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Caribou Coffee announced nationwide closings.
Has the rise of third-wave coffee shops inevitably hurt the coffee chains? It appears at least one chain has been forced to change its game.
Caribou Coffee, the Minneapolis-based coffee chain, announced closings of 88 stores nationwide today, according to The Huffington Post. Sixty-six of those stores are in the Chicago market, but closures will span as far out as Ohio, Pennsylvania, Maryland, and Washington, D.C. But the company also plans to convert at least a dozen of those shuttered stores into Peet's Coffee & Tea shops. Said the company in a written statement, "Over the past few months, we at Caribou have revisited our business strategy, including closely evaluating our performance by market to make decisions that best position us for long-term growth."
The Chicago Tribune reports that after the closures — effective this Sunday — about 1,000 people will be out of jobs. Of the stores lef, the Tribune says, "Caribou will have 486 locations in Minnesota, North Dakota, South Dakota, Western Wisconsin, Iowa, Kansas, North Carolina, Denver, and 10 international markets." HuffPo says that the company appears to be aiming closer to its home market of Minneapolis in this new strategy. So when you're not hanging out at Spyhouse in Minneapolis, better head to Caribou and keep those lattes coming.
Where the Best Restaurants Rank in Customer Service
Sometimes we talk about automation like it’s a magic Matrix pill. An ultra-tight labor market and wage increases are boxing quick-serves into an interesting conundrum. Can you survive the added labor costs, but still guard customer experience? Everyone wants to be the next Chick-fil-A. Yet that kind of ingrained culture took decades to build, and now it just feeds itself. The more common scenario is a Catch-22 of sorts. You want to offer outstanding customer service but you can’t afford to retain employees. Hiring quality help is one hurdle, especially given the tough-to-match incentives large brands offer. Trying to stem the triple-digit turnover tide is another. So the churn becomes something that strains a restaurant’s mission statement, even when the founder has the best of intentions.
This is one reason you see restaurant chains try to replace the human element in a way that doesn’t destroy customer experience. Kiosks that have a guest-facing employee, like McDonald’s and its Experience of the Future model. Automated ovens like Arby’s uses at some locations so employees don’t have to arrive at 7 a.m. Mobile ordering and AI systems that keep employees off the phone during peak hours.
Take this example from Dunkin’. Chief operating officer Scott Murphy told The Wall Street Journal, “We spend a lot of time training people and a month later they walk out the door.” In response, Dunkin’ assembled a focus group to discover the tasks that made employees quit. Many were menial and wouldn’t be noticed by even the most loyal customer. Things like labeling expiration dates for stock and digitalizing quality specifications for coffee grounds. Dunkin’ turned to automation as a solution.
Digital menu boards. McDonald’s in Canada boosted sales 3–3.5 percent by highlighting items, like a milkshake on a hot day, to align with customer preference. Again, these are changes intended to enhance customer service, not replace human, guest-facing interaction.
Employee scheduling with automated texts instead of emails or calls. App notifications. Training with online content and interactive programs instead of pulling hours out of a manager’s day-to-day workflow. Virtual reality software that helps new employees tour the restaurant and onboard without a “buddy system” approach.
There are endless opportunities. There’s just a balancing act of making sure your restaurant’s four-wall traffic doesn’t get kicked curbside along with off-premises orders.
Newsweek released a ranking of America’s Best Customer Service brands for 2019. A stat they pointed out: Analysts predict that by 2020, one-fifth of the country’s multitrillion-dollar retail business (this includes restaurants) will have moved to the web, slashing the number of workers needed.
The list was created so, as Newsweek said, it could “recognize a more personal factor in business success: the ways in which many companies nurture their relationships with consumers.”
This is the critical point. If your restaurant’s customers are cool with picking up their food in a cubby that doesn’t take cash, then so be it. But trying to be all things to all people, or the wrong things to the right people, can set your brand adrift in tough-to-correct ways. Newsweek teamed with global research firm Statista on the data.
They surveyed more than 20,000 U.S. customers who have either made a purchase, used a service or gathered information about a product or service in the last three years. Each customer gave their evaluation of several brands, totaling 132,954 evaluations. The survey stretched across 141 categories (we will focus just on restaurants).
The final evaluation was based on the Net Promoter Score (50 percent of the final score) and five evaluation criteria (also 50 percent).
- Quality of communication: measures whether the contact (via email, telephone or face to face) was friendly or polite.
