How Steve Benitez turned Bo’s Coffee into the biggest brand in the local cafe industry

“I’ve always known I was going to be an entrepreneur,” Steve Benitez admitted. This, after a circuitous path that took three years of being a law student at Ateneo, and simultaneously working for American Express in Makati. In 1992, his father decided to sell the family business Ric’s Barbecue near Fuente Osmeña. The restaurant, though not quite that large, had a loyal following. Steve offered to come back to Cebu and run it. He enrolled at a local university to finish law degree, and it became a mix of studying and working the food business.

ENTREPRENEURIAL BEGINNINGS

During that time, he found himself eating frequently at a nearby shawarma stall owned by a Lebanese. Of course, it didn’t take long for him to convince the owner to sell it to him. Taking a big risk and P120,000 from his meager savings, he jumped into more responsibilities. He expanded the business and was doing quite well, as the shawarma craze came into beginning. He still has the shawarma stalls, now currently run by his wife Geraldine.

He altogether dropped his dreams of being a lawyer to be in the food business, but still took time to travel every chance he got. Singapore was a favorite destination, with SilkAir offering direct flights. While there, as well as on trips to Europe–perhaps as a result of those late nights in law school that called for lots of caffeine-induced energy–he discovered cafe culture. Coffee to be enjoyed, not just gulped in one swallow, and served in insulated paper cups for a quick dash as needed. 

In Cebu during the mid-90s, the beverage was served in ceramic mugs, and you can usually get it from hotel coffee shops or at Vienna Coffee Haus. Why not make it more accessible and portable? In 1996, the Starbucks chain hadn’t yet entered the international fray, though it opened later that year in Tokyo as their first branch outside of the US. But for those who hadn’t tried Mr. Schulz’s brew in Seattle, Bo’s Coffee was a fresh idea.

THE BO’S OPENING

In 1996 also, Ayala Center Cebu was sparkling clean and there was not much traffic, as most locals preferred to do their shopping downtown. Steve was able to secure a coveted space in the middle hall, where he set up a kiosk with coffee tables–his version of a street cafe.

He called it Bo’s Coffee, named after an American-Italian expert coffee roaster that Steve met in the first coffee exhibition he attended in New Orleans. On the chalkboard menu, there were three flavors of espressos and his original brewed coffee. It was a slow start, his first month averaging a daily sales of only P100. On his second month, it grew ever so slowly to P200, then P300 per day–still not enough to cover the rent. For other people, this would have been enough to throw in the towel, but Steve saw growth, even if it was little steps. Sure enough, sales started climbing to P2000 a day.

STARTING THE EXPANSION

He opened his second kiosk at SM City Cebu shortly after. In the meantime, friends were still skeptical with his business model–it’s a tropical country, how can you sell hot beverages, or why would you pay P25 for a brewed coffee. Some said it was just a fad, and that most people would prefer the comfort of their go-to instant coffee.

The third Bo’s Coffee was at the Supercat Station by Cebu Port. Thinking it was a good idea for travelers to get their coffee just before boarding the ferry, Steve did not account for the novelty of his product. The stall did not turn out as expected, and was closed after six months. Unfazed, he opened his fourth outlet, this time a bold financial move as he built his first stand-alone coffee shop near the Capitol building. The 120-square meter building proudly displayed the Bo’s logo to passers-by on Osmeña Boulevard. He also introduced iced coffee and started offering pastries.

Today, there are a total of 81 Bo’s Coffee Club outlets. Steve proudly supports local coffee farmers, and is heavily involved in the roasting of beans that produced world-class espressos. Through the years, he has mastered a technique for dark, strong brews that are very popular even among die-hard Italians. 

Bo's iced coffees are some of the brand's most in-demand products
Bo’s iced coffees are some of the brand’s most in-demand products

THE BUSINESS CYCLE

Now, Steve calls Manila home, as he opened more outlets in the capital city. “I believe in timing, and in business cycles. I think companies that started around the mid-90s until 1998 when the Asian financial crisis happened had a bigger chance of success. Then, those that opened in 2003 should be okay too, until the next crisis happened in 2008 during the US real estate debacle. So all these cycles are five years in duration,” he opined.

For those entrepreneurial spirits, he voices from experience, applying the same cycle. “The first five years are the romance years–one starts a business and you are driven by passion, you do this because you want to. Then the next five years you want to sell. Just like a relationship, it’s either you make it or break it,” he shares. “If you make through ten years, business should become a breeze, and you start making money and investors get interested. It is now up to you on where you want to take the business.”

