Rising popularity of EK43s in cafés

[thebookfreak58]

Had a coffee made on an EK43 today...will type up the notes soon

[ax72]

I don't know whether some people think my questions are silly, but I sure appreciate the informative answers that people are giving, thanks

[TOK]

Anybody who's silly enough to pay $50/kg for FOL beans if they're using 50kg/week deserves to go out of business.

Andy Freeman will sell me espresso wow for $30/kg for just 3 kg, so how much if I order 50kg from him, each week? Surely $25 tops, maybe a lot less, for what is obviously one of the better beans available.

So some cafe owner is buying inferior beans and therefore paying $1,250 per week for equipment?

Couldn't agree more with you that owning a cafe is a recipe for very hard work for little reward...but maybe running a roasting company isn't as bad...

I don't follow. Where did the *inferior beans* come from? Not everyone that will supply equipment under a equipment supply agreements is supplying inferior beans. In any case, definition of "inferior beans"?

Also, far be it for me to put words into the site owners mouth BUT I think you will find that the beans we have access to through CS will sell for upwards of $10.00 more if they were purchased from other commercial roasters and I believe you are in effect buying at wholesale through the CS system and being treated extremely well from that point of view....

If that is wrong I am sure the site owner will be along shortly to correct this.

Also the cost of supplying cafes is actually higher due to all the other services that are required to be provided to the cafe including the simple but costly act of delivery where the client is local, and carrying credit, while retail clients are by comparison much more cost effective to supply with very little trouble by comparison and a very straight forward COD transaction. Ergo you wont find there is much difference usually, between the retail and "wholesale" price of beans where the quality is equal irrespective of volume purchased. If the wholesale supply really is of lower quality, then that is where the price can be expected to have much more "give" in it.

[TOK]

....I read about cafe operators complaining that the cost of making a cup of coffee continues to rise, despite a reported worldwide fall in coffee bean prices, ....

Just on that point alone.

The price of greens rises and falls all the time but you don't see roasters putting the sell prices of browns to cafe owners up and down all the time in conjunction with the cost of their purchases....it would create madness. In fact you will see the price of browns remains very constant long term and sometimes falls due to aggressive competition, all the while the same rising costs that affect cafe owners also affect their suppliers, while cafe clients are demanding more and more expensive gear to be put in on loan for them (enter the EK43 next?).

All of that also lowers the roaster/suppliers profitability and times right now have never been tougher with our cooling internal economy. Too many cafes, punters spending less, turnover is down, there is plenty of aggression in the market with many roaster/suppliers trying to make it up by taking more kilos, offering stoopider and stoopider deals just to keep the drum turning.

So right now the price of browns, having remained stable in at least the last couple of years, with pressure to fall due to the aggressive competition in the marketplace (nothing to do with the price of greens), and with the cost of doing busines forever rising.....the price of browns has actually fallen in real terms and in comparison to everything else.

Also the price is actually up right now due to:
a) seasonal problems in Brazil and
b) lower Australian dollar.

So I don't really see brown prices falling any time soon if the only criterion is silly news reports written by people looking in from the outside ......

The cost of making a cup of coffee certainly is rising but in the scheme of things it doesn't have much to do with the price of browns going up or down or remaining the same. Take a look at rises in all the variable overheads required to run the business as a whole, and therein will lie the answer.

Re the rest of this:
the act of doing business right now seems to involve a lot of people that aren't paying their bills, doing everything they can to stay in business, by stiffing people in other businesses that are trying to help them. People running roasting companies have their own headaches trying to run their own businesses, and paying their own suppliers, and so it goes on up the line....

[TC]

That he will Jonathan...

If you want $50k in FOL stuff, you might find that the numbers change

[Jonathon]

Coffee? 50kg x $50/kg x 50 weeks? $125k if you want the good gear FOL. I wouldn't call that small....even at $30+/kg for very basic gear....

Anybody who's silly enough to pay $50/kg for FOL beans if they're using 50kg/week deserves to go out of business.