- Technical competence: measures the quality of information received and whether questions were answered correctly and in sufficient detail.
- Range of services: measures whether one’s personal expectations and requirements were fulfilled.
- Customer focus: measures whether a personal concern/requirement was addressed with a tailored/specific solution.
- Accessibility: measures the availability of customer service in a shop or on a helpline.
Krispy Kreme's holiday promotions are a hit across all channels.
Bagel and sandwich chains
Bruegger’s often ranks well in customer surveys. In October, Bruegger’s was 16th overall, a spot ahead of Burger King, in Foursquare’s Loyalty Index. That study measured consumer behavior through foot traffic analysis. Last December, the 36-year-old chain closed 30 units nationwide, primarily in Eastern markets, based on financial performance and improved positioning for future growth, the company said. The previous August, the parent company of Bruegger’s Bagels sold the brand to Caribou Coffee. Bruegger's is part of the Coffee & Bagel Brands family and has more than 220 locations. It had 269 locations at the end of 2016, which was down from 284 two years prior.
No surprise on the top two. Krispy Kreme, bought by now-Panera Bread owner JAB Holdings for $1.35 billion in 2016, remains a cult favorite. Dunkin’, despite dropping the “Donuts” from its name, still splits its beverage and food about 60/40, although it’s pushing in a more beverage-led direction. That accounts for some 3 billion donuts a year. Duck Donuts is a very interesting challenge brand. First opened in North Carolina’s Outer Banks in 2006, the company launched its franchise program in 2011 and boomed to 65 units by May 2018. It also recently signed an international deal to expand in Chile, a place Dunkin’ jumped from five stores to 80 in 15 years. There are Duck Donuts open or in development in 23 states.
Fast-food restaurant chains
What is there to be said about Chick-fil-A on this topic anymore? Nothing, which is about as hefty a compliment you can pay the chain. This year’s American Customer Satisfaction Index scored Chick-fil-A at 87 to rule the limited-service category. The next closed competitor—Panera—was well behind at 81. Also, 87 was the exact same ranking Chick-fil-A received in 2017. Consistency as easy to count on as that smile in the drive thru. Which, speaking of, is another year-to-year thing that boggles the operational mind. Just take a look at this “service attributes” category from QSR’s 2018 Drive-Thru Study to see how ridiculously stable Chick-fil-A’s excellence is.
Firehouse's customer-service scores are off the charts.
Breakfast chains, historically, are loyalty grabbers since they’re part of a consumer’s daily routine. That’s one reason customer service is so key at this daypart. But that doesn’t mean automation can’t help. Look at Starbucks for example. While the baristas are often very informative and pleasant, the Rewards platform is where the money is. And it’s where Starbucks can crush those in its sector, simply from a numbers standpoint. The brand added an eye-opening one million members to its base last quarter, bringing the total up to 16.3 million people. That was the biggest jump in close to four years. Starbucks has nearly 30 million U.S. customers connected digitally between its Rewards program and its digitally registered base.
Fast-casual restaurant chains
Firehouse gets the big win in an insanely competitive segment. So much so, really, that it’s being squeezed to the point where many of the fastest-growing chains nationwide have halted expansion. Some upstarts have even been forced to shutter entirely. The cream is rising to the crop in this second wave of upscale quick-service growth. Makes sense to see three of the category’s stalwarts and trailblazers at the top. Firehouse CEO Don Fox told QSR in May, “We’re having a really great year, “Especially at a time when the industry is lackluster at best.” Firehouse launched a new national advertising campaign this past year created by Dallas-based Richards Group, best known for its Chick-fil-A work. The campaign was heavily focused on digital and video—a new direction for Firehouse. It’s also launched delivery, updated to-go systems with new packaging and operations, and remained committed to the long game. “I can have all the time and money in the world, but the bottom is if I don’t have people, the business doesn’t operate,” Fox said.
