gc
15 September 2003, 10:56 AM
Perking up D-FW
Aiming at Starbucks, Dunn Bros. Coffee prepares to invade the Metroplex with 60 new stores
David Wethe - Staff Writer
http://dallas.bizjournals.com/dallas/stories/2003/09/15/story2.html
A mainstay of the Midwest coffee wars is moving into the Metroplex, where it hopes to brew up a Texas-sized battle with industry titan Starbucks for local java drinkers.
Minneapolis-based Dunn Bros. Coffee, whose claim to fame is roasting its own coffee beans on-site, plans to open 60 shops throughout Dallas-Fort Worth over the next five years.
The 16-year-old chain of 32 stores in Minneapolis and St. Paul, Minn., also plans to add 12 shops in states such as Wisconsin and Iowa over the next six months.
However, Dunn Bros. has identified the Metroplex as its single-largest source of growth in the coming years.
The company came to this conclusion after consulting with Eden Prairie, Minn., franchising expert FranChoice, said Chris Eilers, who opened the chain's first franchise store with partner Skip Fay in Minneapolis 10 years ago. Eilers and Fay later bought the company for an undisclosed amount from its founders, two brothers named Ed and Dan Dunn.
"The Dallas-Fort Worth area has a very solid reputation for franchising. The entreprenurial spirit seems to be pretty prevalent down there," Eilers said. "The economic climate of the area was certainly an attraction."
After deciding in June that it wanted to locate here, Dunn Bros. Coffee signed two area franchisees, who have since committed to building four stores over the next few years. Both franchisees are new to the coffee industry.
Though no leases have been signed, brokers from Staubach and Lincoln Property Co. are eyeing prospective sites in Addison and North Dallas, Eilers said.
Alan Geddie, a franchisee who used to work for Irving-based CalTex before the company moved its headquarters to Singapore, said he hopes to sign a lease within three weeks for an Addison location that once housed Community Coffee Co. -- or CC's, as it was known.
After expanding into Texas two years ago, Baton Rouge, La.-based CC's pulled its 17 corporate-owned stores out of the Lone Star State earlier this year because the shops failed to meet expectations, according to published reports.
The lack of stores like CC's is one reason Eilers is so hot on the Metroplex.
"When we look at Dallas-Fort Worth, we see really just one specialty coffee company with any kind of dominance -- that being Starbucks," he said of the Seattle-based chain, which has 115 stores in the Metroplex and about 5,000 North American stores in all. "There's no other regional competitor. The nearest (Starbucks) competitor, the Coffee Haus, has just a handful of stores."
Indeed, Burleson-based Coffee Haus consists of one corporate location in Arlington and five franchised stores.
Thomas Horton, owner of the Coffee Haus brand, said he's not concerned about Dunn Bros. "There's enough business for everybody," said Horton, who said he'd like to add "a few more" stores over the next five years.
Starbucks does not comment on other businesses, according to a statement by Tim Casey, the company's regional vice president.
Matthew Mabel, president of Surrender, a Dallas-based management and hospitality consultant firm, said he's not sure Dunn Bros. will find success in the Metroplex.
"I really question Dunn Bros.'s strategy in believing they can do what others have failed to do, simply based on the franchise model," Mabel said. "The battlefield is littered with corpses of people that wanted to be in the coffee business that were not named Starbucks. "
But Geoff Seiber, who's recruiting franchisees from the Arlington office of FranChoice, said he believes Dunn Bros. can easily add 60 locations here.
"It's definitely do-able," said Seiber, who added that he has "several" more potential franchisees looking at Dunn Bros.
The company requires franchisees to invest anywhere from $200,000 to $400,000 per store.
Growth of the CC's brand was hampered locally because it didn't open franchise stores, Eilers said.
"They didn't have the brand penetration that we will have, and they didn't have the point of differences that we have as well," he said.
The main difference between Dunn Bros. and other coffee chains around the country, Eilers said, is the sensory stimulation of roasting coffee beans everyday at each of the stores.
"Coffee roasters really become almost a theater," he said. "When people walk in, that's the first thing we want them to experience and see."
The number of coffee retailers who roast their beans on site every day is actually growing, according to the California-based Specialty Coffee Association of America.
At the end of 2002, the association estimates there were about 1,200 shops -- each averaging about $925,000 in annual revenue -- that roasted coffee beans on the premises.
Still, Mike Ferguson, the association's spokesman, said he was surprised to hear that Dunn Bros. was roasting at all 32 locations.
"I'm not aware of anyone who's roasting their beans at each store," he said. "Most stores, for cost reasons, do it at a central location."
In addition to roasting, Dunn Bros. is also unusual because it doesn't "cookie-cutter" its stores' interior layouts, Eilers said. Though he provides general operational guidelines, he leaves the design up to his franchisees.
About the only requirement at each store is a "technology center," where customers can use two or three computers to surf the Internet for free. The stores must also be wired for Wi-Fi "hot zones," enabling customers with laptops to access a wireless, high-speed Internet connection if they have a certain kind of card installed in their computers.
Competing with about 60 Starbucks shops and an estimated 120 Caribou Coffee shops in the Twin Cities market of Minnesota, Eilers said his chain has proven itself to be a tough competitor.
"We've been successful (there) because we've been able to develop brand recognition," he said, "and we have enough stores in the marketplace for people to understand the brand."
Contact DBJ writer David Wethe at dwethe@bizjournals.com or (817) 693-0025.
