Independent coffee shops were hit hard by the pandemic last year. In October, Euromonitor International predicted that the U.S. would have just 25,307 coffee/tea specialty outlets by the end of 2020, a 7.3 percent drop year-over-year and the first such decline since 2011. While giants like Starbucks had the resources to weather the pandemic, smaller independent chains bore the brunt of COVID-19 fallout.
Given this dark backdrop, you might think that Bellwether had a bleak year as well. The startup makes a compact, connected, electric and ventless professional coffee roasting machine meant for independent cafes — like the ones that shut down last year. But actually, Bellwether didn’t just survive the pandemic, it thrived.
“We ended up having a really good year,” Bellwether CEO, Nathan Gilliland told me by phone this week. “We grew revenue a bit over 100 percent last year and installations doubled.”
Gilliland attributed this growth to a number of factors. First, at the start of last year, the company introduced a rental model. Previously, coffee shops could only buy or long-term lease Bellwether’s machines. The new rental model is more expensive than the leasing option, but it also comes with just a one-year commitment (as opposed to five), which proved more enticing to customers. Gilliland said that the majority of new installations in 2020 were rentals.
Another reason for Bellwether’s growth was who its customers were selling to. During COVID, in-house dining/drinking operations were shut down across large swaths of the country. With their consumer traffic down, cafes started selling their roasted coffee to local grocers.
Perhaps sensing and opportunity, in the fourth quarter of last year, Bellwether itself decided to start targeting grocers as potential customers. Since the Bellwether is the size of a vending machine and runs automated roast programs from the cloud, the device is relatively plug-and-play. You don’t need to have a staff of coffee experts to operate it. Roastery (née Carbine Coffee) was another electric ventless roaster that launched around the same time as Bellwether, also targeting grocers. (Roastery’s fate is unknown at this point as its website is just a picture of the device with no text, links or other information.)
In addition to the machine itself, Bellwether also makes money through its green coffee bean marketplace. Gilliland said that 85 percent of Bellwether’s customers order green beans through Bellwether, and 65 percent of those order more than half of their green beans through Bellwether. The Bellwether machine roasts seven pounds of coffee at a time, and the average Bellwether customer roasts 100 lbs of coffee per week.
With the pandemic receding, Gilliland and Co. are looking ahead to the rest of this year. In addition to more people actually sitting inside coffee shops, another reason the future looks bright for Bellwether could be stricter environmental regulations. Cities like Seattle and San Jose have banned natural gas from being installed in new commercial constructions, creating an opportunity for the all-electric Bellwether to step in as a way for small shops to have their own roaster.
Gilliland is also looking abroad. The company will begin expanding outside of North America this year, with machines going to Southeast Asia and Japan. Additionally, Bellwether is looking to create an iTunes-like experience for its roasting recipes. Coffee shops will be able to upload and sell their particular roast programs via Bellwether, which others could pay for to download and use. Specifics have yet to be determined, but there would be a rev share for roast creators.
Without a doubt, 2020 was a bad year for independent coffee shops. But perhaps Bellwether’s growth could be, well, a bellwether for better times ahead for the industry.