From tradesmen to NHS workers, a queue snakes out of the door of an Esso petrol station on a soggy October morning in Dorking, Surrey. But they are not lining up for petrol; they are seeking another fuel — a cappuccino, latte or Americano from one of the three Costa Express machines in the corner.
Every morning, a growing army of caffeine cravers queue up at 12,000 forecourts, motorway service stations and shops around the country at these same robot baristas. Selecting a £3.30 latte, Paul, 39, a digital marketing manager who works in nearby Leatherhead, explained why: “There’s a great coffee shop in my village, but it’s about convenience. I come here every Monday and Friday for a little boost.”
As financial accounts lodged last week show, Costa Express machines have become a money-spinner. Last year, they churned out a profit of £70 million — nearly eight times the earnings of Costa’s 2,500 UK cafés. Little wonder that, after being slow off the mark, Starbucks, Pret A Manger and others are now playing catch-up by rolling out self-service machines of their own.
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Costa is now owned by Coca-Cola, but the Costa Express phenomenon goes back to an entrepreneur who came up with the concept more than a quarter of a century ago. And, perhaps surprisingly, the idea was not inspired by a coffee craving, but the humble photocopier machine.
Martyn Dawes had been on a trip to America, where the popularity of photocopiers in convenience stores piqued his interest. He had read in an article how it worked: the manufacturer installed the machine free of charge in return for a slice of the takings. The store owner was on a win-win: all he had to do was fill the copier with paper and ink cartridges from time to time, and then watch the money roll in. Not only that, but the machine brought a new batch of customers into his shop.
It was the 1990s, and high street coffee shops were getting to be a huge thing, but self-service machines were still churning out foul coffee made with powdered milk.
It suddenly dawned on Dawes that what he had seen with photocopiers in the US could work for a high-quality coffee maker.
But he needed to build the machine.
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The big obstacle was figuring out how to use real milk. Conventional machines used powdered for a reason: fresh milk clots within minutes, clogging up every pipe, tube and nozzle it touches. That’s why you see baristas wipe the foamer after every cup — so a device was needed that was as hassle-free for the store owner as a photocopier.
Fortunately, other manufacturers had already discovered the solution. Milk clots only when it gets warm; keep the pipes it travels through cold, and it runs as smoothly as water.
Refrigerator systems were already on the market that did just this. The technology was borrowed and a prototype created. It wasn’t long before four machines were in petrol forecourts and service stations, but needed serious investment to expand the business further.
By the second half of 1999 Dawes had brought on board Scott Martin from the consumer giant Unilever to help with the operational rollout. And with their proof of concept up and running, they persuaded Neil Wallace, a partner at the private equity firm Primary Capital, to invest — and Coffee Nation, the forerunner to Costa Express, was born. Within five years, they had nearly 1,000 machines installed across the country.
Wallace recalled: “What became evident was that when people tried it, they thought, ‘You know what? This coffee is as good as high street coffee.’ The challenge was to get them to try it in the first place.”
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The company’s rapid success began sparking interest from potential buyers. Wallace’s fund sold its stake for a tidy profit in 2007, and a few years later, Whitbread, the conglomerate that owned Costa, came knocking.
In 2011, it bought the business for £60 million, making Wallace and Martin millionaires many times over. Now their business had exactly what it needed to take it to the next level: a recognisable brand in Costa and the deep pockets of a FTSE 100 company.
“Costa Express was born,” recalled Martin, who would stay on at the business until January this year. “A million cups a year soon turned to a million a month. Then a million cups a week.”
In 2019, it got an even bigger owner when Coca-Cola bought Costa from Whitbread for nearly $5 billion. For the US giant, the fast-growing Express business was a key attraction.
Like the best inventions — from the iPhone to ChatGPT — the key to the machine’s success is that, while the technology behind it is sophisticated, it is extremely simple to use. Clean it at the end of the day, fill it with milk every few hours and off it goes. As the chief executive of one of its biggest operators put it: “All we really have to do is provide the power, water and milk.”
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It is low maintenance for Costa, too. A 3G or 4G card transmits data on every machine in real time back to Costa’s headquarters in Buckinghamshire. This allows the company to calculate the profit share with the store and alerts its team of engineers to any faults.
But Costa’s dominance in DIY coffee was not just of its own making. It can also be explained by the reluctance of its rivals to transition to self-service drinks.
Starbucks and Pret A Manger are belatedly expanding in the market, while the billionaire Issa brothers — owners of petrol stations, Asda and the Leon fast-food chain — have rolled out 200 self-service machines across their forecourts and supermarkets.
Others, however, refuse to get involved. A Caffè Nero spokesman said: “[Our] beans are ground by the barista, who hand-prepares the coffee, steams the milk and pours it for the customer. We believe it delivers a better-quality cup of coffee.”
Greggs, which is one of the biggest sellers of coffee in the UK, said it also has no plans to switch to self-service machines.
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Gerald Ronson, the millionaire entrepreneur whose forecourt business, Rontec, owns the Dorking petrol station, is a big fan of the robot baristas.
“People look forward to their morning coffee,” he said. “And selling Costa coffee is big business.”
I’ll stick with the humans, thanks
Costa says you shouldn’t be able to tell the difference between the coffee that comes from its baristas, and that which comes from its Express machines across the country, writes Charlotte Ivers. After a blind taste test of a medium-sized cappuccino with a chocolate dusting on top from both, I’m afraid you can.
At first glance, you are getting better foam for your buck with a barista-made coffee. The robot-made version has a rather sad flatness to its surface. Both have a somewhat sickly hot chocolate smell, but the machine offering is definitely sweeter and more cloying.
Costa is proud that its machine-made drink contains real milk rather than powdered, and to be fair to them, it’s definitely milky. Milky to a fault. You can barely taste the coffee. Which is probably a bonus for some, but not for me, because I’m not four years old.
If you are looking for a coffee that tastes like coffee, you will have to rely on good old baristas. Another win for the humans against our future robot overlords.
Call me cynical, but I suspect Costa probably knows there’s a difference between the two, or why would it keep shelling out for its wage bill if a machine could replicate the human touch?
• The regular cappuccino cost £3 from a machine at Tesco Express. It was slightly smaller than the £3.80 medium from a Costa branch
