There’s a lot to say about how the Spinn Coffee Maker has failed its customers with a delay of nearly two years, but there’s still a chance that story will have a happy ending (fingers crossed, Michael). Customers of Alpha Dominche, a tech hardware startup that’s made waves in the specialty coffee industry, aren’t so lucky.
On December 4th, Alpha Dominche notified its customers that the company was halting all operations immediately with no goal of launching up again.
“This past year we have explored every reasonable option to continue our business operations, but were unable to secure the resources necessary to continue. We deeply regret any hardship this causes our partners, customers, and friends within the coffee and tea industries.”
The company recently crowdfunded over $230,000 to manufacture the Flask Coffee Brewer, a relatively simple manual coffee maker, but they won’t end up shipping a single product. No refunds or late arrivals.
But it’s far worse for the company’s commercial customers. Alpha Dominche’s flagship product that launched in 2014, the Steampunk, is—or, was—an eye-catching $15,000 coffee and tea brewer designed for high-end cafes. And soon they’ll all stop working.
Thousands of cafes around the world purchased a Steampunk for its stunning cylinder design, vacuum-sealed brewing process, and tablet-driven controls. Many of these cafes transformed their bar layouts, customer flows, and menus specifically to complement the Steampunk. It was supposed to usher in the future of precision coffee and tea brewing, enabling coffee shops to brew using recipes hyper-tailored to individual coffees at the click of a button.
Flask Brewer backers are out eighty dollars, Steampunk-wielding cafes around the world are about to have a useless hunk of metal when the official servers go down, and Alpha Dominche’s brand new cafe in Brooklyn has turned the lights off. Alpha Dominche was the tech darling of the specialty coffee industry, the innovator leading the way to a high-tech future for coffee shops.
We’ve seen coffee technology projects fail in the past, but not with a company as beloved and well-funded as this. What does it mean for coffee tech? Have we discovered the boundaries of financial viability, the limit to what the industry can afford? Will cafe owners ever learn to love tech again?
Businesses fall apart frequently for reasons other than their products, but even in the beginning, many in the coffee world wondered if the Steampunk would be a sound investment.
“For me, financial viability was never even a question for an existing cafe,” Umeko Motoyoshi, Head of Coffee at Sudden Coffee, told me (Note: I have done freelance writing for Sudden previously). The device was so expensive that it would only make sense to purchase if you were to develop your entire cafe around it, from barflow, to customer interactions, and even the menu. Before Sudden, Umeko spent a few years at Four Barrel Coffee in San Francisco, “there was no pain point that the Steampunk would have addressed for it to be worth it.”
Margins are notoriously low for coffee shops, but the story is different for roasters who own their own cafes. Profits tend to be significantly higher per beverage since they receive the beans at a much lower price point, and this allowed Oak Cliff Coffee in Dallas to have a more positive experience with their Steampunk. As Will Riggs, Client Experience Director, puts it: “As a roaster, there was price justification because it was used primarily for our single origin coffees, which have a higher margin.” The cafe eventually sunset their Steampunk due to repeat maintenance issues.
I’ll admit to being an early skeptic myself. As a former cafe manager, I couldn’t make sense of the numbers for our own small town shop, especially when a top-notch batch brewer would run less than 10% the cost of the Steampunk. A positive ROI simply didn’t seem realistic.
The BKON Craft Brewer is a ~$10,000 tea and coffee brewer that looks eerily similar to the Steampunk, though the underlying brewing technology is significantly different. When I spoke to BKON about Alpha Dominche’s closure, I was surprised by what I heard. Steampunk owners may be burned, but they aren’t traumatized by the recent news and trading in their cloud-connected brewers for manual pour over cones. In fact, it’s quite the opposite.
“Cafe owners that were using the Steampunk aren’t looking to get out of coffee tech,” Dean Vastardis, one of BKON’s co-founders told me. “They’ve actually come to us looking for a way to fill the gap.”
But the question is still the same: can the coffee and tea industries really sustain expensive hardware like the BKON when margins are low and $1,500 batch brewers are already pretty good at making coffee?
Apparently, it can. Most of BKON’s Craft Brewers are located in smaller chains and independent coffee shops, and unlike Alpha Dominche, BKON doesn’t show any warning signs of closing down. In fact, they say they’re just getting started. Last year BKON launched the Storm brewer, a commercial-sized cold brewer utilizing the same vacuum technology and capable of producing up to 400 gallons of coffee or tea at a time.
The sudden closure of Alpha Dominche may have initially seemed like a sign of the end times for coffee innovators, but the coffee tech space doesn’t seem to be winding down. Flask backers will probably be more skeptical of future crowdfunding projects and some cafe owners may opt for less risky batch brewers, but the specialty coffee market as a whole isn’t finished with high-end coffee tech yet.