Specialty Coffee Retailer

Specialty Coffee Retailer November 2012

Specialty Coffee Retailer is a publication for owners, managers and employees of retail outlets that sell specialty coffee. Its scope includes best sales practices, supplies, business trends and anything else to assist the small coffee retailer.

Issue link: http://read.dmtmag.com/i/92590

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differently initially," wrote Brian Keating, founder of Seattle- based Sage Group. "The larger coffee chains and many independent outlets for the most part have tea on their menus, yet for many it has been an aſterthought." "The rise of multi-unit tea-dedicated chains across North effort to add fine loose teas, better quality teabags and freshly brewed tea to any operation; the choice of potential suppliers is at an all-time high." " he wrote. "It takes little LOOK HOW THEY GROW: TEAVANA VS. STARBUCKS While Starbucks (17,018 stores) currently dwarfs Teav- America is a significant opportunity to improve their tea offerings and ride the wave dedicated tea shops are blowing open with tea-consciousness raising, ana (303 stores), it's instructive to look at their respective growth patterns. Teavana's first major growth spurt, in the 10th through 15th years of its existence, is similar to Starbucks' in its 16th through 22nd. 300 250 TEAVANA'S NIRVANA Teavana, the largest tea retailer in the nation, operates 302 tea retail locations, mainly in Tier A and Tier B malls in the U.S. and Canada. It is the only pure-play publicly traded tea retailer. A July 2011 IPO generated $123 million. It has since opened and acquired 105 stores and reveals a growth trajectory strikingly similar to Starbucks. The company was founded in 1997 in Atlanta. Andrew Mack and his wife self-financed the venture while demonstrating the concept's profitability. They next sought outside financing to open a total of 47 stores by January 2007. Store count reached 100 in the spring of 2010, seven years quicker than Starbucks in reaching that milestone. Teavana operated 161 stores in 35 states on the day the July 2011 IPO was funded, with 284 company-owned stores in the U.S. and Canada and 18 franchise locations, mainly in Mexico. The average store earned $862,000 at the time. Years aſter Starbucks' 1992 IPO, one of the most successful in history, CEO Howard Schultz publicly attributed his company's success to the tipping point phenomenon: "That moment in time when the momentum for change becomes virtually unstoppable, Tipping Point: How Little Things Can Make a Big Difference." "The 20-year explosion of the current coffee shop landscape in America was only possible because of certain factors; the existing coffee culture being at the center, " according to Malcolm Gladwell, author of "The "Our parents drank coffee, our grandparents drank coffee, and coffee was served at every get-together, every restaurant and every time people gathered together. Coffee at the office, coffee at the church potluck, and major coffee companies established and promoting this life beverage. " Groot observes. to overbuilding, but the company will open 1,200 stores this year. Margins are 21 percent on sales of $11.7 billion in the 2011 fiscal year. The firm employs 150,000 in 60 countries. Last year Annie Young-Scrivner, chief marketing officer of Starbucks subsequently experienced setbacks, due in part " " market. The company is exploring a lot of channel strategies to determine what is right for tea in the market," he says, adding that at this point "we are not wed to any particular strategy. " ONLINE SUPPORT Following the announcement that Starbucks would open in my town." Another 19.2 percent replied "I'd have to try it " a Tazo tea retail store, editors at "The Bottom Line" on NBC News conducted an online (non-scientific) poll of readers that generated nearly 10,000 responses. The results: 72.2 percent consider the retail concept "a great idea, I' d love to see one before deciding" and 8.6 percent labeled it a "bad idea, I think they should stick to coffee. Starbucks, told stockholders at the company's annual meeting: "Tea is huge. Starbucks is reinventing a traditional beverage. "When they see an opportunity, Starbucks starts small and then does things big," says Charles Cain, Tazo VP of merchant and operations. "We need consumer feedback and to test the expansion and the continued growth of 80-store Montreal-based DavidsTea and Chicago' Groot is skeptical: "The culture of coffee is ingrained in the American psyche much as beer is in Germany and sake is in Will the combined impact of Tazo retail, Teavana's rapid s 30-store Argo Tea tip the scales for tea? 11 200 150 100 50 0 10 11 12 13 14 15 16 17 18 19 20 21 22 YEARS AFTER FOUNDING Sources: Teavana and Starbucks SEC filings and quarterly reports; "Strategic Management, Concepts and Cases, Strickland, University of Alabama " by Arthur A. Thompson Jr. and A.J. Lonnie NUMBER OF STORES

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