Innovation

In a world that has become and will continue to become more connected than ever, there has never been a more crucial time for businesses to make morally sound decisions. It became evident to us that the very foundation of this company was built on socially responsible principles; a great example of this is the fair trade practices orchestrated between Second Cup and its overseas bean suppliers in Costa Rica. First and foremost, Second Cup pays well above market wages for their farmers and their families in the form of a premium paid on top of the produce. In Costa Rica, the bean cultivation process is done by hand picking and deforestation is meticulously planned to ensure that the forest can replenish itself. Rainforest Alliance, a nonprofit organization created to conserve biodiversity and the well-being of workers, recognizes almost 99% of Second Cup coffees as Rainforest Certified. Our interviewee was actually able to go and see for herself first hand how these premiums add quality of living to the foreign bean suppliers.

A company's moral obligation extends to more than just the people who are affected by their business operations. Second Cup promotes environmentally sustainable business in multiple ways. For every beverage that is poured into a reusable container provided by the customer, that purchase is discounted by 20 cents.

Another major part of Second Cup’s sustainable business model comes from their consistent tendency to procure all operations and supplies they can from local businesses. During our interview, Lisa explained how almost every local business partner of Second Cup, such as the local bean roasters and bakers, has had to upscale their operations in order to continue to fill orders from their corresponding Second Cup locations. In addition to this, Lisa went on to explain how she personally delivers unsold food to the local homeless shelter in the Toronto location she manages.

Second Cup has created their own unique innovation through a sustainable business model and has established themselves as leaders in their industry. The UN Sustainable Development goals are achieved through three primary operational distinctions that Second Cup has made which include local procurement from establishments such as bakeries and bean roasters, fair trade business with out-of-country material suppliers, and finally proactive environmentally conscious decisions such as discounts for limiting waste from purchases.

Inspiration

Second Cup Coffee Co.™ was founded 42 years ago in 1975 by Tom Culligan and Frank O’Dea. Frank O’Dea’s story is one of beating the odds and triumphing in the face of adversity. It is this personal story that inspired our franchise owner to invest in this Second Cup location.

Overall impact

The philosophy of having the business operate in a fashion that provides an overall positive net benefit to society has shaped operations at Second Cup in a multitude of ways. By providing locally sourced pastries and other products where possible, Second Cup supports other businesses in the area that it operates within. This gives local businesses that have contracts with Second Cup the chance to flourish. A good example would be the bean roaster and baker in the area where Lisa Tirkalas has her franchise locations. Both have had to upscale their production to effectively match orders from Second Cup within the area.

Second Cup works with farmers in Costa Rica to source their fair trade coffee beans. As Lisa Tirkalas describes, “I went to Costa Rica to see why we pay a premium for fair trade. We provide housing for them (the employees), buses that take their children to school, and they deliver the best quality coffee that we can ask for.” A major component of fair trade goods is that the buyers of the goods pay a social premium to the producers of said goods. In the case of Costa Rican coffee, the price that Second Cup pays for the coffee includes the higher wages paid to the workers, and housing and transportation for the children of the workers. These benefits ultimately end up benefiting more than just the workers on the farm as the workers spend their money within their communities in a sort of trickle down effect.

In terms of the environment, Second Cup has programs both in the local area and abroad that are environmentally conscious. The business is proud to advertise the fact that almost 100% of their coffees on the menu are Rainforest Alliance Certified™.

While all these factors contribute to the cost of a coffee at Second Cup being more expensive than typical coffee shops, business at Second Cup has shown that people are willing to pay for goods that are sourced in a sustainable and responsible manner.

In the short-term, the adoption of all these programs has caused each franchise location as well as the business to have a higher overhead cost, which correlates to a smaller amount of profit made. However, the business views this as necessary to promote a sustainable future not just in Canada but also the regions of the world in which Second Cup does business. The evidence for the impact the business has is made apparent for franchisees when they tour the farms in Costa Rica and are able to see the benefits described firsthand. Other evidence would be the success of affiliate organizations such as the Rainforest Alliance, which has been operating for 30 years now and makes progress towards its goal of a sustainable future daily.

Business benefit

At first glance, it may seem as though this business model offers less in terms of financial stability due to focus on areas other than just profit. For instance, the premiums paid on top of the cost of the raw beans imported from Costa Rica or the extra cost required to hire a local bean roaster are expenses that could easily be cut for a quick profit - so why haven’t they been? The answer lies within our very own humanity. People (especially if they have the luxury of choosing which brands to support) will often choose to not support companies and corporations that have moral or ethical views that do not align with their own. Second Cup’s tendency to put people before profit allows them to mark up their own prices to compensate for their increased production costs while still maintaining enough sales to be a profitable company. In addition to this, the age of multimedia that we currently live in allows for companies who do good deeds to “blow up” in the sense that a photo or article that outlines their altruism could end up as a potential free advertising campaign.

Social and environmental benefit

Second Cup provides both societal and environmental benefits in local areas around their coffee retail stores as well as other locations that house their operations around the globe. Local society is benefited directly in the sense that, on top of providing their own jobs in store to locals, they also provide local businesses with improved revenue of the own. Our interviewee, Lisa, also went in depth on recycling habits, as well as mentioned that she has personally delivered unsold food to homeless shelters on multiple occasions in the past. The 20 cent discount that is also offered to customers who bring their own container for a beverage is another great example of sustainable business practices that benefit the environment at a local level.

In terms of global scale benefits, Second Cup puts hours of meticulous planning and consideration into their employee benefits for bean harvesters in Costa Rica in order to benefit the societies that their employees belong to. As previously stated, Second Cup pays a premium on top of their bean imports in order to benefit the families of the bean farmers in Costa Rica. Their transportation to work is provided, as well as their children’s education transportation to school, they pay higher wages to workers, and even provide moderate health care. Beans are hand picked by workers to avoid a large environmental footprint, and farming strategies are planned and implemented in a way that does not jeopardize the sustainability of the forests, giving them a chance to regrow over time. The fact that Second Cup coffee is almost 100% Rainforest Alliance Certified only reinforces the idea that Second Cup is taking real action to ensure the sustainability of the environments that are affected by its operations.

Interview

Lisa Tirkalas, Franchise Partner