In November, 1,400-unit Papa Murphy’s said it was conducting a formal review of all strategic alternatives. This included, but was not limited to, a potential sale of the business. No fresh news, on that note, has surfaced since. The brand’s systemwide same-store sales dropped 2.1 percent in Q3 as it began to see traction in its turnaround strategy. Although negative, the percentage change was Papa Murphy’s best in 12 quarters. The chain released preliminary Q4 results Monday afternoon that kept the momentum going. Same-store sales fell 1.3 percent and Papa Murphy's saw positive comps in October—its first period of growth in 37 months. “Momentum has continued into 2019, and we expect our strategic and cost saving initiatives to continue to deliver in 2019,” Weldon Spangler, chief executive officer, said in a statement. Papa Murphy’s is also working toward returning to at least a 95 percent franchise system with no more than 50 company-run restaurants by 2020. Among the changes leading the turnaround, the company said, are “the adoption of key marketing messages” that feature a low, broad, and consistent value message a new online platform launched with Olo in March a fresh mobile app introduced in September and increased delivery (delivery orders upped 67 percent last quarter and was, as of November, available in more than 400 stores through partnerships with third-party providers.
Hungry Howie’s is a brand that knows all about embracing the digital realm, as you can read about in this feature. As for Marco’s, the chain plans to open a new store every three to four days in 2019 and hit 1,500 by late 2020.
Here are the rest of the categories:
Ice cream and frozen yogurt stores
A quick note here: Customer service is the exact arena Cracker Barrel said it’s working to reignite. Always a staple, some of the chain’s operating procedures strayed from brand aim in recent quarters. Traffic has been in the red for some time now. But many fixes, including implementing everyday value across all occasions, are in the works. Read more about Cracker Barrel’s efforts here.
What the Chic Drink Now: Tea With Gummy Balls
Late on a recent Saturday night at a noisy tea bar in Westwood, a lively crowd of hip young things are sipping sweet concoctions through wide, brightly colored straws.
Known as boba teas, the drinks are featured at a new breed of tea bar popping up in college towns and trendy spots across the nation. Blended like martinis in metal cocktail shakers, the $3-to-$4 drinks, with their gummy balls of tapioca, are edging their way into the mainstream from California’s Chinese-American enclaves.
A small but determined group of young entrepreneurs are betting that the colorful drinks that took Taiwan by storm a decade ago will fuel similar enthusiasm for tea bars in the United States.
Much like cigars and wine, tea has become a lifestyle to be marketed. Hugo’s restaurant, a longtime West Hollywood entertainment industry hot spot, recently added a separate tearoom complete with fountains and bamboo and more than 100 kinds of tea. The ritzy W Hotel in Manhattan features a “tea sommelier” in its restaurant.
In Westwood, four tea bars cater primarily to UCLA students and their late-night hours, and at least two more are on the way. The university itself started offering boba drinks at campus coffeehouses.
“This market is so untouched in the United States that I think anyone can make a name for themselves if they know what they’re doing,” said David Wang, 30, a grandson of the founder of Taiwan’s Ten Ren Tea Co.
With $3 million from Ten Ren and private investors, Wang recently opened two slick tea bars called Cha for Tea in Westminster and Irvine and has plans to start two more in New York and San Diego.
Figures for the fledgling boba market aren’t available yet. But add that to the chai tea fad in recent years and the growing taste for green tea, all of which has helped push up the overall U.S. wholesale tea market an estimated 8% last year to more than $4.7 billion from sales of $4.4 billion in 1999, according to Sage Group International in Seattle.
Some industry analysts, including Brian Keating of Sage Group, aren’t so sure boba teas will do what chai and green tea did for the industry, even if it is prompting the opening of more tea bars.
“I think it will have a very nice niche,” he said, “but I don’t think it will make the jump to Starbucks and the International House of Pancakes.”
Nonetheless, Keating sees the trend toward the Americanization of global tea styles, and that should lead to a record U.S. consumption of tea this year.
Coffee purveyors aren’t worried about the competition. “Because tea has such a different taste profile from coffee, it is in our minds a complementary beverage,” said Gary Goldstein, spokesman for the National Coffee Assn. in New York.
Indeed, Starbucks Corp. acquired Tazo Tea Co. in Portland, Ore., two years ago and added Tazo teas at its stores. And trendy coffee stores are offering rare, exotic teas for as much as $80 a pound.
About 30% of U.S. adults drink tea every day, compared with 54% who drink coffee daily, according to the National Coffee Assn. But tea consumption in the U.S. has been rising as coffee drinking has declined, according to the U.S. Department of Agriculture.
The annual consumption of coffee dropped nearly 20% in the last five years from 21.5 gallons per person in 1995 to 17.3 gallons last year, agency statistics show. Tea consumption, however, rose nearly 3% from 6.9 gallons to 7.1 gallons in the same period.