Andy Freeman will sell me espresso wow for $30/kg for just 3 kg, so how much if I order 50kg from him, each week? Surely $25 tops, maybe a lot less, for what is obviously one of the better beans available.

So some cafe owner is buying inferior beans and therefore paying $1,250 per week for equipment?

Couldn't agree more with you that owning a cafe is a recipe for very hard work for little reward...but maybe running a roasting company isn't as bad...

[TC]

• $1k? Very cheap rent for CBD. On a shopping strip- yes. Shopping centre? $2k/week is cheap and you'd be talking a small kiosk at most of them.
• Staff- yes probably + super, workcover etc and payroll costs if you don't have the time/expertise to do it all and get it right
• Utilities- easy that (power/gas/body corp/council rates/water rates/compulsory marketing levies)
• GST?
• Coffee? 50kg x $50/kg x 50 weeks? $125k if you want the good gear FOL. I wouldn't call that small....even at $30+/kg for very basic gear....

Anybody want to hazard a guess at what turnover needs to be before the owner puts a buck in his/her pocket? How many coffees to break even each week?

Cafes are gruelling- or they're slowly or rapidly going bust.

Do it properly as a startup? Fitout costs plus assume no salary for a year-18 months. If you need to finance it, everything blows out due to interest payments. Many startups look for FOL gear because their startup + working capital is more like enough for a few months at best. Most blow their dough. Makes putting it all on the black at the casino pretty compelling, no?

[Jonathon]

I keep reading about cafe operators complaining that the cost of making a cup of coffee continues to rise, despite a reported worldwide fall in coffee bean prices, and I wonder how much of the rising cost is attributable to unnecessary hardware upgrades? If a machine is doing a great job, surely it's enough to maintain it till it is no longer economically serviceable?

I'd think that in a typical city cafe, the machine and beans would be a fairly small proportion of the cafe's total costs. (Not so in small towns though where rent and staff costs are lower)

Some very top of the head numbers for a city cafe with an average of 4 staff:
Rent - $50k pa
Staff - $200k pa
Utilities - $20k pa

So we're at almost $300k of costs before the direct cost of beans, milk and machine hire. (Excluding the food side of things)

Obviously entirely dependent on usage, but say $25/kg x 25 kg/week is $32k pa, or about 10% of the total costs. Milk might be another $10k pa.

So if the bean costs increase by 20% ($6k), that's just a 2% increase in total costs - a whole lot less than the increase in utilities and staff costs each year. (But yes, still $6k out of the owner's pocket)

And on the machine, say an average 3 group is $8k (wega, etc) compared to a flash LM Strada which is yours for $16k at the moment. That's just an $8k difference to have a flash machine which will both attract some extra customers and, more importantly, increase your chances of hiring a good barista.

Just thoughts, not claiming any of the above numbers are particularly accurate.

[ax72]

I read about cafe operators complaining that the cost of making a cup of coffee continues to rise, despite a reported worldwide fall in coffee bean prices, and I wonder how much of the rising cost is attributable to unnecessary hardware upgrades and trying to be too trendy? If a machine is doing a great job, surely it's enough to maintain it till it is no longer economically serviceable? If the menu has a good selection of popular products, why fiddle with it? Sometimes I visit a business that afterwards closes, and my memories of the business are not of the space-age equipment, or the far-out decor, or the encyclopaedic menu, but of lousy service or poor product or pretentious prices that do not square with the quality of what is being delivered. I remember an occasion when my then girlfriend and I sat in a new establishment for nearly 25 minutes, during which no one came near us to provide service. Repeatedly we tried to grab someone's attention, but the staff, who outnumbered the small number of present guests 2:1, seemed to be too busy chatting amongst themselves to find the time to visit their guests. After we eventually walked outside, having ordered nothing, the owner also came outside and then seemed to take an interest in my girlfriend and/or my parked car. That sort of interest wasn't unusual, but on this occasion I sensed that it was not normal. Asking him what his problem was, he nervously said something about us not paying for our order - At which point I turned his attention to the fact that no order was taken on account of his exceptional standards of customer service. That business closed within a year of that one-time visit, and at no time had I thought "Oh that's right, they closed because they did not use the Gigacafe XYZ123 grinder". Some instant coffee, served in a timely manner, might actually have been useful. That's possibly what we ended up drinking when we reached our destination later that night.

