Gear Up!
Choosing Your Suppliers
Story by Steven Krolak . Illustration by Chad Crowe

Back in the Klondike Gold Rush days, hardy prospectors toiled in savage conditions, fueled by the dream of a quick fortune. But the real bonanza was reaped by the merchants who furnished the shovels, pickaxes and pans. Every so often, a miner struck it rich. But even this stroke of luck was partially a result of synergy with the merchant.
   Coffeehouse retailers are the prospectors of today. There's gold in them hills, to be sure, but you'll pan long and hard before you'll see the first glint of profit. And like the miners of old, you'll rely on an array of individuals to outfit your vision and point you to the diggin's.
   But supplying a coffeehouse isn't as easy as buying out the General Store in Skagway lock, stock and burr grinder. It's a process, and like every other aspect of your business, it demands patience, finesse and good judgment.

Head For The Hills
Starting a coffeehouse is a daunting task. Choosing a supplier for your machinery and small ware is a big part of the reason why. With regional distributors, Internet-based warehouses and roasters with a host of allied products all vying for your business, it's easy to lose track of the principles that matter. And yet these principles are what make the retailer-supplier interface arguably the most crucial element in your shop's success.
   The first step is mental. "Supplying is not a one-shot experience," says Terry Ziniewicz, owner of Seattle, Wash.-based Espresso Parts Northwest. "It's about establishing a relationship." Once you've accepted this basic fact, you're ready to begin to make decisions concerning your business model and to research the industry.

How do you find a good supplier? In a word, meet people.
   Tom and Char Schuh studied the business for four years before opening Steam Heat Coffee in Salem, Ore. this past July. They read books, scanned the Internet, visited trade shows such as Fresh Cup ROADSHOW and Coffee Fest and analyzed the concepts and procedures of other coffeehouses. "While other folks watched football on TV, we researched the coffee industry," says Tom Schuh. An equipment dealer by vocation (Caterpillar tractors), Schuh knew many in the machine trade, and eventually those contacts led him to Bob Mitchell of TriState Equipment in Eugene, Ore. This opened up a relationship with a regional roaster, with whom Schuh has been very satisfied.
   Jeff Schorr of Starving Artist Coffeehouse in St. Petersburg, Fla. had a similar trajectory. Study and word of mouth led him to Terry Davis of Ambex in nearby Clearwater, and this in turn took him to Monin Syrups, also in Clearwater. For Schorr, a newcomer, proximity to these sources of information and service was reassuring.
   In Tucson, Ariz. Bonnie Vining of Javalina's Coffee and Friends found Aaron Triplett of Roaster X online, then determined they are located only a few miles apart. Triplett introduced her to Bill Brodberg of Espresso Wrench, who sells and services equipment. Both Triplett and Brodberg have essentially mentored her operation, and helped her gain a foothold in the industry.
   The scenario could be replicated ad infinitum, but the point is clear: The coffee business is built on relationships.
   But making new friends is only part of the process. As Dirk Smith, owner of Magna Cum Latte in Rancho Santa Margarita, Calif. observes, "You have to connect personally. But you have to make sure you know what you want, and not be swayed into buying something else just because you like the person who is selling it."
   Some owners know exactly what they want. Schorr has about 144 square feet of café space, so he knew he wanted equipment that would fit into tight spots. Schuh knew he wanted a European "Konditorei" ambiance. This clarity made it easier for both to find supply partners, and harder for them to be hoodwinked by exaggerated promises.
   Knowing your personal goals is also something that suppliers cherish. "I was looking for someone who took an interest in what I was doing," Schuh says, illuminating a key principle that is echoed by industry veterans. Ziniewicz "pre-interviews" prospective customers. "We have a questionnaire, a handout that explains that the business is a great thing, but it's a lot of work. We ask them what they want out of it." Dillanos Coffee Roasters of Sumner, Wash. has also produced a questionnaire. It has evolved out of the intensive start-up seminars that the company has been holding for the past six years at Coffee Fest shows. Vice president Scott Hinckley explains, "We want to teach people what to look for in a partner, and that this is a long-term relationship." Dillanos also wants prospective startups to focus their own concepts, so that they can make informed and responsible supply decisions. "The relationship between supplier and customer should revolve around common values," Hinckley says. "If you're cause-based, for example, you should look for someone who can help you go in that direction, rather than someone who will try to impose their direction upon you." The key here is to ask questions-of yourself as well as your supplier.
   Once the philosophical issues are put to rest, you can begin looking that gift horse in the mouth. "Demand references and talk to them," advises Michael Teahan of Van Nuys, Calif.-based Espresso Part Source. "Ask them about service, training and reliability of the equipment. Try not to find someone you will be competing with, so they will speak openly with you." "Don't buy what you don't need," says Laura Sommers, founder and president of Espresso Supply in Seattle, Wash., a purveyor of small wares. Sommers notes that start-ups frequently wait until fairly late in the planning process to become aware of how many small wares their shop will need.
   Sandy DeWitte, owner of Prairie Brew, a kiosk in Sioux Falls, S.D. advises newcomers to "be cautious, go slowly, network, make contacts."
   Hinckley of Dillanos says, "A big part of the relationship is about trust. The vendor is giving expertise to the customer, not just coffee or equipment." That expertise is crucial when it comes to regional variation. "The most important thing is to get to know which market you're dealing with," Hinckley says. "Is it Seattle or Mississippi? It's important for a retailer to know that the supplier understands the difference."

