Flash Coffee Founder, COO & CFO, Sebastian Hannecker, speaks to 5THWAVE about instigating a digital café revolution and how his brand is democratising premium coffee across Asia
"We saw the potential to reinvent the customer journey using technology" | Sebastian Hannecker, Founder and COO, Flash Coffee | Photo credit: Flash Coffee
Striking out with its first store in Indonesia in January 2020, Flash Coffee has sparked a remarkable ascent across Asia. Despite setting up shop just as the Covid-19 pandemic was brewing, the chain has since expanded to more than 200 stores across Indonesia, Singapore, Thailand, Hong Kong, Taiwan, South Korea and Japan.
Deploying a new retail-style business model, customers can order drinks for pick-up or delivery via Flash Coffee’s custom app, with the brand aspiring to ‘digitise today’s offline-dominated coffee industry’.
With convenience and quality at the brand’s core, Flash Coffee also offers a competitive price-point that opens the premium coffee shop experience to swathes of previously untapped consumers across Asia.
“Income levels, especially in emerging parts of Asia, are lower, making most major coffee chains far less accessible in terms of price,” says Flash Coffee Founder and CFO, Sebastian Hannecker.
Having been inspired by Melbourne’s specialty café scene, Hannecker also saw the opportunity to introduce lighter roasted coffee in Asian markets more accustomed to a darker taste profile, especially in Indonesia.
“I wanted to combine these elements to offer a very high quality 100% Arabica light roast at accessible prices,” he explains.
From these small beginnings, the Flash Coffee team have been busy building Hannecker’s dream to have a coffee shop every 500 metres across every major Asian city.
Investors are buying into the Flash Coffee vision too. In April 2021, the company received $15m from prominent firms including DX Ventures, Global Founders Capital, and Conny & Co, to grow the brand.
There is undoubtedly vast untapped potential for domestic and international coffee chains alike across East Asia. World Coffee Portal
data shows the region’s branded coffee chain market grew 5.1% in 2020 to exceed 74,500 outlets, with 13 out of 17 markets achieving outlet growth during the period.
A flash of inspiration
With convenience a key pillar of the Flash Coffee experience, the brand deploys a digital-first strategy to provide a seamless experience for customers.
“I hate queuing, I’m impatient and I want my coffee quickly. Our model means that I can order coffee from my desk and collect it when I get a notification with no queuing,” Hannecker says.
So, how did Flash Coffee go about building its digital coffee utopia? “We built everything ourselves from scratch,” says Hannecker, who reveals that the company’s largest department is its team of in-house developers.
“We really are tech-first in that sense. We wanted to fully own our own tech product, so we are not using any third-party solutions for our customer app.”
More recently, Flash Coffee extended its app eco-system
to include delivery, enabling the business to sidestep third-party providers and further reduce complexity.
Flash Coffee’s flagship two-storey store in Sinsa, Seoul | Photo credit: Flash Coffee
“Customers now don’t need another provider to get coffee delivered. You can collect loyalty points and you have your order history all within in our app,” says Hannecker.
Flash Coffee’s digital-first strategy offers customers a greater variety of ways to access the brand, but it also generates business efficiencies that have been crucial to the business’s growth.
“We saw the potential to reinvent the customer journey using technology”
In particular, the deployment of nimbler stores with less seating, fewer overheads and staff costs, has enabled Flash Coffee to pass savings to customers while expanding into developed and competitive coffee shop markets, such as South Korea
“We saw the potential to reinvent the customer journey using technology. We looked at conventional café chains and wondered why coffee was so expensive. We realised that many coffee chains’ margins are through the roof because they’re spending so much on real estate, with many customers buying one drink and staying all day.”
By focusing on smaller stores, grab-and-go and delivery, Flash Coffee has been able to keep costs low. Nevertheless, real estate remains a key part of Flash Coffee’s identity, enabling it to showcase its bold branding and stand out from the crowd.
Behind the scenes, Hannecker says Flash Coffee is also looking at two ways to further optimise operations by automating its supply chain. The business is investigating how it can better forecast consumption of key products, such as coffee and milk, in individual stores, to reduce waste and more accurately schedule wholesale orders.
“If we can leverage technology to keep our cost base in check, then we are more likely to avoid price increases seen elsewhere in the market,” says Hannecker.
“Commodity prices are going through the roof, there’s a supply chain crunch and inflation is rising globally. Add a bad harvest in Brazil to that and there are many factors significantly driving up the price of coffee.”
With a presence across seven Asian markets and more in the pipeline, Flash Coffee is, however, curiously absent from China, which is frequently regarded as a key growth market among international coffee chains such as Starbucks, Costa Coffee and Tim Hortons.
Despite China’s potential as one of the world’s fastest growing coffee shop markets, not to mention high penetration of digital and appbased ordering among consumers, Hannecker says China won’t be on the company’s radar in the near term.
“Per capita coffee consumption is still very low at around ten cups per capita annually – across other Asian markets it’s around 150-200 cups. I never say never, but for the time being we are busy enough with the markets we are currently in.”
A bright future
Looking to the future, Hannecker says he is focused on continually improving customer experience across Flash Coffee’s growing business.
“We’re still a young company, and every now and then we get a complaint from a customer and that keeps me up at night. For me, it’s very important that we continually improve our processes. I think our coffee offering is already very strong, but there is still a lot of opportunity to expand our food menu, for example.”
As for Flash Coffee’s dream to instigate a digital revolution in the coffee shop industry, Hannecker imagines a time when offline ordering could become a thing of the past.
“Right now, we still offer the option to order at the counter. But as the adoption of technology increases, perhaps we won’t need it any more.”
With the cost of living rising sharply around the world and high rents chipping away at profits margins, Flash Coffee’s agile model could prove to be a successful template for coffee shops navigating today’s challenging economic environment.
This article was first published in Issue 10 of 5THWAVE magazine.
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