Costa Coffee wants to expand in the U.S. in nontraditional locations with its “barista in a box.” | Photo courtesy of Costa Coffee.
Costa Coffee has opened five locations in the Atlanta area, which is what happens after you are acquired by the Atlanta-based beverage giant Coca-Cola.
That’s about where it will stay, at least for now. Costa has no immediate plans to join the rush of operators into the U.S. coffee shop business. But that doesn’t mean it doesn’t want a presence here.
That presence instead will in the non-traditional business, largely through what it calls its “barista in a box.”
The Smart Café, as that box is called, is targeted specifically at non-traditional locations: Hospitals, college campuses, hotels and convenience stores. The device is essentially a coffee shop vending machine, with 200 options that give customers the ability to customize. Costa has about 350 in place now.
“We’re really focused on high-impact channels in the U.S., where quality and convenience come together,” Erica Brown, VP and managing director for Costa Coffee Americas, said in an interview. “Consumers are on the go a lot.”
Costa Coffee was founded in 1971 as a roastery that served local caterers in London by Sergio Costa, whose family had moved to England from Italy in the 1950s. They eventually opened a coffee shop in 1981 and by 1995 had 41 locations. It was sold that year to a large coffee shop operator known as Whitbread, which expanded the chain rapidly in the next few years.
Among its expansion strategies was a series of Costa Express machines that would be opened in grocers and convenience stores in places like Denmark and the UK.
By the time Coca-Cola acquired the brand in 2018, Costa Coffee had 4,000 locations and was valued at $5.1 billion.
That hasn’t necessarily translated into U.S. expansion. But the company is changing that now, albeit in a different format. “We’re really focused in the U.S. on building our business away from home,” Brown said.
The Smart Café is a tall machine that can make both hot and cold beverages in 90 seconds. Cold beverages are particularly important in the U.S., where consumers have steadily shifted away from hot drip coffee and into a variety of espresso-based and mostly cold drinks.
Customers can also customize their beverages, which is another key ingredient to U.S. success. “People really want to make their beverages their own,” Brown said.
Costa also has a countertop option for those places where the tall box cannot fit. The company only asks for space. And it can monitor the machines to ensure that they are working properly. Costa also sees what beverages customers get from the machines to tailor its offerings for the customer base.
The company then shares the revenue with the location hosting the machine. The convenience store, college, hotel or other place simply keeps the machine clean and provides the milk.
“It sounds like a coffee shop, it smells like a coffee shop, it tastes like a coffee shop,” Brown said. “The sounds of beans grinding and everything. So from a consumer experience perspective, it’s pretty special.”
But it doesn’t come with the labor of a coffee shop, which for non-traditional locations is a vital consideration.
“This is an opportunity to capitalize on espresso beverages that can generate real business,” Brown said. “You don’t need to have a barista in those environments because the machine does the work in a high-quality way.”
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