Keeping It Going
If you've chosen your supply partner well, there's no reason for the honeymoon to end. But this relationship, like a good marriage, can't be taken for granted. It takes "effective and consistent communication, as well as trust and understanding," according to Glenn de Gruy, president of New Orleans, La.-based New Orleans Coffee Works.
   Nurturing your supplier relationship, like building it in the first place, involves a combination of philosophical adjustments and practical decisions.
   On the philosophical side, each partner has to accept the other's right to success. As a consumer of equipment, coffeehouse owners are often justifiably skeptical about the prices they are charged for equipment. But with that equipment comes knowledge and the possibility for success that dwarfs the initial cost of the machine. You pay more for a car than for an espresso machine, but don't expect that car to make you a millionaire. As Teahan puts it, "When you negotiate aggressive pricing on equipment, the cost of the equipment isn't really affected. That is a fixed cost to the seller. Reducing the price only inhibits their [the suppliers'] ability to provide service."
   Kelly Traw, vice president of marketing for Seattle, Wash.-based Espresso Specialists Incorporated (ESI) knows that different people do things in different ways. Some are comfortable with one-stop shopping, others shop and shop, at diverse locations, to secure individual pieces. Some want machines with no service. This is where ESI draws the line. "We won't sell a machine without service," Traw says. Philosophically, the company believes that owners who do not purchase service are pouring money down a hole later on. "Mutual respect is a good start to any relationship," Traw explains. "And it's a disservice to us if you consider us merely a vendor. Where we sit, the machine is one of the major sources of income for the coffeehouse. You need reliability, durability and performance at a reasonable cost."
   On the practical side, Hinckley returns to the centrality of communication. "What happens after you make the purchase?" he asks, rhetorically. "Will you still hear from them? Will you have access to upper management? You need to be able to find the right person with the best answer, not just the sales department."
   Coffeehouse retailer Dirk Smith concurs. "Accessibility is what makes it work," he says. "At trade shows, equipment people are always helpful. But in 90 percent of the cases, the situation is different in the field, when you really need them. It's hard to get return calls, or to get hold of the right person."
   Vacuum valves, pressure switches and pumps, group solenoids and pressure relief valves may sound innocent enough, but when they fail in the middle of the morning rush, they become problems that can seriously affect your credibility and damage your sense of security. Being able to speak with someone, and get a visit within hours, is essential to your peace of mind. Sommers of Espresso Supply suggests another level of attentiveness. Many suppliers will source requested items they do not have in stock. Her company went the extra step of designing and producing silicone gaskets for biscotti jars, which did not exist at the time.
   Teahan encourages coffeehouse owners to be proactive and tell suppliers at the outset that you expect them to be informational resources, and to stop by regularly to talk shop, especially about trends that you, trapped in your own shop, might not be seeing. On your side, you can take concrete steps toward furthering communication by delegating a person-perhaps yourself-to deal with your supplier, according to Darren Reynolds, sales manager at Seattle, Wash.-based Visions Espresso. "It's good for us when people at the coffeehouse know product order numbers and other details," he says.

Caveat Emptor
Sandy DeWitt learned the hard way that there are unreliable and even unscrupulous suppliers out there. She bought into a scheme involving coffee capsule machines. When the company disappeared and became the subject of a criminal investigation, she was left with the expensive machines and no supply chain. She had caught the coffee bug, and soon recast her dream as a kiosk operation at farmers' markets, but the lesson cost her time and money.
   "Some people choose to go around the system, but I think they miss out," says Terry Ziniewicz. "There are so many talented people in the industry, and they have such a wealth of information, that you're not saving any money by not taking advantage of them."
   Still, coffee is a dynamic industry in which players come and go. How can you make sure you're picking up on the right signals?
   If communication is a good thing, a lack of communication is a sign that something is wrong. "If the owner or employee of the supplier is not returning phone calls or sending requested info in a timely manner, it's a red flag," says de Gruy. He suggests being wary of suppliers that try to be all things to all coffeehouses, and urges coffeehouse owners to tour the supplier's place of business, if possible. "If they brag about service, call them on a Saturday afternoon and ask them why your espresso doesn't have crema," suggests Teahan. "If no one calls you back, or if someone calls you to set up an appointment, that's no service, but an answering service."
   While there are occasions when parts are unavailable because suppliers are being inconvenienced by manufacturers, this shouldn't be allowed affect the relationship with coffeehouse owners. Understanding that suppliers are consumers, too, is part of your job. But you also need to insist on regular updates and status reports. Learn about their corporate culture. Do they test each and every machine they sell? Can they get parts? Do they travel to Italy to build relationships with manufacturers or train their service technicians? Can they control their inventory, so they have all the parts they need when you need them? How high is the turnover in their sales and service representatives? Do they offer installation, technical training, preventive maintenance?
   Once again, it's a two-way street. Don't expect the red-carpet treatment if you haven't been paying your bills on time, or at all. You would be surprised how many deadbeat accounts are also the squeakiest wheels.

Be Realistic
As the industry matures, it changes. Scott Hinckley sees more and more business plans based on significant assumptions of and demands for growth. In this environment, suppliers must have a command of many different kinds of scenarios. "We need to offer the same service to customers with drastically different business plans. We need to educate ourselves and our entire staff on the needs of franchises and chains. Everyone is now an advisor with a command of different needs of chains, franchises and individual operators." This is a revolution in thinking, and it affects how the relationship is formed and maintained. With greater resources and expertise comes a greater expectation of professionalism on both sides.
   Still, at the heart lie the personal principles that give the industry its cohesion. As Bonnie Vining of Javalina's notes, "The most important elements in making the relationship with suppliers work are the same elements that make any relationship work: honesty, integrity, respect, trust and a good sense of humor."