January Part I - What's Brewing in the Coffee Business?

Upscale coffeehouses Southern style

Port City Java is a franchise company operating from its North Carolina base since 1995. It currently has 50 upscale and relaxed coffeehouses, most of which are franchised. The founder, Don Reynolds, has a background in the restaurant business. That influence is quite evident when you walk into the cafe. In addition to a whole range of coffee and espresso drinks, Port City Java cafes offer a well-rounded menu of food items such as paninis, sandwiches, salads, and wraps. Each coffeehouse also has an on-site baking program.

Offering food does more than plump up the bottom line, according to Jim Deering, Director of Franchising. He says, "The food menu sets up what we call the 'all day' approach to the high-end coffeehouse. Folks feel just as comfortable dropping by in the late afternoon or evening as they would first thing in the morning. Plus, we can serve those who don't want coffee, maybe something a little more wholesome such as fresh squeezed juice or smoothies. Our smoothies are made with pure fruit, with no water or ice. Each store uses fresh fruit that it peels in sections, and freezes. When somebody orders a smoothie, fresh frozen fruit is used so there is no need to add ice."

Going the extra mile for a good cup
Like most high-end coffeehouses, Port City Java serves premium Arabica coffee. But Deering says that behind the scenes, a great deal of care goes into setting themselves apart from other players in the market. "We control our own coffee supply from the field to the cup," Deering explains. "We have a green coffee specialist on staff who not only tests the samples, but makes the buy recommendations. She travels to the farms and cooperatives and plantations where the coffee is grown to check crops. And she does a great deal of the green coffee bean early testing, through the processing, all the way down to the cupping flavor profiles. After we make a buy, the coffee is shipped to our warehouse here in Wilmington. The offices are attached to the warehouse and that's where our roastery is located, too. From there, we roast, package, and ship to our franchisees. We roast 'just in time' so coffee roasted now will be used in the cafes next week. We consider it incredibly important to control the whole process all the way from the field to the cup."

Port City Java is also determined to carry as much organic and Fair Trade coffee as possible. Although these are two separate identifications, the company has coined the term "fairganic," meaning the product is both organic and Fair Trade. "When we have a choice for a specific blend that we can buy Fair Trade, we buy it. Same thing goes for certified organic. That is part of our buying process. All our coffeehouses will always have a 'fairganic' coffee of the day," says Deering. The fairganic coffee is kept separate from other coffee beans, too. It is warehoused separately in climate controlled space and roasted with a dedicated roaster. Deering says it's interesting to note that although not all their coffee is labeled organic, most of it is. "We learned that a lot of the farmers, even the Fair Trade farmers, don't have the capital to use fertilizer and pesticides. So it's organic by default, but not certified so we can't label it as organic."

Good coffee is here to stay
Deering says the market for premium coffee is here to stay. "I don't think high-end coffee is a trend. I had a rare and privileged opportunity several times to be able to talk to Bill Rosenberg who founded Dunkin' Donuts. When he started Dunkin' Donuts it didn't really have anything to do with donuts. It had to do with him buying what he believed to be the finest coffee he could get and selling it across the counter for twice the amount of money that you could go out and buy a cup of coffee for anywhere else. Everybody thought he was nuts, convinced that it wasn't possible to make a living selling coffee. But there are people in the Northeast who will go to their grave without ever drinking anyone else's coffee. So, yeah, you can make a living selling coffee," proclaims Deering.

Deering says Dunkin' Donuts was the first wave of change in coffee consumption patterns in the US. "It laid dormant for 30 or 40 years until Starbucks came along. Starbucks reintroduced high quality coffee and the thing is, once you consume that over the course of 2 or 3 times, it's extremely difficult to go back to what you were drinking before."

Contact Information: Jim Deering, Director of Franchising, Port City Java, www.portcityjava.com, 910)796-6646 ext. 305.

Premium Coffee for Customers on the Go

Don't have time to linger over a double latte while reading the newspaper or checking your email on your laptop? No problem. Jo to Go Coffee is a franchise that has been delivering coffeehouse-quality espresso and coffee drinks at lightning speed since 1998. The basic concept is a dedicated double-sided stand-alone structure of about 500 sqft with no indoor seating - drive-thru service only. Jonathan Lukens, Vice President of Franchising, says the efficiency of the operation is amazing. "Double drive-thru means there is a drive-thru window on both sides of the building so we are able to queue or stack cars on either side. That unit can handle between 90 and 100 cars an hour."

There are several variations on the basic format. The company has just started building its first few double drive-thru cafes. "This type of concept is located on the end cap of a strip center," Lukens explains. "It has approximately 1000-2000 sqft of space plus the double drive-thru window set up on one end of the building similar to a McDonald's. Unlike the basic concept, it has seating for up to 25 people. We think that's going to be a real popular option for us. From a real estate perspective, sometimes those little postage stamp sites are tough to find. And we will also be able to accommodate walk-in traffic while continuing to provide drive-thru service at two different windows."

The third concept is an in-line, developed to be a store within a store. "We have a national tenancy agreement with WalMart," says Lukins. "But the same setup can also be used in a sporting or entertainment venue or outlet center."

Good coffee for the masses
"We are really all about being the specialty coffee for the masses," says Lukins. "We're about bringing that same great cup of premium coffee that you might get from a place like Starbucks to everyone - but with a whole lot more approachability. For example we do small, medium, and large, not grande and vente. We are not dumbing it down, but rather making it more familiar. We're telling our customers they don't have to be intimidated by specialty coffee. We also have a kid's menu that makes us very family friendly."

The whole drive-thru concept is quite different than the typical coffeehouse idea. "Companies who follow the 'third place' concept are selling an 'experience' or atmosphere. That's great if you have 4 hours to hang out with your laptop and newspaper," says Lukins. "But we are going the opposite direction. We understand that everybody has a busy lifestyle. People have lives that they need to get back to and a lot of times they are just trying to make it through a busy day. We're not going to stand in the way; we're going to help you. We are going to serve a great cup of specialty coffee with a whole lot of convenience and speed and a little bit of fun thrown in just to send you off with a smile. That's what it's about," asserts Lukens.

Jo To Go locations are set up near subdivisions, universities, or high schools - wherever there is a daily population swirling around. It's easy in, easy out. "People can stop by and not have to dedicate 5 or 10 minutes at the drive-thru that they might at some of the other larger chains. Want a medium double shot latte? We can serve that up in about 45 seconds," says Lukins. A cup of house coffee is even faster.

Jonathan Lukens, Vice President of Franchising, Jo To Go The Drive Thru Expresso Bar, www.jotogo.com, (920)884-6601 ext.108.