Wang hopes that Asian American college students at UC Irvine will introduce their non-Asian friends to the boba drinks at his lively tea bar near the campus.
Ten Ren tea, of course, is well known in Chinese American communities it has 17 retail stores nationwide, including nine in California. Its Tea Station bars in Irvine, San Gabriel and Hacienda Heights have catered mostly to a Chinese American clientele.
“All the Chinese people know who we are. It’s time to expand to the mainstream,” said the Taiwan-born Wang, a Columbia MBA. Wang presented his Cha for Tea blueprint to Ten Ren’s elders three years ago while working at MTV in New York. Now there are Cha for Tea locations in China, Taiwan and Australia too.
As he builds more sites, Wang will find plenty of competition.
Dali Yu, a 29-year-old UCLA graduate, opened a Relaxtation tea bar in a restaurant and retail center on L.A.'s Westside two years ago and has since drawn a competitor in the same building. Yu is planning to open another bar in Westwood Village, closer to campus, and a third one in South Pasadena in the next few months.
Restaurateur John Mekpongsatorn, also 29, was looking for new products for his Pan-Asian restaurants when he saw how popular boba drinks were in L.A.'s Asian neighborhoods. He opened the 60-seat Boba World teahouse in Westwood, just a hop from where Yu plans to open her next tea bar.
Mekpongsatorn now serves boba drinks at his Brentwood and Alhambra restaurants. “Beverages have a higher profit margin than food and a lot less overhead,” he said.
Enthusiasts of boba, often referred to as pearls or bubbles, believe they have the formula for the next big splash. The glutinous tapioca or yam balls are added to any number of tea- and fruit-based drinks, but the most popular drink consists of sweetened black or green tea with milk, shaken with ice and served with a heaping scoop of gleaming boba. The drinks are sipped through extra-wide straws.
Boba entrepreneurs are seeing no limits to their dreams.
“I want to be bigger than Starbucks,” Wang said. And he’ll have Mekpongsatorn on his tail: “I want to be the one putting it in malls across America. But if it’s not me, it’s going to be somebody else.”
In my opinion, Chameleon is better black. It’s a little watery, but it has a pleasntly round, earthy flavor that again I don’t mind at all and would not suggest sweetening, especially if you go for the Vanilla flavored one that is also very common on shelves. It does have a little bit of that sour bitterness that I mentioned earlier. Chameleon claims that it has chocolate and toffee tasting notes, there are faint hints of chocolate roastiness that hit the back of the mouth. The boldness of the brew is comparable to Califia, and it’s just as drinkable. However the taste might put some people off at first, but the more you drink it the better it tastes. It’s sold in both 32 and 10 ounce sizes.
This coffee is very, very mild and pretty sweet. It’s extremely drinkable because it is so light-roasted. It almost has a weird coldness that hits the back of your throat akin to eating a mint. It definitively tastes better without the milk because it just makes it too watery. It just tastes like coffee: no special tasting notes, but not offensive either. I think I personally would like the unsweetened version better, perhaps it would have more interesting flavors without the artificial sweetener taste. It doesn’t really leave an aftertaste, but then again the foretaste isn’t very remarkable either. It’s sold in 48 ounce bottles.
The 9 Healthiest Coffee Drinks and Smoothies
One of the sneakiest places excess calories hide is in beverages--and two of the biggest culprits are coffee drinks and smoothies. Though coffee itself is calorie-free and smoothies are made with fruit, the extras we add to these beverages can tack on hundreds of calories! Thankfully, there are plenty of better choices out there. Here, we've rounded up the nine healthiest smoothies and coffee drinks!
Be sure to 'Pin' this graphic for easy reference.
In choosing these beverages, we looked at calories, fat and added sugar. We tried to choose beverages with wide availability nationwide, with a variety of hot and cold drinks that are both sweetened and unsweetened. We think you'll find one to suit your preferences!
McDonald's Iced Coffee with Sugar Free French Vanilla Syrup (small)
Coffee drinks don't have to be complicated to be delicious and decadent. Simply add a sugar-free flavored syrup to your usually coffee for a treat!
4.5 g fat
1 g sugar
Caribou Coffee Northern Lite Latte (small)
It is possible to indulge in a latte for less than 100 calories. Choose skim milk, sugar-free syrup--and hold the whip.
0.5 g fat
12 g sugar
McDonald's Nonfat Latte with Sugar Free French Vanilla Syrup (small)
Lattes are a safe bet no matter where you go for coffee. Thanks to the milk, you'll also get 9 grams of belly-filling protein!
