June 21, 2021

Understanding supplier partnerships for coffee shops

There are a number of different ways to source coffee for your coffee shop. You can buy bags of coffee on demand from a wholesale roaster, roast your own beans in-house, or you can look at setting up a long-term partnership with a supplier.

Supplier partnerships often come with a number of benefits, which can include reduced prices, regular maintenance, free equipment, and more. However, sometimes there are also restrictions – which coffee shop owners will need to consider.

But how do you start your partnership? Who is the right partner for you? And how will it all work? To answer these questions and more, I spoke to three coffee professionals based in the US, Germany, and South Africa. Keep on reading to find out what they had to say. 

You might enjoy reading our article on entrepreneurship in coffee producing communities.

coffee shop interior

What is a supplier partnership?

To put it simply, a supplier partnership is any kind of agreed business relationship between a supplier of goods and a buyer, generally in a business-to-business (B2B) context.

This can take many forms, but for coffee shops, it often means partnering with a roaster. The partnership itself generally concerns the supply of roasted coffee, but it can also cover everything from syrups and cups to equipment and training. It may also require both parties to sign a contract, sometimes labelled as a “supply agreement”.

However, it’s important to remember that no two suppliers are the same, and as such no two partnerships will be the same. The examples in this article might be a good place to start, but each potential partnership should be approached on a case-by-case basis.

nicole battefeld

Finding the right partnership

The “right” supplier partnership for your coffee shop will depend on the specific needs of your business. Alongside roasted coffee, you might also want to agree terms on leasing a new espresso machine, for instance. The important thing is finding an agreement that works for you.

Erica Piedmonte is part of the sales team at Higher Grounds Trading Co., a roaster based in Traverse City, Michigan. She explains that Higher Grounds supplies roasted coffee to a number of different cafés, restaurants, and supermarkets in the area. 

Depending on the client, she says her team has different ways of working. She tells me that they generally don’t work with contracts for their partnerships, with the exception of customers who are leasing equipment. In some circumstances, she tells me that they also ask for a minimum coffee order to use the equipment and get free shipping. 

Nicole Battefeld was the 2018 German Barista Champion and has worked at Röststätte in Berlin for more than five years. She tells me they have different types of partnerships. 

While Röststätte supplies roasted coffee for its own cafés and others across the country, the brand is also a distributor of Victoria Arduino machines in Germany. As such, it offers “bundles” that often include espresso machines, technical support, and roasted coffee.

Shaun Aupiais is a coffee consultant and barista trainer at Red Band Academy based in South Africa. He explains that he has worked on a number of different partnerships, specifically with imported coffee brands. 

“For the imported brands, we offer a consistent supply of coffee as well as branded accessories like cups and saucers, other consumables, and even other branded goods, like clocks, light boxes and sugar tube holders,” he says. 

He also says that the contract they use varies depending on the individual café’s needs. “For equipment, we would use a longer term contract,” Shaun says. “That would include a clause stating that only that particular brand’s coffee can be purchased and used on the equipment in question.”

coffee shop

Advantages for coffee shops

So, we know that long-term supplier partnerships can take shape in a number of different forms depending on a café’s particular needs.

But what are the advantages of partnering with a supplier in the long term?

The right coffee at the right time

For cafés and other hospitality businesses, arguably one of the most important areas to focus on is the coffee you use. 

By partnering with expert suppliers – such as roasters – you can make an informed decision about buying higher-quality coffee to improve customer satisfaction.

Coffee shop owners can then choose from a wide range of options, from rich, chocolatey espresso blends to lighter single origin filter roasts. Nicole adds that a relationship with your supplier makes it easier to communicate specific flavours or profiles that your customers might be looking for.

Erica also notes that the coffee is usually fresher. “We roast it and then we ship it, which takes two days,” she says. “If a customer calls on Monday and places an order, we’re usually going to ship it out either Tuesday or Wednesday.”

coffee machine and baristas

More cost-effective

These long-term partnerships can also help you improve your cashflow. For instance, buying coffee under partnership terms will often be cheaper in the long term than a one-off wholesale order from a roaster. You might also find that existing partners are more inclined to be flexible if you need it.

