All about the coffee

There was only one year that we held The Canadian Telecom Summit in a government owned facility.

Back in 2004, the event had grown big enough to warrant moving to one of Toronto’s larger exhibition facilities. The CEOs of Bell, Rogers, TELUS, Sprint Canada, and Allstream were all keynote speakers, as well as the CEOs and COOs from Cisco, Nortel, Ericsson, Siemens and Alcatel. Attendance was projected to be triple what it had been the previous year.

We booked the relatively new South Building of the Metro Toronto Convention Centre (MTCC), right downtown. The event was only held there once, and the reason we didn’t go back can be summarized by telling you a little story about the coffee.

A few weeks before the Summit was taking place, I attended another technology trade show at the same venue. I poured myself a cup of coffee from one of the big jugs and almost immediately spat it out, just like we have all seen in the cartoons. I called our conference producer and asked her to get the type of coffee changed.

She called me back a few minutes later with the response, “No”. Changing coffee suppliers? Unheard of.

We were told that was the coffee that gets served at MTCC. Period. After much discussion, we were able to negotiate buying our own ground coffee, providing it to the MTCC and they would still charge us the same $3 per cup to serve it, with the added proviso that we would agree to sign waivers for serving “outside” food and beverage. We were told how many pounds of coffee to provide for the 2 day event. As it turned out, buying bulk ground coffee isn’t that expensive – in those days, it was about $70 for a case with 20 one pound bags. A pound of coffee made 50 cups. So I bought nearly 50% more than what the venue recommended – just to make sure.

As it turned out, at the end of the first day, the maitre d’ informed me that he had never seen people drink so much coffee. He warned me that they were going to run out of coffee, and asked if we wanted to get more, or start serving their coffee. I had a taxi bring us another case of our roast.

After the event concluded, we met with the venue to discuss the ups and downs. We paid thousands of dollars for coffee for the nearly 600 people at the event. The MTCC salesperson echoed the Maitre D’s comments that our attendees drank more coffee than they were used to seeing. I replied that maybe it was because the attendees actually liked our coffee.

Think about it. We paid the equivalent of about 7 cents for a cup of a decent roast and the venue charged $3 to serve it. On a per cup basis, how much cheaper could the the venue be getting their ground coffee? Certainly, when you are buying thousands upon thousands of pounds of coffee, it may appear to be smarter to save a couple cents per pound. But they weren’t selling as much as they could.

I am sure that some government purchasing agent was proud of reducing the coffee expenditures by 10%, 20% or more.

But at what cost?

What we experienced was the result of staff focused on cost minimization, instead of profit maximization. Shaving a penny or two per cup in costs resulted in dramatic reductions in sales of a product with ridiculously high margin. For a few cents more per cup in costs, we showed how the venue could have been making so much more money and improving customer satisfaction.

The Canadian Telecom Summit moved to a privately owned venue near Toronto Airport for the next 15 years. When we first met with the other venue, the salesperson offered me a coffee. I asked what kind they served and following her response she asked, “Is there a particular roast you would like us to serve?”

There is a lesson in there about incentive plans for staff, and the way organizations measure success.

There can be a high cost associated with going with the lowest cost solution.

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