0 g fat
13 g sugar
Caribou Coffee Iced Northern Lite Mocha (small)
This cool treat mixes espresso, your choice of chocolate and skim milk. It makes a calorie-conscious snack any time of day.
1 g fat
19 g sugar
Dunkin Donuts Caramel Iced Coffee (small)
Dunkin Donuts comes in a variety of flavors, and you can get it sweetened or unsweetened. Even with caramel flavoring, this one has no fat--and just 100 delicious calories.
0 g fat
24 g sugar
Starbucks Caffè Vanilla Frappuccino Light Blended Beverage (tall)
Frappuccinos are a cross between coffee and a milkshake, and many of them are far too rich for an average day. Opt for the light version, which are made with the natural sugar substitute stevia.
0 g fat
29 g sugar
Smoothie King Slim-N-Trim Vanilla (Make It Skinny) (20 ounces)
Smoothies are a great way to get in a healthy meal on the go. Unfortunately, many restaurants that specialize in smoothies jack up the calories by adding sugar and high-calorie juice. Opt for the "Slim-N-Trim" varieties at Smoothie King, which are made with banana and a proprietary protein blend.
1 g fat
19 g sugar
McCafé Strawberry Banana Smoothie
McDonald's added smoothies a couple of years ago, and while they do contain the most sugar out of any on our list, they are low in fat. Unfortunately these smoothies only contain 3 grams of protein, which won't do much to fight hunger.
0.5 g fat
44 g sugar
Jamba Juice Berry Blend Smoothie (small)
This berry-based smoothie contains both soymilk and protein powder to boost staying power, plus six grams of fiber!
4.5 g fat
37 g sugar
What is your favorite coffee drink or smoothie? Did it make our list?
4. Quarry Park and Nature Preserve, Saint Cloud, Minnesota
Quarry Park and Nature Preserve is the largest nature preserve overseen by the Stearns County Parks system, spanning an area of more than 680 acres. The park is open to the public year-round from dawn to dusk and showcases a wide variety of plant life throughout its prairie, woodland, wetland, and bedrock ecosystems, including oak and aspen trees, Indian paintbrush, yellow ladyslippers, and prickly pear cacti. Two unsupervised quarries have been designated for swimming, with picnic areas and restrooms offered nearby, and three have been designated as scuba diving areas for certified divers. Rock climbing and cross-country skiing are also permitted in areas throughout the park.
1802 Co Rd 137, Waite Park, MN 56387, Phone: 320-255-6172
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With the acquisition of Panera, JAB will have spent more than $40 billion in what appears to be a big bet that it can muscle in on a market dominated by Starbucks and Nestlé.
Starbucks has just undergone a major management change, with its longtime chief executive, Howard Schultz, stepping aside to focus on developing its emerging high-end coffee business. Kevin Johnson, the new chief executive, served on the Starbucks board but made his career in technology.
In many ways, Mr. Schultz was the personification of the company, and under his leadership, Starbucks routinely posted record earnings and stellar growth, but it has run into some glitches recently. Investment analysts were spooked after the company reported first-quarter earnings in January that reflected slower sales in its vast fleet of American stores and problems with its mobile order system, which apparently could not keep up with demand.
One quarter does not, of course, a history make, and JAB also faces challenges.
It takes on Panera at a time when it has two large turnarounds on its hands, Krispy Kreme and Keurig Green Mountain. The doughnut chain was a phenomenon several years ago, then fell on hard times and has never fully recovered.
Keurig, which dominates the single-serve coffee market, has struggled as competition cut into its profitability. Then it made a big bet that fell flat on a single-serve machine to make cold drinks, and JAB stepped in.
The restaurant business in general has been in the doldrums for the last couple of years, with most big chains struggling to eke out increases in same-store sales of even 1 or 2 percent. Panera has done better than most. The company moved faster than others to build a mobile ordering system and cleanse its menu of ingredients like artificial preservatives and high fructose corn syrup that consumers do not want.
The NPD Group, a research and consulting firm, predicts that traffic in restaurants in the United States will remain stalled this year as well. The firm predicts that quick-service restaurant chains like McDonald’s and KFC, which account for 80 percent of the total traffic in the restaurant industry, will see a 1 percent increase in visits this year.
On Wednesday when it announced the deal with JAB, Panera said its same-store sales in its company-owned stores were up 5.3 percent, which is stronger than most.
