Brixton-based coffee roaster, Volcano Coffee Works, saw an initial revenue drop of 75% during the first lockdown of the pandemic but have since recovered ~70% of this revenue by shifting their business model.
The Pandemic has shown just how resourceful the small coffee businesses have been. Many companies have seen their business models upturned almost overnight as lockdowns were applied around the world. Almost as bad is the uncertainty of when, or for how long, a reprieve might come.
For Volcano Coffee Works, around 90% of their revenue came from wholesale hospitality – a hard-hit sector, so as restaurants and the hospitality industry shuttered, they looked at the data showing a massive increase in at-home coffee production from consumers. To tap into this pool of revenue, Volcano invested in an e-commerce platform to directly connect to consumers.
But ask anyone who has done this, and it is harder than it sounds. Setting it up technically is just part of the problem, but then fulfilment and marketing challenges need to be addressed, and with every other roaster doing the same thing, it’s easy to get lost among the competition.
Since Volcano pays a premium for coffee directly from the producers, they felt was vital during the pandemic to keep buying to support these producers. New data shows 63% of UK coffee drinkers now willing to pay more for ethically sourced coffee which was something roasters like Volcano Coffee Works could leverage to enhance their appeal and create some differentiation.
Another strategy employed by businesses in response to the need to revitalise their business model is the pop-up concept. Instead of paying rent on a brick and mortar location which requires rent regardless of COVID protocols, businesses find parks, parking lots, or warehouses to attract customers.
Again, there are usually lessons that need to be learned, and some pop-ups have fallen foul of local authority rules. Nevertheless, the shift towards e-commerce and pop-up retail likely accounts for the successful recovery of revenue and the future of small business may see less of a reliance on brick and mortar storefronts.