Micro-Chains: the Worst of Both Worlds or a Brilliant Business Strategy?


I once wrote a post on my blog about the idea of ‘fifth wave coffee’, back at the time when I was actually working in management at a company who fell into this category. Therefore, when looking back over it quite recently, I realised that I subconsciously leaned over to its favourable side, when actually my true beliefs aren't all that rosey.

Don’t get me wrong, this isn’t going to be a post which just sits down and slates the concept of micro-chain coffee shops and how terrible they are. Instead I do want to weigh up why I personally find them quite the difficult subject to discuss when it comes to the speciality coffee scene.

Once more, I do wish to clarify that I’m not against them. I think - if done well - they definitely benefit certain areas of the industry, which I’m going to jump into in just a second.

Firstly, let's recap over what exactly fits the idea of a ‘micro-chain’ or ‘fifth wave’ coffee brand. Ever since the third wave coffee scene grew exponentially in London, certain names (especially those who had cashed in at the very start) were able to re-invest their profits into new shop openings. Therefore, these speciality coffee shops suddenly begin to have a number of coffee shop locations, which can really turn into some big money for the owners when done correctly.

Whilst I write this, I’m actually sat in a coffee shop who falls under this category, because I’d always heard other coffee brands almost spit on them in terms of their coffee and quality. You know I hate to live off other people’s words, so for the first time in the 5 years I’ve actually been here, i ventured into said coffee micro-chain. I won’t say who, but I will say that it’s not too far from main Mayfair, which to any of you who are coffee savvy (or simply savvy in using Google), you’ll now know who I’m talking about.

(I also would like to clarify that this blog post has not come about because of visiting said coffee shop. I needed to sit down and crack out a blog post, and you know your girl needs to be in a caffeinated environment to do that).

Which brings me onto my first point: competition.

Okay I get it, coffee is a business like any other: people need to earn money and pay the bills. However, what I’ve noticed from researching a handful of micro-chains is that they become a considerable bit more competitive than their independent counterparts. I’ve always applauded the coffee scene for being what is essentially a friendly business (and for those who aren’t: they really don’t stay around for long).

Need some more oat milk? Sure! Come on over and we’ll let you buy some off us if we’ve got a surplus. Grinder down? Okie doke, we’ll lend you one from our shop’s basement: it’s not the best but it’ll do you until your own is fixed.

The coffee industry is a community, where everyone has their own selling points which almost always seem to suit different individuals’ tastes. That’s why you can have a handful of coffee shops in a single town and have them all doing well.

Once we creep into multi-site companies this community vibe seems to narrow, where instead they focus more on benefiting themselves than rather being a part of the wider community. This tends to not do well for the coffee shop in question, as the wider community tends to begin to reject it - leading to its failure.

On top of this, these companies tend to conduct research extensively on location; they see where speciality coffee is already thriving, and place their own site there. Although this seems good on paper, this isn’t necessarily a good idea. This can be perceived as threatening by smaller businesses in the vicinity, and most locals will already have their regular joint which they frequent.

It takes more (time-wasting) marketing efforts to try and convince those regulars to jump ship: usually resorting to free items being given out in a soft launch to try and persuade them. In this experience, more often than not, I’ve seen consumers take advantage of a free cup of coffee before reverting back to their usual favourite shop: thus not contributing to the revenue of the new location.

Turning this logic on its head is a good example of how a micro-chain can make the most of their business and location. Notes Coffee, for example, started in high-profile tourist locations such as Trafalgar Square (St Martins Lane) and Covent Garden. This business strategy then changed to accommodate city workers, which worked well. Taylor St Baristas and Department of Coffee did something similar, although the latter still do focus on areas away from the City of London.

These big guys opened sites back when there were little-to-no speciality coffee shops in these areas, which definitely worked to their advantages. I remember hearing that most people venture towards the chains when they’re in areas they don’t know too well, and can’t afford to roam around side streets trying to find somewhere independent to go to. Therefore by having a speciality coffee name which people already know and trust works well, and is a good example of where a micro-chain will flourish rather than fail.

Another point is the quality of the coffee. What I can only say is a progression through the growth of a micro-chain and its supply of coffee always seems to take place in some way or another. Undoubtedly, these coffee shops supply some pretty darn good coffee - hence why they receive such popularity that allows them to grow.

However, once they grow and fail to keep up with supply and demand the trend seems to be that the coffee quality within these micro-chains declines. This isn’t only to do with the supply of coffee itself, but also the level of the baristas within the shop.

A small independent, as long as there is at least one highly skilled barista in the shop, can take on what can only be seen as ‘apprentices’ within the coffee shop, who slowly become trained to be able to fulfil the needs of the speciality location. However, with the expansion of an independent into a micro-chain proves strenuous on the situation of staffing.

The original team sometimes gets split up (which almost always causes problems), and less skilled baristas are hired simply because they need staff members there to ensure a smooth running service. This can heavily impact the quality of the coffee being served in the shops.

But what comes down does tend to go back up. After the continued growth of the micro-chain, a system is put into place which can deal with any staffing issues: including the abundance of baristas able to dip and delve into whenever there may be problems. Not only this, but if the brand roasts their own coffee (like many of the micro-chains do since this is where the money truly can be made), the larger revenue being brought in means higher quality equipment can be bought, and better quality beans can be sourced due to an increased possibility of pre-investment.

Arguably, better baristas can also be enticed in as a result of higher wages. As much as I did want to stress the point of higher wages, it doesn’t seem to be the case however, and baristas in these micro-chains tend to receive lower pay-per-hour than many independent coffee shops I’ve compared them with.

The debate between small independent coffee shops and the growth of the fifth wave sparks controversy with almost everyone within the speciality coffee industry. It’s almost reminiscent of marmite, where people either love or hate them. I for one don’t have a problem with them, but only when I want to have that level of consistency only really available in chains: big or small.

Independent coffee shops will always be my favourite, but sometimes I don’t have the time to trawl through the streets with my geolocation on, trying to find a new hidden gem. There’s nothing worse than trekking for 20 minutes to come across a disappointing find.

What are your thoughts on the Fifth Wave and micro-chain coffee? I’d love to hear from you!

Until next time, lovelies.

@caffeinegalore

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