Nicole says that Röststätte also “bundles” prices together for coffee shop owners. “You could take a machine or a grinder, but if you take both along with our coffee, then we’ll give you a better price for the coffee itself,” she says. 

This lowers the unit cost of roasted coffee and can go a long way towards building a strong, profitable business relationship between buyer and supplier.

Boosting your brand image

”One of the key marketing advantages is the professionalism it brings to your café,” Shaun tells me. “It makes [the coffee shop] feel like they are getting more value for their money.”

In other words: if you work with a roaster or supplier that is renowned for its quality and brand image, customers will associate your café with it. This can boost your brand authority in the long term.

“When a coffee shop orders from someone who’s experienced at roasting, customers often already know the brand,” Erica adds. “They might even know they’ll like the coffee.” 

coffee shop exterior

What are the challenges?

While on paper it sounds like there are no shortage of benefits, entering a long-term supplier partnership is not simple and it shouldn’t be a decision you make lightly.

For instance, you need to start by exploring where the supplier or roaster you want to partner with is based. If the distance is too far, delivery times and shipping times can increase. This can have an impact on coffee quality, as roasted coffee becomes less fresh and vibrant the longer it takes to get to your coffee shop.

Shaun says that another key challenge arises when working with suppliers from other countries: the currency exchange rate. 

“This can be a constant challenge,” he says. “From order to order, your wholesale price may jump all over the place; supplying your café at a consistent price becomes a challenge, and it can then affect item cost and even menu prices.”

Partnerships may also have exclusivity clauses written into the contract. This typically takes the form of an agreement to only use a certain coffee for a fixed period of time in exchange for equipment (often an espresso machine) which would otherwise be costly or expensive.

While this can be suitable for some, keep your business plan in mind and look at where you want to be months and years down the line. For instance, a lack of freedom and flexibility in the early stages of your business may be a challenge – and it will not be the solution for everyone.

Make sure your brand identity is aligned with your supplier’s, too – this will make it much easier to establish a strong working relationship. Look at your potential supplier’s business model and ask: do their values resonate with yours? Are you happy with the way they do business?

This can also apply in for suppliers, too; some are more exacting than others when it comes to criteria for a partnership. For instance, Nicole says that Röststätte regularly evaluates the coffee shops it supplies, to make sure their brand is then represented accordingly.

Erica also says that they often train new cafés when they order their coffee to help them understand more about the brand. Higher Grounds is a certified B Corp, with a number of projects that help give back to coffee farming communities. 

“We want cafés to understand our main purpose,” she says. “And in turn, we want them to convey the message of Higher Grounds’s purpose to the people visiting them.”

inside a coffee shop

Where should you start?

A good starting point is simply to do your research. Nicole says: “[Coffee shops can] look up all of the roasteries in the neighbourhood, others they’ve heard of, or those who have been recommended,” she says. 

You can also visit the partner you are interested in working with. This gives you an opportunity to try their coffees, get a broader idea of what they offer, and understand if their products are suited to your customers’ tastes.

As far as contracts are concerned, Shaun says that it’s important to make sure the terms are suitable for both buyer and supplier.

“Both parties should be happy with the journey that lies ahead,” he says. “Ensure that your short-term and long-term plans for the café line up with their brand and business model, especially the agreement and the terms you are signing yourself into.”

espresso machine and grinder

Every coffee shop has its own needs. When looking into entering a long-term partnership with a supplier, keep your café’s needs in mind and make sure that the agreement suits you. This will be the best possible foundation for a strong, healthy business relationship in the long term. 

Ultimately, establishing a partnership isn’t only about getting the best deal. Look for a partner that you are happy to work with, with a team that shares similar values. That will be the best formula for long-term success.

Enjoyed this? Then try our article on how roasters can drive change at origin.

Photo credits: Nicole Battefeld, Higher Grounds Trading, Collections from Him

Please note: Higher Grounds Trading is a sponsor of Perfect Daily Grind.

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