Despite those analytical data that Steve is fond of quoting, it is apparent that, at least for this entrepreneur, the passion is still strong. He continues to dash back and forth seeking new markets and forging alliances here and abroad. At least he is mixing it with something he loves best–a cup of java and traveling. After this interview, he was off to on another sojourn in search of the next brew, to Reykjavik, Iceland this time. Lucky guy.


A QUICK CHAT

What was 1996 like for the company? What were its challenges then, and how was it resolved?

As a start-up, the company was just really composed of six people, of which four were baristas, one bookkeeper and myself. We had one cart with seating, and I had to do multi-tasking to make things operate–from trainer and human resources, to delivery and inventory man, barista and store manager, among others.

The biggest challenge was to make the concept work. The concept of a lifestyle coffee shop was not yet familiar to the market. In fact, when I was putting the concept together, I already had a few setbacks. Nobody believed it would work. My prospective partners backed out. I failed in two of my three filters of measures: common sense, good judgement and gut feel. All I had was gut feel, but I went for it.

The first few months were downright disappointing. The daily sales average for the first month was less than P500. I tried to stay focused and continued working on adding more value to the concept. Every month of small incremental sales encouraged me to hang on. On the sixth month, it hit a positive turning point that I decided to open the second kiosk in another mall soon after.

Looking back at the last 20 years, what would you have done differently?

I did what was best given the limited resources I had. Our present is a result of the choices we made in the past. If I did something differently in the past, there is no guarantee it would result to exactly what it is now or better. Having said that, the only thing I wish I had more was the capacity to grow faster and bolder, so I could replicate what Jollibee did to fast food, in the coffee space that I’m in. Other than that, we’re on track to hit our goals by 2020.

At what point in the last 20 years were you finally able to say that this company is stronger and weaker? Why do you think that?

In retail, it’s all about scalability. How fast you can scale your business to a level where it builds momentum and leverage on its size to gain advantage? I would categorize my business journey in stages. The first ten stores was my honeymoon stage. It was fun and sweet. From ten to 30 stores, it became a real business concern. We were facing day to day challenges of managing cash flow, employee turnovers and issues, addressing customer feedback, meeting supply chain demands, just to name a few. From 30 to 70, the challenge to transform it to a corporate professional set-up was imminent. It was not a choice, but a must do. I would say if these stages were hurdled, long-term sustainability and growth for the business becomes more stable, coupled with a strong cash position.

Steve at last year's Bo's Coffeechella, a festival that celebrated coffee and creativity that celebrated the brand's 20th anniversary
Steve at last year’s Bo’s Coffeechella, a festival that celebrated coffee and creativity that celebrated the brand’s 20th anniversary

What new innovations would you consider for your industry in general, and for your company in particular in the coming years?

No business category is safe from disruption nowadays. It’s for this reason that I’m always on my toes, observing what’s going on not only in my industry but other industries in general. Our company environment encourages everyone to be creative, young, dynamic and open to anything. I’m proud to say that in the local coffee industry, Bo’s Coffee has always been a thought and innovation leader. As way back 20 years ago, we were the first to innovate iced and blended coffee in the Philippines, where most drank their coffee hot. We were also the first to introduce free Wi-Fi in all our stores, where all the others charged for it.

Five years ago, we reinvented the brand to showcase Philippine Coffee by highlighting coffee from different origins in the country, such as Benguet, Sagada, Apo, Matutum and Kitanglad, with yet more to come. In the works is to introduce traceable coffee–when you drink a cup or buy beans from Bo’s, you’d know who the farmer is, from what farm, when it was harvested, and when it was roasted. 

We are also the first one in our industry to introduce an app, used for our loyalty programs, promotions, and eventually a payment gateway. We are continuously looking for ways to make this app add more value to customer experience. The only way to move forward is to adapt to new market behavior using technology, and integrate more innovations in all touch points to enhance customer experience.

How do you see your brand in the next 20 years?

Our focus is to strengthen our operations locally for the next four years. That means to build more stores, to elevate customer experience, to create a stronger platform for our social entrepreneur partners and coffee farmers, to develop and grow more people and execute all our plans at a global standard. After which, we look forward to sharing the Filipino coffee experience to other parts of the world, starting off in territories where there are Filipino communities.

photography Ezekiel Sullano 

Originally published in Zee Lifestyle, Dec-Jan 2017

Eva Gullas
Eva Gullas

Eva Gullas is the publisher and executive editor of Zee Lifestyle. She is also the woman behind Peso Store and Nail Play.

No Comments Yet

Comments are closed

Pin It on Pinterest

Share This