Aiming at Starbucks, Dunn Bros. Coffee prepares to invade the Metroplex with 60 new stores
David Wethe - Staff Writer
http://dallas.bizjournals.com/dallas/stories/2003/09/15/story2.html
A mainstay of the Midwest coffee wars is moving into the Metroplex, where it hopes to brew up a Texas-sized battle with industry titan Starbucks for local java drinkers.
Minneapolis-based Dunn Bros. Coffee, whose claim to fame is roasting its own coffee beans on-site, plans to open 60 shops throughout Dallas-Fort Worth over the next five years.
The 16-year-old chain of 32 stores in Minneapolis and St. Paul, Minn., also plans to add 12 shops in states such as Wisconsin and Iowa over the next six months.
However, Dunn Bros. has identified the Metroplex as its single-largest source of growth in the coming years.
The company came to this conclusion after consulting with Eden Prairie, Minn., franchising expert FranChoice, said Chris Eilers, who opened the chain's first franchise store with partner Skip Fay in Minneapolis 10 years ago. Eilers and Fay later bought the company for an undisclosed amount from its founders, two brothers named Ed and Dan Dunn.
"The Dallas-Fort Worth area has a very solid reputation for franchising. The entreprenurial spirit seems to be pretty prevalent down there," Eilers said. "The economic climate of the area was certainly an attraction."
After deciding in June that it wanted to locate here, Dunn Bros. Coffee signed two area franchisees, who have since committed to building four stores over the next few years. Both franchisees are new to the coffee industry.
Though no leases have been signed, brokers from Staubach and Lincoln Property Co. are eyeing prospective sites in Addison and North Dallas, Eilers said.
Alan Geddie, a franchisee who used to work for Irving-based CalTex before the company moved its headquarters to Singapore, said he hopes to sign a lease within three weeks for an Addison location that once housed Community Coffee Co. -- or CC's, as it was known.
After expanding into Texas two years ago, Baton Rouge, La.-based CC's pulled its 17 corporate-owned stores out of the Lone Star State earlier this year because the shops failed to meet expectations, according to published reports.
The lack of stores like CC's is one reason Eilers is so hot on the Metroplex.
"When we look at Dallas-Fort Worth, we see really just one specialty coffee company with any kind of dominance -- that being Starbucks," he said of the Seattle-based chain, which has 115 stores in the Metroplex and about 5,000 North American stores in all. "There's no other regional competitor. The nearest (Starbucks) competitor, the Coffee Haus, has just a handful of stores."
Indeed, Burleson-based Coffee Haus consists of one corporate location in Arlington and five franchised stores.
Thomas Horton, owner of the Coffee Haus brand, said he's not concerned about Dunn Bros. "There's enough business for everybody," said Horton, who said he'd like to add "a few more" stores over the next five years.
Starbucks does not comment on other businesses, according to a statement by Tim Casey, the company's regional vice president.
Matthew Mabel, president of Surrender, a Dallas-based management and hospitality consultant firm, said he's not sure Dunn Bros. will find success in the Metroplex.
"I really question Dunn Bros.'s strategy in believing they can do what others have failed to do, simply based on the franchise model," Mabel said. "The battlefield is littered with corpses of people that wanted to be in the coffee business that were not named Starbucks. "
But Geoff Seiber, who's recruiting franchisees from the Arlington office of FranChoice, said he believes Dunn Bros. can easily add 60 locations here.
"It's definitely do-able," said Seiber, who added that he has "several" more potential franchisees looking at Dunn Bros.
The company requires franchisees to invest anywhere from $200,000 to $400,000 per store.
Growth of the CC's brand was hampered locally because it didn't open franchise stores, Eilers said.
"They didn't have the brand penetration that we will have, and they didn't have the point of differences that we have as well," he said.
The main difference between Dunn Bros. and other coffee chains around the country, Eilers said, is the sensory stimulation of roasting coffee beans everyday at each of the stores.
"Coffee roasters really become almost a theater," he said. "When people walk in, that's the first thing we want them to experience and see."
The number of coffee retailers who roast their beans on site every day is actually growing, according to the California-based Specialty Coffee Association of America.
At the end of 2002, the association estimates there were about 1,200 shops -- each averaging about $925,000 in annual revenue -- that roasted coffee beans on the premises.
Still, Mike Ferguson, the association's spokesman, said he was surprised to hear that Dunn Bros. was roasting at all 32 locations.
"I'm not aware of anyone who's roasting their beans at each store," he said. "Most stores, for cost reasons, do it at a central location."
In addition to roasting, Dunn Bros. is also unusual because it doesn't "cookie-cutter" its stores' interior layouts, Eilers said. Though he provides general operational guidelines, he leaves the design up to his franchisees.
About the only requirement at each store is a "technology center," where customers can use two or three computers to surf the Internet for free. The stores must also be wired for Wi-Fi "hot zones," enabling customers with laptops to access a wireless, high-speed Internet connection if they have a certain kind of card installed in their computers.
Competing with about 60 Starbucks shops and an estimated 120 Caribou Coffee shops in the Twin Cities market of Minnesota, Eilers said his chain has proven itself to be a tough competitor.
"We've been successful (there) because we've been able to develop brand recognition," he said, "and we have enough stores in the marketplace for people to understand the brand."
Contact DBJ writer David Wethe at dwethe@bizjournals.com or (817) 693-0025.