A Coffee Robot in Franchise Terms

Since the first mention of coffee brewing techniques in the fifteenth century, the market size for the drink has grown to over 60 billion USD and is estimated to reach 100 billion USD by 2023. Over 400 billion cups of joe are consumed annually around the world.

Nevertheless, succeeding in the business from scratch is a challenging task, mostly due to competition from established restaurant brands, such as Starbucks.

A franchise is a license type whereby one party agrees to transfer to a counterpart the rights to a process, or know-how, etc. The kind of a deal aims at entitling the counterpart to sell a product or service under the business name of the transferring party, which is referred to as a franchisor. The entitled party is a franchisee.

The role of the franchisor is to provide support in strategic decision-making and operations: employing personnel, setting up a point of sale, advertising, supplying consumables, etc. The franchisee is obliged to comply with the franchisor’s recommendations on a continuous basis.

A typical franchise contract stipulates three types of payments from a franchisee. Firstly, the so-called upfront fee to purchase entitlement. Secondly, compensations for training and advisory services. Thirdly, a regular royalty or certain percentage of trade turnover.

Franchising is not new to coffee brewing. Corner Bakery Café, Maui Wowi, Dunkin' Donuts—just a few names on the top franchisor list—are long-established trademarks.

Most licensing offers in the domaine are turnkey packages, providing freshmen businesses with assistance in the following:

1. Site selection, including negotiations with location owners
2. Café design and layout
3. Fitting operational spots with furniture and equipment, such as espresso machines and other brewing appliances
4. Onsite personnel training
5. Drafting business plans
6. Marketing and PR support, as well as creative service (e.g., organizing the grand opening ceremony, campaigns, events, etc.)

One more valuable asset a franchisee obtains with a license is a loyal customer community. Amateurs of a brand or brew are more likely to drop in at a newly opened spot with familiar identifications as they would rightfully expect services and products of a particular quality.

As new technologies enter the scene—cloud computing, machine learning, robotics, etc.—the coffee franchising landscape is getting more varied. Market players start utilizing mobile apps and intelligent bots, helping franchisees manage customers and increase labor productivity. Robots open new automation opportunities, including unattended spots with no human personnel.

Robot franchises in the java-brewing industry are mostly points of sale equipped with robots instead of human baristas to deliver a selection of brews. These include automated kiosks using a Briggo-style concept: a mobile app to place orders and a smart brewing station, sort of an advanced vending automat. Another installation type is a robotic arm with a conventional barista environment—a grinder, a compactor, a java-making machine, etc.



Whether an automated kiosk or a robotic arm setup, the kind of coffee franchise boasts a number of remarkable advantages:

• Small footprint translates into a major reduction in rent expenses and more flexible location opportunities.
• Low labor costs, which stems from robots’ inherent ability to work 24/7 non-stop, without much overhead expenses, except for servicing and power supply.
• Zero theft risks, since kiosks and robotic setups are completely self-contained installations, sealed inside a housing.
• Remote monitoring, allowing to diagnose equipment, detect and resolve issues with no disruption to the servicing process, as well as to get insights into sales statistics.

Finally, it is impossible to disregard the novelty, or wow, factor meaning a high-tech barista-robot making coffee is sure to attract attention and cause excitement among customers.

Rozum Café is an example of a franchise project where a coffee robot is the centerpiece of a genuine barista environment—a professional-grade espresso machine, a grinder, and a compactor. The installation is fully automated and requires only minimum human intervention, for initial setup, refilling and maintenance.

The robot reproduces with exactitude and swiftness the moves of a human server to deliver a range of drinks with consistent quality. Doppio, americano, cappuccino, flat white, latte, as well as cocoa and tea are the regular varieties on the R/Café menu. Alongside a selection of beverages, the robo café is supposed to sell pastry.

The franchise is a cost-efficient way to enter the coffee business. Labor costs and taxation-related expenses are minimized because the machine needs no wages. The robot’s capability to brew javas with no breaks, days off, or holidays is another evident economic advantage.

The franchisor provides personnel training and servicing support, transferring technology and brewing know-how. Return on investment is expected within 18 months on average. Franchising options are as follows:

Master—exclusive partnership within a specific area (city, region, state, or country)
Single store—a license to open a single point of sale; the franchisor advises on high-traffic locations
Co-branding—a contract to locate a robot at the premises of an own coffee house to attract more visitors

Franchising has the potential to bring benefits to both parties under a license.

For a franchisor, the opportunities are:

• to expand its presence geographically, while cutting commercial risks and utilizing the local knowledge of a franchisee
• to augment the market share without investing more own capital
• to gain an additional income source—royalty fees

As regards franchisees, the underlying benefits are:

• A franchise is a ready-to-use business solution with a proven operational scheme.
• Established branding helps to avoid extra costs for marketing and advertising.
• The franchisor provides continuous support and supervision in organizing and managing business processes.

In general, operating a franchise is a good choice for beginners with no experience in the coffee business, but with a passionate desire to break into the highly competitive market.

A franchisee should be prepared to bear expenses and to give up total freedom of controlling its business in exchange for the above amenities.