Caffeine fix

Mike Koolen utilised a love of the food and beverage industry in developing his coffee franchise Espresso Essential. By Andrea O’Driscoll.

MIKE KOOLEN tasted both success and failure in the food and beverage industry before arriving at the idea for Espresso Essential.

Together with his wife, he developed Kools Chicken ‘n’ Fries back in 1992. The concept grew to 380 outlets across Australia, New Zealand and the South Pacific before the Koolens sold the Australasian rights to the Retail Food Group in 1996. They then moved to the UK hoping to establish the Kools brand in Europe, but it wasn’t to be.

The Koolens have created a multi-million dollar
franchise business selling coffee machines.

“We took the chicken concept to the UK, but we found it really hard to get it up and running over there,” explains Koolen. “They don’t like change and you have to stick it out for a very long time before anything happens. After two years of losing money we decided that we would try something different in New Zealand. We tried some concepts which didn’t really work and in late 2000 we ended up back in Australia with two kids and no money left in the bank.”

Koolen established himself as a business broker while he considered his next move. “I decided to become a business broker to better understand what people were looking for in a business and a brand,” he says. “What transpired was that a lot of people wanted to eliminate rent and wage bills. In other words, they were looking for a very low overhead business. But more than anything, people wanted recurring revenue streams.”

These findings, together with the office environment in which he found himself, gave Koolen an idea. “For many years every lunch room in Australia and New Zealand had what you’d call a Café Bar,” he explains. “It was a unit that could be wall mounted or placed on a bench, which dispensed instant coffee. While I was working at the business brokerage I recognised an opportunity to introduce real bean espresso coffee to the small office environment. I wanted to take the office coffee system into the new millennium.”

In creating this van, I had developed a three-in-one business concept. You can sell drinks out of it; you can demonstrate the equipment and products to prospective customers; and you can transport supplies to existing customers.

Italian supplier

Koolen approached a local importer about supplying the machines. “I asked him if he was interested in us doing some business together, but he was a little bit hesitant,” he explains. “I ended up buying the first machine from him and I used that as a basis to grow the business from.”

The machine was set up in the office of the brokerage and proved an instant success. “We introduced it into this office of 12 people as a test platform,” says Koolen. “The first thing people said when they walked into the office was, ‘Wow, smell the fresh coffee!’ It was amazing. Soon all the other offices in the complex we were in got wind of the fact that we had this coffee machine and they would all come over to get their cappuccinos, or their café lattes.”

Koolen was also using the brokerage as a test platform for different coffee blends and milks. “One of the things that I have always maintained, in all of the businesses that I have been involved with, is that the quality of the product is paramount,” he explains. “We use the best beans and the best milk that we can get our hands on.”

The machines themselves are manufactured in Italy. “One of the big sources of our strength is our supplier relationships,” explains Koolen. “We represent 45 per cent of the Italian machine manufacturer’s total global business. We found them through the Italian Consulate. They sourced various manufacturers for us, but almost all of them already had some sort of distribution agreement in Australia and New Zealand. It was sheer luck that this particular company had only been in business for about five years. I flew to Italy early on to cement the relationship and it has just gone from strength to strength.”

Initially, Koolen was reluctant to adopt a franchise model, largely because of his experiences with Kools Chicken ‘n’ Fries. “Because of our time with Kools Chicken, I never, ever wanted to do it as a franchise,” he explains. “I vowed to my wife when we started Espresso Essential that I did not want to go down the route of commissioned sales. So I started out selling the machines myself out of the boot of my car.”

But it wasn’t long before Koolen turned his mind to alternative ways of structuring the business. “After about 12 months, I was driving back to Queensland from Melbourne and I started thinking that there had to be an easier way of selling these coffee machines,” he explains. “It was then that I came up with the idea of fitting out a small van with a generator and all our equipment. That way we could demonstrate our product to the end users. But it also opens up a whole other revenue stream.”

-- to read entire article, please visit publisher's site to subscribe --