But roughly 60 percent of its stores are owned by franchisees, with sales in those units not doing as well. Mr. Shaich said that was because the fruits of initiatives like the mobile ordering system, which were rolled out first in company-owned stores, have yet to fully show up in the performance of franchisees.
He said JAB had no plans to make changes. “They are hands off,” Mr. Shaich said. “These guys have a track record for investing in great brands and companies and letting management do their jobs.”
Under the terms of the transaction, JAB BV, the investment vehicle executing the transaction for JAB, would pay $315 a share, representing a premium of 30 percent to Panera’s 30-day volume-weighted average stock price as of March 31, the last trading day before media reports that Panera was exploring a potential sale. JAB BV would also assume about $340 million in net debt.
“We strongly support Panera’s vision for the future, strategic initiatives, culture of innovation, and balanced company versus franchise store mix,” Olivier Goudet, JAB’s chief executive, said in a news release. “We are excited to invest in and work together with the company’s management team and franchisees to continue to lead the industry.”
The transaction is expected to close in the third quarter and is subject to shareholder and regulatory approval. Mr. Shaich and entities affiliated with him have agreed to vote shares representing about 15.5 percent of the company’s voting stock in favor of the transaction.
Morgan Stanley and the law firm Sullivan & Cromwell are advising Panera. Goldman Sachs, JPMorgan Chase, Bank of America Merrill Lynch and BDT Capital Partners, and the law firm Skadden, Arps, Slate, Meagher & Flom are advising JAB. In addition, entities affiliated with BDT are acting as minority investors alongside JAB, which they also did in the Krispy Kreme deal.
Competition Gaining on Running Gear Stores
Some of the stores are seemingly no bigger than a closet and their wares fairly limited. But for a generation, specialty running stores have managed to survive even thrive around the country despite competition from the big chains and online and mail order outlets.
These small stores may be at a turning point, though. They face newly invigorated competition from bigger players looking for a piece of their profitable action. Chief among them is Road Runner Sports, a 25-year-old mail order (and now Internet) powerhouse based in San Diego. The company is opening its 19th store this month, and its president and chief executive, Michael Gotfredson, has a goal of 100. The Road Runner stores offer the same personalized service as their specialty rivals but are far bigger (8,500 square feet of selling space, on average) and have a more extensive inventory.
At the same time, the specialty running stores are, in effect, graying. Some of the pioneers of the genre got into the business more than 30 years ago, and are now close to retirement age, many without a succession plan.
“I think a lot of specialty stores are at a critical juncture,” said Tom Raynor, chairman and chief executive of Fleet Feet, which started in 1976 and now has 80 franchised stores nationwide. His company, he said, has a mechanism in place to help retiring owners of stores. But, he added, other small-store owners “don’t have any good viable exit strategy.”
“The hope that they’ll sell the business for a million bucks and retire to Tahiti is not reasonable.”
For the time being, though, the small running stores are strong.
According to a survey by the Leisure Trends Group in Boulder, Colo., there are more than 700 specialty running stores representing about 450 owners around the United States. In 2006, they accounted for $596 million in sales. Figures for the first half of 2007 showed a 12.4 percent sales increase over the period in 2006.
“The species is strong,” said Mark Sullivan of Formula 4 Media, founded in 2005 to harness what he and his partners saw as a huge potential in specialty running stores. The company helped start the Independent Running Retailers Association it publishes a newsletter and holds an annual conference and trade show called the Running Event, which has grown by about 40 percent to 600 participants in its two years in existence.
“Right now as a class of trade, running specialty is hot and has been hot for the last three years. If you opened a running specialty store in the last three years and you could walk and chew gum, you would do O.K.”
But Mr. Sullivan agreed, “It’s about to stiffen up.”
Gary Muhrcke, who won the first New York City Marathon in 1970, was one of the first people to ride the early wave of interest in running into the running business selling shoes from the back of his van in 1976. Now 67, with a thin runner’s body and a shock of gray hair, Mr. Muhrcke owns Super Runners Shops in Manhattan and in Huntington, on Long Island. Personal service with shoes, in particular, he said, is the reason for his longevity.
“I can’t see the shape of a person’s foot over the phone,” he said. “I can’t do a gait analysis over the phone. I can’t look at a person’s body structure or size or whether they’re bowlegged over the Internet.”
He added, “The basic reason why we’re still here we’re needed.”
