"I always had a powerful sense of the future I wanted to create."
Martyn Dawes knew early on that he didn't want to take a conventional path, even if he wasn't sure what the unconventional path would be.
“I always had a powerful sense of the future I wanted to create.” Martyn Dawes has never been the type to let a few setbacks get in his way. The founder of Coffee Nation knew early on that he didn’t want to take a conventional path, even if he wasn’t quite sure what the unconventional path would be.
Martyn grew up in the Midlands. An adopted single child, he had an early sense of being different despite an otherwise uneventful childhood. He dropped out of A levels with ambitions to be a pilot, but colour vision deficiency stalled his progress. He did the next best thing, joining an aerospace components foundry that made aircraft parts as a management trainee.
Not yet 20, he was made redundant not long afterwards when the company ran into difficulties. He applied elsewhere for an apprenticeship and, having been accepted, was noticed by the then quality assurance manager.
Martyn says: “He was a bit of a character and very innovative. He took me under his wing and it was an early lesson in the power of mentorship. The company was on the cusp of losing a big contract from a key customer. The manager suggested I have a go at turning it around. 18 months later, the company was awarded preferred supplier status.”
It was a great result, but Martyn was itching to move higher. He got his chance when he was headhunted by the largest agricultural tractor company in the world. He wasted no time in making a similar impact, massively reducing the scrap rate of incoming components from suppliers; “I turned things round to the point where the purchasing director said to his colleagues “if Martyn Dawes can do this, why the hell can’t the rest of you?”
Martyn met his wife and moved to London. His wife was also a high-flyer, having worked her way up to become an HR director for M&S. The pair teamed up and grew a consulting business with her focus on people and his on quality assurance. It grew steadily, but Martyn got itchy feet and started to look for something new.
“I saw a piece in Business Age magazine about photocopiers in convenience stores. It was a simple revenue share business model and it got me thinking about the footfall in newsagent shops and whether there were other products that could be sold that way. I went to New York, convinced that I would find the right idea somewhere in Manhattan. This was pre-coffee boom: Starbucks was just starting out and cappuccino was something you had on holiday. I saw a Seven-11 convenience store selling takeaway filter coffee for $1 a cup and it was flying out the door. I thought I could put that in newsagents back in the UK using self-serve machines.”
This turned out to be vastly more difficult than he thought. He had about 30 machines around the UK in Spar shops and newsagents selling hot drinks to take away using Nescafe instant coffee and powdered milk but none were selling more than about 50 cups per week. He did everything he could to sell more coffee. He found it was all push for very little reward: “I realised I was doing everything I could to look after the convenience store owners rather than learning about what made the business work.”
That all changed when he went to visit a store he had a machine in on a petrol forecourt in the Midlands. The machine was spotless as it was hardly ever used. He met a guy there and they got talking. The man said while he thought it was a good idea, he didn’t want to pay for the type of coffee Martyn was selling - he could make that back at his office with a jar of instant and the kettle. He wanted something special. “I realised I had made two mistakes; I had thought that people wouldn’t pay for a premium product, that instead they’d want in a convenience store what they drank at home, i.e. instant coffee. The second mistake was to prioritise low cost of equipment over product quality; the machines only cost £1,500 but all they did was to whisk up instant coffee granules not make a premium quality gourmet coffee made with fresh beans and fresh milk. I took the leap and installed an espresso machine, which cost many times what the instant coffee machine had cost but this made the product the hero and I could put up the price of the drink.”
It proved to be a turning point. Sales rocketed overnight and Martyn knew he was onto something. It became the UK’s first self-service gourmet concession: Coffee Nation was born.
He found himself some big partners – Texaco and Welcome Break motorway services – and seed capital to fund the new machines and then off the back of the results with those retailers he raised £4m of private equity funding. Great sales results meant he could secure long-term contracts with retailers and he could expand to more sites.
Martyn worked hard to maintain standards, developing his own maintenance operation. “We created a new market. Putting great coffee where it wasn’t available previously but where people would buy it if it was available. Pricing at or just below that of a coffee bar.” Companies wanted Coffee Nation not just because of the profitability of selling gourmet coffee but also because it brought more people into their stores who then spent more money on other items. By 2003 Martyn landed a deal with Tesco and by 2005 Coffee Nation was in 200 Tesco Express stores. The company grew very fast and by 2008 it was in 700 locations with £20m in revenues and had trials in Germany and the Netherlands. The company was sold successfully in 2008 and then again to Whitbread in 2011, who rebranded it as Costa Express (the group also owned the Costa Coffee chain).
Post exit, as Martyn re-engaged with the entrepreneurial world he decided to write a book telling his story of building a high growth company. There were a lot of books on entrepreneurship but all seemed to be saying ‘anyone can do it’. Martyn wanted to tell the truth - it’s not glamorous and it was really hard work. With that in mind, he wrote ‘Wake up and Sell the Coffee’, which was designed to be the real-life story of building a high growth company: “It set out many of the lessons I had learnt and also to help others not just start up and survive but perhaps go on to become the high growth businesses of the future – the start-up game is only part of it. It’s about getting from survival to profitability to growth.” His book was rated as one of the top UK books on entrepreneurship when it was published.
Almost as soon as he had sold Coffee Nation, he started to get asked to help other businesses and entrepreneurs. Since then he has mentored many founders, CEOs and boards of high growth companies including fast growth venture capital-backed companies, $1bn unicorns and major corporates.
The consultancy he founded with his wife back in the 1990s is now called Wondrous People and is the work transformation company of choice for many of the world’s leading and most ambitious companies and is itself now a growth business. Martyn is now helping steer this company on to even greater success but this time as Chairman instead of CEO.
He also speaks regularly in the UK & Europe on entrepreneurship and has since rekindled his love of aviation; Martyn is now a qualified pilot flying multi-engine aircraft all over the world.
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