STRONG FUTURE BREWING

After almost 30 years, Coffee Beanery’s hot cup still runneth over.

Someone once told JoAnne Shaw, founder and president of The Coffee Beanery, Ltd., that she had only two factors to consider in growing her business: quantity or quality.

“That person told me once you make the decision on which way to go, everything else falls in place,” Shaw said. “We’re not going to be Wal-Mart or K-Mart. We just want to be the place to go to get the best cup of coffee in the world.”

That’s been the goal of The Coffee Beanery since it opened its first store in 1976 in one of the nation’s first mega-malls outside of Detroit. Not until nine years had passed and it had eight corporate stores, did The Coffee Beanery make the decision to begin franchising in 1985.

In the ensuing years, the chain’s growth has been slow and steady, just as planned. Today, The Coffee Beanery has almost 200 locations, with 166 of those spread over 30 states. The remaining international locations are in four countries, including China, South Korea and the Middle East.

But now, The Coffee Beanery is getting its own java jolt. With a stellar reputation within the industry and the adoration of coffee connoisseurs everywhere, the Flushing, Michigan-based company is looking to attract an even larger following. By year’s end, The Coffee Beanery is expected to open 22 stores, with plans to almost double that number to 40 in 2005.

“We’re really at a place and time where we have put all the tools and support in place to accelerate our growth and do it in a planned manner that helps build brand awareness in markets,” Shaw said.

The Coffee Beanery is all about the quality found in its 50 different types of coffees. It is certainly no Johnny-come-lately to the specialty coffee chain craze. Shaw, along with her husband and co-founder, Julius, has been in the coffee business for almost 40 years. In 1967, they started Shaw Services, which provides office coffee service. The couple was inspired to open The Coffee Beanery nine years later as a way to offer superior coffee at a time when freeze-dried and instant were in vogue.
“There really wasn’t a place to buy quality coffee of any sort,” Shaw said. “People would say they liked the smell of coffee, but they didn’t like the taste. Why? Because they couldn’t get good coffee to taste.”

Once customers were able to not only smell, but to taste great coffee, The Coffee Beanery became an instant hit. One year after its founding and with only two stores, sales reached $525,000. And the specialty coffee craze was just beginning to sprout nationwide. By 1979, specialty coffee sales within the industry had reached $763 million.
Today, The Coffee Beanery has found a comfortable niche for itself in its “David vs. Goliath” match-up, as Shaw calls it, against industry colossus Starbucks, which has more than 8,000 locations.

The niche has been filled by The Coffee Beanery’s street-front café concept, first introduced in 1995. With a jazzy, contemporary look, the cafes are either free-standing or in strip centers, generally in upscale suburban locations. The cafes feature not only coffee, but also muffins, biscotti, breakfast, sandwiches, salads, wraps and toasted sandwiches. The Naples (Fla.) Daily News described the chef salad as “perfection on a plate.”
Some of the cafes feature outdoor patios, wireless Internet connections or “WiFi” and often have live entertainment. The combination of menu offerings and ambiance at its cafes has helped boost the average register receipt to between $6 and $7, almost double the ticket average at The Coffee Beanery’s mall locations, which currently make up 60 percent of its system.

“We’re in between a Starbucks and mini-Panera Bread,” Shaw said. “We fill a niche that no other chain has really filled with awesome coffee, great food offerings and wonderful service.”

It’s no wonder that Shaw expects the café concept to make up 80 percent of The Coffee Beanery’s future store openings. Cafes now comprise about one-third of The Coffee Beanery locations, with the remaining seven percent devoted to non-traditional locations such as airports, where the chain is gaining even more visibility and building brand awareness. Airport concessionaires have turned to The Coffee Beanery to replace other specialty coffee competitors in Detroit, Nashville and Memphis.
“What we offer a customer when we replace a competitor is more quality choices,” Shaw said. “Our flavored coffees are hand-flavored with natural or artificial extracts at the time of roasting. There are no calories, no alcohol and no sugar. Others generally use syrups to attain flavors.”

The Coffee Beanery is turning close to home as it looks to build a stronger presence in its domestic markets. It has close to 40 stores in the metropolitan Detroit market, but Shaw is hoping to add another 40 to 50 locations. To attract franchisees, the chain has embarked on an aggressive campaign using radio spots, sales seminars, billboards and ads in upscale magazines.

Within the next six months, The Coffee Beanery will expand its growth focus to the Philadelphia/New Jersey area, where it has its second-greatest concentration of stores. However, Shaw is quick to point out that The Coffee Beanery won’t ignore the opportunity to build mass in any of its other markets covering 30 states.

Shaw said she has no fear of nearby competition, believing it’s good for The Coffee Beanery because it “keeps you on your toes” and also builds brand awareness by bringing more customers to an area. She also sees the coffee craze continuing to percolate for some time.

“The difference between coffee and other concepts is that we’re not trendy,” Shaw said. “We’ve already been around for 27 years and our customer base is growing. Once a customer becomes accustomed to high-quality coffee, it becomes very difficult for them to switch back to lower-quality coffee.”

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