Still, he said, he would entertain offers to buy his stores, “without a doubt.”
Mr. Gotfredson of Road Runner Sports said he believed that his stores and catalog dovetail, more than compete, with small stores. But specialty running store owners are generally not happy to see Road Runner coming.
“It’s a fact of life some people will do anything to save $3 so they’ll come to our store and get fitted and then go up the block and buy it there,” said Leanore Gallardo, whose flagship Metro Run & Walk in Falls Church, Va. one of three she owns in the Washington area is about to face a Road Runner Sports a mile away. “Only a fool would not be concerned,” she said.
It complicates plans by Ms. Gallardo, 62, to sell her store and retire. “It’s a concern that I think about every day of my life,” said Ms. Gallardo, who has already had one sale fall through.
That is why Julie Francis, 49, who opened a store in 2001 called soundRunner With No Boundaries in Branford, Conn., told her son Preston, 24, that he had five years to decide whether he wanted to take over the business. He runs a recently opened second store in nearby Madison.
Ms. Francis, like virtually every owner, vendor, industry analyst and runner, attributed the success of specialty running stores to three factors.
First is the running shoes the most important product running stores sell, accounting for about 60 percent of sales. Stores have made their reputations on the ability to fit customers personally and properly.
“I was running actually in the wrong shoes for years, and I was getting injuries all the time,” said Sarah Vaughan, 52 of Hamden, Conn., who said she had bought shoes at chains like Sports Authority before trying soundRunner five years ago. “They looked at my foot and the shape of my foot and the kind of running that I do and they put me in the right shoe and I’ve been injury-free since.”
Second, the stores have adapted through the years to a broader clientele of fitness runners and walkers, half of whom are women. They are not just for elite runners anymore.
Data from the National Sporting Goods Association for 2006 found that 20.6 million people identified themselves as frequent or occasional runners and 68.9 million as frequent or occasional walkers.
The specialty stores have also assumed a role in their communities, sponsoring races, clinics, training, medical referrals and social networks. Consider, for example, Saturday mornings at Common Grounds, the coffee shop next to the soundRunner in Branford, which is usually crowded with three dozen runners of all levels socializing after group runs.
“You’re getting the whole package there,” said John Febbraio of Guilford, Conn., 55, who started running after his wife began three years ago through a clinic at the store. “Everything you need advice and merchandise and friendship.”
A fellow coffee drinker, Jerry Turk, 49, an ultra-marathoner, said he liked the training camaraderie the store provided, but tended to buy his equipment online from Zappos and Sierra Trading Post. “It’s availability and price,” he said, pointing to his feet. “This particular shoe I couldn’t find anywhere else.”
But vendors like Asics, Nike and Brooks say they still see the specialty running store as the best market for their products.
“It’s introducing our brand to people a pair of feet at a time, and that usually happens at a specialty store,” said Jim Weber, the president and chief executive of Brooks. He said the company places 80 percent of its products in specialty stores. “Over the last 10 years,” he said, “our bad-debt losses have been large accounts and almost none in specialty running shops.
Peet's Coffee to expand with huge Virginia roastery
1 of 18 Rick Jacobus, who has been a roaster for 15 years, cleans out a batch of coffee beans from his roaster before preparing for a new roast, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
2 of 18 Margarita Salgado and Alba Balladares (right) package freshly ground batches of coffee at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
4 of 18 Rick Jacobus, who has been a roaster for 15 years, monitors a batch of coffee beans during a roast, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
5 of 18 Green coffee beans are seen at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
7 of 18 TImmy Taing walks up the stairs to cut open sacks of coffee beans for processing, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
8 of 18 Robert Miller (left), who has been a roaster for 12 years, tastes different coffees, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
10 of 18 Timmy Taing cuts open a sack of coffee beans for processing, at Peet's roasting facility in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
11 of 18 (l-r) Employees Silvia Ramirez, Leonar Rodriguez and Mikey Chan package and organize small batches of Peet's coffee, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
13 of 18 Robert Miller, who has been a roaster for 12 years, monitors a batch of coffee beans during a roast, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
14 of 18 Coffee beans roasting at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
16 of 18 Elias Serrano, who has been a roaster for 8 years, monitors a batch of coffee beans during a roast, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
17 of 18 Rovert Miller, who has been a roaster for 12 years, monitors a batch of coffee beans during a roast, at Peet's Roastery in Alameda, California, on Thursday, Dec. 8, 2016. Gabrielle Lurie/The Chronicle Show More Show Less
Even as it has spread its stores from coast to coast in an effort to keep up with Starbucks, Peet&rsquos Coffee has continued to prep all of its beans in a single roastery in Alameda. That will soon change: The Emeryville company announced plans Friday to build a second roastery about 200 miles south of Washington, D.C.
