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Press Releases
Coffee king spills the beans
Better
Business
February 2003
Circulation: 16,000
Frequency: Monthly
The coffee bar phenomenon is
never out of the media for long - whether it be the
march of mighty Starbucks, or warnings of a saturated
market.
But while others are struggling, one
man has been brewing up a highly profitable coffee concept
- gourmet coffee in all those places coffee bars can't
go.
Martyn Dawes, 34, believes that his
consumer-operated espresso machines will be the coffee
success of the decade.
And with a further 200 sites planed
for the next six months, he's well on his way.
So how did a boy who left his Coventry
comprehensive to join the local foundry end up creating
a business with a turnover of £8 million?
Passion, drive and a bloodyminded
self-belief in his big idea is how.
New beginnings
Back in the early 90's, Martyn Dawes
set up a successful retail consultancy with his then
wife, after climbing the junior management ladder.
'Through the consultancy I realised
that it was running a business, not advising on a specific
aspect, that turned me on,' he says.
'So I decided to step back from that
and leave my wife to run it. I wanted to look for another
idea - a new idea.'
In 1996, Martyn Dawes took £50,000
from the business and set about researching the 'big
idea' that would ultimately transform his life.
The journey took Martyn Stateside
in the form of a reconnaissance trip to Manhattan, where
he hoped to pick up ideas that could be successfully
translated back across the Atlantic.
It was there that he noticed how every
corner shop also sold coffee, and the first seeds for
Coffee Nation were sown.
'Retail really interested me, and
New York is a hotbed of innovation, so I just bombed
around New York for a couple of weeks. I saw a frozen
yoghurt company and loads of things. But, I came back
with the idea that coffee in convenience stores would
be really good.'
It wasn't a coffee bar that Martyn
wanted - it was coffee-to-go.
'At that point I could see that the
real stuff - fresh beans, fresh milk, freshly ground
and so on - was expensive, and I thought an imitation
would suffice. I was wrong.'
Martyn began talking to people like
Nestle and then wrote a business plan.
'There were lots of things in my original
business plan that were flawed, and therein lies the
first lesson,' declares Martyn.
'You've got to prove the concept before
you can raise the money - you need to prove the thing
works first.'
Martyn approached a number of UK convenience
stores with the offer of installing some instant coffee
machines.
But he soon realised that these were
not the shops, and this was not the kind of coffee,
which would really turn people on and generate excitement.
He needed to go more up-market. 'It was the wrong product
in the wrong location,' he says.
New direction
At this point, Martyn decided to take
a step back and think about a new direction. He sourced
a vending machine that could make real coffee, and installed
four of them in mainstream retail sites, two at Texaco
and two at Welcome Break - two of Martyn's biggest customers
today.
The machines were an instant success,
not only for Martyn but also for the retailers.
'I took more space, had a real espresso
machine, Coffee Nation branded cups, put the price up
- and hey presto sales went up. I then replaced some
of the instant coffee machines and sales leapt up. And
I thought "OK, I'm on to something".'
But the next stage of his journey
wasn't without its troubles. 'At the same time as that
was going on, I was keeping the creditors at bay,' adds
Martyn.
'I was still trying to raise money.
I was learning fast, but was I learning fast enough?
Was I learning quick enough to reach the point where
I'd got something that was proven, and was I going to
get to that point quicker than the creditors, who were
going to come and tell me it was "game over"?'
In the early days Martyn says he had
a naivety about him, but he believes that, in this case,
ignorance was bliss.
'If I'd have gone into it knowing
how stressful and tough it would become, I may not have
gone ahead. And there were times when I almost buckled,'
reveals Martyn.
Guardian
angel
It was a difficult time for Martyn,
but he clung on, and in November 1998 a guardian angel
changes his fortunes.
Martyn was making a presentation to
a room of potential investors, and although perfectly
competent, it was quite dry.
Then a business angel, whose identity
Martyn never discovered, gave him a fantastic piece
of advice.
Martyn explains: 'He said, "Great
idea. But you've got to turn it around. At the moment
you sound desperate, like you need the money, and what
you've got to do is make the audience need you. Make
them sit down and think, Wow - we need this guy and
if I don't invest in this guy's company I'm going to
lose out. I don't want to miss the opportunity - where's
my chequebook?"'
Later that week he gave a second talk
to another group of business angels.
Total
conviction
'That day in Cambridge I went full
on, using very powerful language, total self-belief,
total conviction, and it worked,' he says. 'W e got
pledges for all the important £100,000 seed capital.
'I realised the whole business was
on the line. If I didn't get the money then I was dead.
If I hadn't been successful that day I would have been
looking for a job. In the end my passion and self-belief
won the day,' Martyn says.
'By now I'd switched to Lloyds TSB,
and they had said, if you can raise £100k of equity,
we'll match that with £90k of small business loan.
So it came good in the end.'
Because of the test sites were now
hitting all the targets and underpinning all the assumptions
in the new business plan, Martyn was able to go on to
raise institutional funding, with a Chairman and Operations
Director at his side.
Martyn has since raised another £4.2million,
and in two years Martyn has taken Coffee Nation from
zero to £8million sales and into profitability.
'Coffee Nation's success has been
driven by a combination of self-belief and determination,
even when the chips were down,' says Martyn. 'It was
a case of, "This is going to work, and I'm not
going to be told no" - and lots of people tried
to tell me no.'
Proving
the concept
Martyn also insists that proving a
concept actually works is half the battle to get funding,
regardless of how simple the concept is.
Another secret to the success of the
company is its user-centric mantra. If Martyn has his
way , it won't be long before every supermarket shopper
will be able to replenish their flagging energies as
they go round the store with a freshly brewed cappuccino
strapped to their trolley. A trolley cup holder is already
in the design stage - and it's all down to listening
to the customers' wants and needs.
So what advice does Martyn have for
entrepreneurs?
- Be focused, incredibly focused,
on what you're trying to achieve. 'Bring the goalposts
in, as my chairman used to say to me. You can't do
everything well, because you spread your attention,
talents and money thinly, but you can do things you
focus on well, if you really focus properly.'
- Create something that is fundamentally
different. 'The thing that makes Coffee Nation fundamentally
successful is that its concept is unique. It's pioneering.
You've got to sell a lot harder to customers, suppliers
and investors, but the potential is far greater. If
you set up a company selling widgets like the bloke
down the road, and the only difference is your widgets
are cheaper than his, you'll make a living, but that's
all you'll achieve. If you can be truly differentiated
and unique, then you've really got something.'
- Whatever you think is going to
take a year will take three. 'Nothing happens overnight,
and everything always takes longer than it's going
to take, so be realistic. It's a combination of getting
the right balance between having a huge amount of
realism, and holding on to your vision of where you
want to get to.'
- Be prepared to make a lot of mistakes,
and learn from them. 'I've made hundreds, but I've
learnt from them all.'
- Never get complacent, because success
is a disease. 'The winning ways that got us where
we are today - we'll ignore those at our peril. If
we lose those and start thinking, "Yes, we've
made it" and believing our own hype we'd be dead
and buried.'
- Be approachable and trust your
team. 'I'm a very hands-off boss,' explains Martyn.
'My philosophy is to get the best people and let them
get on with it, and trust them implicitly. It's a
team effort that's making it successful.'
So what lies ahead? 'Expansion across
the UK, as the company is now in "take-off"
mode. We now also have stations in theme parks, universities
and so on.
'This year we'll be taking our first
steps into Europe - the aim of the company is to grow
it into a global brand.'
One thing's for certain - with
Martyn's self-belief, there's no limit to where Coffee
Nation could go.
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