[chokkidog]

Hope that helps.

Hmmmm.....sounds familiar. ;- )

[TOK]

On the topic of roasters supplying the gear, this is an interesting view from a roaster who encourages the opposite.

--link removed - content pasted --

WE DON'T JUST SUPPLY COFFEE.

Posted on October 20, 2013...........
It has become a daily conversation. Every day I am hearing how disillusioned cafe owners have become with their current coffee supplier....................

--from: Some Brand Espresso

Bear with me, this is not as long as it looks.

Very happy you posted this up Jonathon as I am an ardent student of client / supplier sociology and psychology and would like to make some random comments. The text you supplied puts into words what a lot of people in these forums think, but they don't have any experience of what's really out there to know whether it is a true reflection or not. In the context of the "FOL discussion", we see a lot of "supplier bashing" without taking into account that there are always 2 sides to a story and a particular marketplace to consider.

".......It has become a daily conversation. Every day I am hearing how disillusioned cafe owners have become with their current coffee supplier.

A gross generalisation at first giving the impression that its about the quality of the beans supplied, when if its true that the clients are disillusioned, it could be about any part of the total service experience including that clients get thoroughly pissed off with their suppliers when they are late making payments on account and the supplier places a demand for payment. This is common enough and they look else where, sometimes changing to an unsuspecting supplier while leaving the unpaid account with the previous supplier.

'They used to look after us but they're too big now. They don't care anymore.' Or the one about, unfulfilled promises of support and training.

The client often gets itself tied with a supplier because of its own greed to do with getting equipment and other stuff supplied on loan for a particular price per kilo. Very often the client lies about its real nett worth to the supplier and my rule of thumb is if a prospective new unknown (to me) client advises he uses 30 kilos a week, I divide by 2. An equipment supply agreement that is one sided can make the supplier lose interest when he is placed in a situation to have funded the freebies to the client but the profit is compromised when the kilos promised are not there.

Written in another way - its a two way street and clients that want a supplier to fund their business also have to deliver certain expectations to the supplier....which they very often don't, leaving their own unfulfilled promises to lower the profitability to the supplier, about which they have not the slightest care factor.

If this sounds familiar, then you are not alone. This blog is not written solely as an attempted grab at wholesale customers but more about letting you know that there are alternatives out there. Forgive me for stating the obvious, but every coffee company will supply coffee and, at the very least, most of it is of a reasonable quality. The question is...with literally hundreds of coffee suppliers out there, which do you choose and why?
Before I answer this question, here is a little information about how some of the big coffee companies work. The big ones, who shall remain nameless, have money to throw around. They can, and they do, pray on and ultimately seduce the inexperienced cafe owner with worldly promises of support and training, machinery, merchandise including wind barriers and umbrellas, crockery and often a sizeable cash incentive thrown in to gain your account. To good to refuse right? Allow me to let you in on a little secret. Nothing in life is free.

Yes but he fails to mention there are an equally aggressive percentage of cafe owners that will expertly play the suppliers against each other to obtain the best possible deal for themselves at all costs including by lying about their real value to the supplier (kilos turned). These are experienced business entrepreneurs who are seducing the suppliers with false promises not to mention there is never any guarantee that anyone pays their accounts on time or at all especially right now in the cooling domestic economy... and there are a goodly proportion of clients that simply refuse to pay for anything other than the coffee and that is, only the per kilo price, to carry ALL of the rest of the supply you deliver. This is a tiresome scenario played out with disputes over invoices at the end of every month.

Before you know it, your cafe, your pride and joy is a total advertisement for the coffee brand. Everything you have is covered in the brand name and logo of your coffee supplier which makes it almost impossible to build your own brand and absolutlely impossible to ever be seen as anything other than a store that is seemingly owned and run by a major coffee company. Building your own brand, remember, is the reason you went into business in the first place.