At 175,000 square feet, the $58 million Suffolk, Va., plant will be even larger than the current 138,000-square-foot roastery, which produces roughly 1 million pounds of coffee a week.
&ldquoWe&rsquore growing rapidly as a company, which means in all parts of the country,&rdquo said CEO Dave Burwick. &ldquoFor us it&rsquos all about sourcing great beans, roasting them to perfection and getting those beans to consumers as quickly as possible.&rdquo
Founded by Alfred Peet in Berkeley 50 years ago, the company has doubled in size since going private in 2012, when it was bought by JAB Holding Co. of Germany. During that period Peet&rsquos purchased boutique coffee companies Stumptown Coffee Roasters and Intelligentsia. Annual revenue has grown from $395 million to an expected $800 million in 2016, and Peet&rsquos coffee is now sold at 14,000 grocery stores, universities and other wholesale outlets nationwide.
It&rsquos still far smaller than Starbucks, which saw $21.3 billion in revenue in its most recent fiscal year. But the expansion signals an increasingly fierce competition in territory where Starbucks faced few well-financed rivals.
&ldquoPeet&rsquos successful expansion in the East will be an ongoing, increasing nightmare for Starbucks multiregionally and corporately,&rdquo said Burt Flickinger, managing director of consulting firm Strategic Resource Group in New York. &ldquoWith Starbucks trying a number of initiatives &mdash some of which work, some don&rsquot &mdash what we&rsquore seeing is some unevenness in quality at Starbucks.&rdquo Peet&rsquos, he said, had a &ldquobetter flavor profile and a good on-premise experience.&rdquo
Outside of its West Coast base, the company has expanded with more than a dozen cafes in both Chicago and Boston and 23 in the Washington area, where the reception has been particularly good, Burwick said.
&ldquoD.C. has a similar demographic to the Bay Area &mdash a lot of affluent, upscale foodies who really appreciate good food and high-quality beverages.&rdquo Plus, he has noticed a lot of transplanted Californians who are loyal to the company&rsquos ultra-dark, rich roasting style.
Burwick said Peet&rsquos hopes to &ldquofill in the gap&rdquo with stores between Washington and Boston, including in the competitive New York market. Especially as comparable East Coast companies like Oren&rsquos Daily Roast and Hampton Coffee Co. stay small, there&rsquos room to grow there, said Flickinger. &ldquoAll of that lack of expansion by some of the preferred roasters in the area is creating a tremendous vacuum, and Peet&rsquos will be extremely successful,&rdquo he said.
But not all of Peet&rsquos recent expansions into retail have been a good fit. In 2013, Peet&rsquos opened stores in the Detroit, Pittsburgh and Columbus, Ohio, areas, many in former locations of Caribou Coffee, a chain Peet&rsquos parent company bought in 2012. All closed by December 2014 because of low sales.
&ldquoOhio wasn&rsquot a bulls-eye for Peet&rsquos,&rdquo said Burwick. He points out that the company&rsquos coffee is still sold in Ohio wholesale outlets, a sector the new Virginia roastery will serve.
&ldquoIt&rsquos a great location that gives us access within three days to the entire East Coast and central part of the U.S.,&rdquo said Shawn Conway, Peet&rsquos chief operating officer.
The new plant&rsquos site, close to the Port of Virginia, will let the company easily import beans from growers. It will create an estimated 135 jobs, said Conway. Operations will be similar to Alameda, where orders come in for the next day by midnight, and roasters arrive at 2 a.m., working on four machines that vary in capacity from 300 to 700 pounds of beans.
Peet&rsquos coffee beans spend an average of 30 days in the grocery store, and if they don&rsquot sell within 90 days, they are removed from the shelf. The industry standard is for coffee to spend between nine and 18 months in stock, Conway said.
Peet&rsquos wide distribution system, including weekly truck deliveries to grocery stores, is one of the reasons that the founders of Stumptown Coffee Roasters were interested when Peet&rsquos approached and ultimately bought the boutique Portland company, Conway said.
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