Coffee Service Corner

Perret DeLapouyade is a 33-year veteran of the OCS and Water industries having spent his time in various leadership positions as an operator. Beginning his career with Standard Coffee Service in 1987, Perret gained experience through a variety of departments before settling into key operations roles, ultimately being promoted to V.P. of Operations supporting Procurement, Asset Management, Route Management, Warehousing, and a National Service Network. He played a crucial role in Standard’s evolution from a 22-state regional operation to a national market share leader, ultimately acquired by D.S. Services. In November of 2019, Perret left his operator role to explore expanding opportunities, which will be announced later this spring.

Article development for a column typically runs one week. As I began preparing for this article, the impact of the COVID – 19 virus has been rapidly expanding throughout the world, affecting almost every aspect of daily life, including the Coffee Service industry. While health concerns remain most important, I felt it would be time to reach out to an experienced industry veteran and friend to explore his thoughts on how operators can adjust and adapt both to mitigate potential downsides as well as positioning their companies for even greater success when we emerge from this catastrophic event.

KS:Perret, social distancing is decimating office populations and transient traffic. What impact do you see from a consumption perspective?

PDL: For the right reasons, office populations began to lean out over the past few weeks, and now we see an even more dramatic drop off as employers fully understand the importance of social distancing to help ensure the health of their associates, much of this being mandated. While this has dramatically impacted near term sales for OCS operators with whom I engage, I also have heard that customers are expressing a high level of gratitude that is reinforcing the value of OCS providers in providing the wide variety of break room supplies and services so that the office staff can focus on the issues they are facing. Unfortunately, some operators might not be able to withstand the corresponding revenue drop-off, and I fear that we will witness a measurable number of businesses closing and/or selling.

KS:Some operators are suggesting that offices might move to e-commerce and eliminate direct service. What message would you give to office decision-makers regarding this?

PDL: While we have seen more online activity in recent years. I don’t see companies abandoning the ‘service’ element of OCS any time soon. While product delivery via parcel carrier should be an option in the portfolio, we all are aware that product delivery is only one of the functions of a high-quality OCS operator. Besides, parcel deliveries have to be delivered by a person.

A key aspect of DSD delivery that is gaining a lot of attention currently is the cleaning and sanitization of the break area and serving vessels by the route operator.

KS:Having been a part of a conglomerate with several thousands of water routes, could the coronavirus outbreak stimulate bottled and POU water opportunities?

PDL: Absolutely. We have all heard of retail locations running out of bottled water during spikes in demand. And customers, both commercial and residential, have far fewer concerns with these types of issues when working with a provider that has a well-rounded product portfolio along with the supply chain expertise to work through any supply issues that have arisen in a variety of product categories.

When we emerge from this crisis, it will be an excellent time for operators to expand their efforts in the water category, and in particular, point of use water and filtration systems.

KS: You had responsibility for managing a portfolio of several thousand SKUs. Should the current environment suggest that operators expand their menus within any specific categories?

PDL: Ken, that’s a great question. My personal opinion is that having a wellrounded portfolio for your target customer type is the best strategy. For a typical office environment, I believe that in addition to providing coffee and coffee-related items that one would typically carry, items for the entire

breakroom such as San-Jan items that are currently in the spotlight are critical to avoid the need for office staff shopping around for these items from other sources. This is also an opportunity for office managers to consider consolidating services and reducing traffic. And if you, the operator, has a great service track record, your request for service consolidation should be well received.

KS:Can OCS operators play a role in fulfilling demand from a labor force that might increasingly work from home?

PDL: I was discussing this with an operator group recently and did believe that we see a long-term transformation in associates working remotely. That said, exploring the value that can be added for service and delivery for operators that are currently commercial only is an exercise that I’d recommend exploring. While selling products via e-commerce is one way to do this, I believe there is an opportunity to incorporate the service element to homebrewers, along with bottled and POU units in a residential environment. One big unknown at this point is whether this might migrate to an expense that would be subsidized by employers as an additional benefit to those associates working from home.

KS:Ours is an international supply chain. Our primary commodities, coffee, and tea are almost exclusively grown outside of the continental U.S. Other necessities including brewers, water appliances, parts, and more come from a variety of sources. Do you foresee measurable sourcing changes in the long term?

PDL: I do not foresee long term issues with supplies, particularly with commodities. As we speak, green coffee is trading near 10-year lows, and although we have seen some cost increases this week that is being attributed to the swings, we see in the exchange rate more than any supply disruption issue.

Many companies, suppliers, as well as operators began supply chain diversification last year for the appliances that were sourced in China simply because of the unknown of the tariff implications long term. Consequently, many operators are well underway towards resolving the potential of any

KS:May I ask what the future holds for you? Selfishly, there are many of us hope that you will remain a fixture in the Coffee Service Industry.

PDL: Thank you, Ken. I’ve been working recently with several equipment and parts suppliers and assisting with supply chain continuity opportunities. A lot of progress is being made that could impact this industry and others. I am currently enjoying newfound personal time to concentrate on various projects. I do anticipate remaining within the industry in some capacity and am evaluating several opportunities.

KS:I appreciate the time that you set aside to develop this article. Your insights are valued and appreciated. I also appreciate having worked with you during my two tours of duty at Standard Coffee. You were the student that rapidly became the teacher!

FINAL THOUGHTS: As I put the finishing touches on this article, it is now Friday afternoon, March 20th, and Coronavirus cases are exceeding 250,000 worldwide. The stock market is hovering around 19,500, and many workers throughout the country are being directed to remain home at varying levels of quarantine and sheltering in place. It is impossible to predict how things will look by the time this article is published....and beyond.

We are a resilient people and passionate industry. We will emerge from this dire situation. Many sectors will possibly look different to varying degrees when we do emerge. My prayers are with all of you and hope that you remain safe. Ken is President of Ken Shea and Associates, providing specialized solutions to operators and suppliers in the Coffee, Tea and Water Industries.