Agree whole heartedly but once a client signs up to get the freebies what does he expect?

By now you have also signed a little dotted line that binds you to that arrangement for as long as it take the supplier to reap every cent back for the original set up including the ongoing weekly coffee purchases of which you cannot do without. These are water tight contracts that, most often, are impossible to break. Trust me, you'll pay back every cent that's been provided, with interest. A lot of it. Moral of the story...don't sign anything!!
Why am I telling you this? Read my 1st line again. Every day I speak to people who want more. They don't want to be 'run of the mill'. They want support, advice and a personal touch. They want to learn how to 'understand' coffee, understand the coffee business and want some help to try and take their business to another level. Here it comes. You know...the plug. This is where Black Velvet comes in.
We don't just supply coffee but offer a complete and documented analysis of your business that covers all areas of your cafe and your coffee that can help take your business to the next level. We discuss things like 'perception' and the image your cafe portrays to your customers. We offer advice on a range of subtle changes that can be made which can dramatically change the image of your business and with that, the training required to improve the quality of your coffee. The best thing about these changes is that most of them come at very little cost, in fact, implementing our strategy will actually save you money by cutting most of your uncecessary costs down while simultaneously promoting your own brand. The other bonus is, you also get to use Black Velvet Coffee.
There are so many coffee roasters out there. Some will offer you the world. Others will pride themselves on offering nothing but coffee.

Agreed whole heartedly but again, there is a certain and very significant portion of the client base that wants everything supplied so they dont have to fork out the start up cost, and they simply wont talk to anyone that wont do that. Also there are enough clients out there that resist all attempts by their suppliers to upgrade their skills....they wont listen to their suppliers, but they appear to listen to everyone else that wants to interfere in the client supplier relationship including other suppliers trying to drive a wedge for their own advantage...its called competition. And of course, people that want someone else to fund the freebies that they are not prepared to pay for, have to expect to give the supplier some assurance that they are going to stick to the agreement, and sign on the dotted line...

There are always 2 sides to a story and you have to understand that both sides will only tell you what they want you to know about the situation. For a supplier that wants to build its own market without doing FOL equipment, it has to portray all the above to lift its own credibility by making the other suppliers and their practices look bad. That's business and competition in an open market place, not coffee.

And none of the above should be taken to mean that I am either for or against equipment supply agreements. If you want to remain in business you have to consider growth and how to get it, and you walk the tightrope of how to conduct your business practices to get that growth, every day.

In an ideal world, it would be exactly as the other supplier has laid it out. Buy your own equipment, invest in your beliefs and your own business. I am in 100% agreement. Unfortunately, we are not in an ideal world and are trying to exist and grow in one that is very aggressively played by all and sundry players, and you do what ever you have to do to hang in there.

Hope that helps.

[ASchecter]

I'm interested if anyone has any comments regarding the claims Perger et al. are making regarding improvements in clarity and sweetness due to increased extraction yield that they attribute to the particle size distribution produced by the EK43.

I've been working at this, but it's not so easy comparing Robur shots to the very different EK shots. So far, to get the balance right, my EK shots must be run longer (more dilute). The EK has been excellent at the light-roasted stuff while the Robur has usually been better at the dark roasts. I'll try to post more thorough impressions when I get more experience.

[ASchecter]

Thanks Mal!

[Dimal]

I apologize if you thought I was telling anyone in Aus how to run their business. Please rest assured: I have never even come close to telling anyone in the US how to do that, and there's absolutely no chance I would be such a pretentious ass as to try and do so in your country.

No need to apologise Andy...

After rereading your posts, it's quite obvious I misinterpreted the meaning of what you wrote. So, it's my apology to you mate...

Mal.

[ax72]

This entire discussion is far beyond my consumer-level knowledge of the cafe industry and coffee making, but I'm thankful to all of you for contributing to the discussion and perhaps teaching me something.