openings year-on-year, both as a company and with corporate partners. It has more than 200 drive-thru stores trading in the UK and has started to expand this service around the world, including Kuwait. It is also expanding its drive-thru model to include motorway sites with its partners.

“It is our fastest-growing sector, and we believe it is only likely to accelerate further,” Hamilton says.

“We believe consumer habits will now be well established and the range of benefits from using a drive-thru store will ensure they remain popular. We know that speed and quality of service is very important for our customers, so it is valuable for our on-the-go customers to quickly purchase high-quality and handcrafted coffee while out on their journeys.”

Coffee giant Starbucks has also seen the rapid growth of its drive-thru service, dubbed its “original on-the-go experience” which it established more than 20 years ago. In particular, the concept is thriving in Asia, Starbucks’ fastest growing region. 

“In the last year, we celebrated the opening of our first drive-thru store in India, and new drive-thru stores in Indonesia, Malaysia, Philippines, South Korea, Taiwan and Thailand,” says Scott Keller, Senior Vice President, Store Development & Design for Starbucks Asia Pacific. “These stores do more than bring added convenience for drive-thru customers, they help create more ways to engage with our customers and the communities we serve.” 

Keller says the new Yangpyeong drive-thru store in South Korea, for example, is the first in the market to bring together a drive-thru, Reserve coffee, and Teavana bar format. In Korea, mobile order-and-pay is integrated into its drive-thru, offering customers the ability to order and pay through the convenience of their Starbucks mobile app or by using its My DT Pass service. This lets drivers whose car plate numbers are registered on the Starbucks app pay for their order automatically with their registered payment method. Last year, Starbucks also began rolling out mobile order-and-pay integration to 300 drive-thru locations in Japan.

“Each drive-thru demonstrates Starbucks enduring commitment to creating human connection by meeting our customers where they are and providing an unparalleled Starbucks experience throughout the day,” Keller says.

In a letter to Starbucks stakeholders last year, the company cited 80 per cent of US transactions were for “on-the-go” occasions, forcing the leadership team to re-examine its store footprint. US stores with drive-thrus drove over half of net sales in Q1, increasing more than 10 per cent from pre-pandemic levels. Starbucks has confidence its targeted initiatives to unlock capacity and enhance the customer experience at its drive-thru locations are boosting business recovery, while strengthening its foundation for future growth.

Keller says Asia is Starbucks’ fastest growing region, with a new store opening nearly every day.

“In such a dynamic and diverse region, we are always seeking ways to elevate the Starbucks experience and provide a safe, familiar, and convenient environment to build genuine moments of connection between our partners, our customers, and our communities,” he says. 

Across Asia and North America, Westrock Coffee Company and the newly-acquired S&D Coffee & Tea support more than 20,000 drive-thru coffee outlets with its products. When many of its customers were forced to cease in-store dining during the pandemic, drive-thru outlets became essential to stay in business. 

“Early on in the pandemic, drive-thru felt like the safest way to meet consumers’ needs. The amazing amount of operational innovation from mobile devices and expanding drive-thru lanes with portable table-enabled ordering stations pushed operations to excel with drive-through speed. Those innovations really enhanced the consumer experience and kept people coming back,” says Kyle Newkirk, Executive Vice President – Global Innovation and Marketing at Westrock. 

“All of our major quick service restaurant customers with drive-thru did exceptionally well in 2020, typically about 85 to 90 per cent of pre-COVID volumes, and in some cases, for customers that innovated with mobile apps that facilitated on-site pickup and delivery, they exceeded 2019 volumes.”

Newkirk says mobile ordering via apps really open the window for product customisation.

“It makes it easy for customers to order exactly what they want, and it reveals options to them that they might not know exist, because the choices are presented in an easy-to-understand way,” he says.

As COVID-19 recedes and people begin to travel again, Newkirk says on-the-go beverages that are portable, easy to drink, and have some functional benefits are poised for growth. 

“Consumers want to power their days with great tastes in whatever they are doing. Whether delivered via a drive-thru window or as a single-serve ready-to-drink beverage from a retail outlet, a C-store, or via a delivery service with your meal, we must find products and platforms that meet all of those needs,” he says. 

Already, this includes single serve coffee pods, of which Westrock’s private label range saw “fantastic growth” in 2020 as consumption shifted from out-of-home to at-home. But what really took off was the demand for its cold RTD range, particularly in extended shelf-life multi-serve bottles. Even through the first part of 2021, Newkirk says both trends have staying power, particularly in RTD cold coffee. 

Further adapting to consumer demand for convenience, Westrock is introducing several new liquid coffee and tea concentrate products that require minimal preparation and can make a variety of cold and hot drinks.

“We are expanding with our customers in Asia, the Middle East and North Africa regions in order to support the growth of innovative coffee and tea beverages on menus, particularly cold coffee platforms,” Newkirk says. 

“The interesting thing is that we are now able to pass trends not only from the US to other regions, but some of the most innovative ideas are now happening in places like South Korea, Japan, Vietnam, and Malaysia, and we are bringing those back to North America to introduce to customers here. Coffee is fantastic because it is truly a global beverage and the innovation we see translates across regions and cultures.”

Over in Colombia, that innovation is evident in Juan Valdez’s commitment to accelerating its digital transformation across 335 national stores. In 2020, the coffee chain strengthened its e-commerce platforms and established home delivery, pickup, and takeaway services via a newly developed Juan Valdez App.  

As of March 2021, the App has been downloaded 212,216 times, accounting for US$160,656 in sales during the first three months of 2021. That’s an increase of 132 per cent compared to the first three months of 2020 that sold US$69,204. 

Juan Valdez’s e-commerce channel, which launched in June 2020, has also increased sales five-fold in just six months. This platform allows consumers to stock up on packaged coffee, branded items and frozen products, with the promise of delivery the day after purchase.

Camila Escobar, CEO of Juan Valdez says it’s thanks to Juan Valdez’s flexible business model that enabled it to adapt to the conditions derived from the COVID-19 pandemic. However, the challenge remains how to offer consumers the same brand experience and via digital platforms.

“The pandemic has left us with new forms of consumption such as delivery or digital commerce for products or categories in which they had not been developed. Certainly, accelerating our digital channels helped us to cushion underperformance and allowed us to engage consumers in different ways,” says Escobar. 

“It is a reality that digital shopping is here to stay. The offline and online world is more integrated than ever. Connectivity solutions permeates every aspect of consumers’ lives. Pre-pandemic, people preferred to go for a coffee in person, however, given the situation, consumers want to use delivery platforms and these services are now essential. However, when the confinement is more flexible, we observe that if it is allowed, consumers will return to their regular habits. At Juan Valdez we see a hybrid world in which consumers are going to move between face-to-face interactions and digital platforms.”

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