What does the Future Hold for Caribou Coffee?

June 27, 2013 — 1 Comment

On a recent trip through Minneapolis Airport, I had the opportunity to visit a Caribou Coffee store. I had heard a lot about Caribou but this was my first visit to one of their retail locations.

Caribou-Coffee-Logo

Caribou Coffee was founded in December of 1992 by Kimberly and John Puckett. The Caribou Coffee concept was created after the company’s founders backpacked through Alaska. On the summit of Sable Mountain in Denali Park, they decided they wanted to build a company to capture the spirit of accomplishment they felt during the climb. They began plans to build a special company that would bring the mountain experience into local neighborhoods where customers could find a place to “escape the daily grind” each and every day. On the descent, they saw a herd of wild caribou. The beauty and movement of these caribou seemed to be a fitting name for a company that aspired to both rapid growth and high quality. The company was founded with the intent of building a leading national specialty retailer in the high growth industry of gourmet coffee.

The pair moved to Minneapolis in the summer of 1992, following a six month analysis of potential markets. In addition to possessing positive demographics, the region was Kim’s home town. Her connections paved their way into the investment community and allowed the Pucketts to open their first coffeehouse that December in Edina.

The Pucketts opened their second shop in the Uptown area of Minneapolis. Site selection was critical to their success. A key ingredient for the success of the coffee shops was location, and the couple was determined to lock in good sites before Starbucks arrived on the scene.

Unlike other locally based competitors, Caribou Coffee purchased rather than roasted its own beans, choosing instead to concentrate on service and quality control. The mystery shopper was one technique they used to ensure good customer service.

While the Pucketts strived for product and customer service consistency from store to store, they also wanted each location to reflect the personality of the neighborhood. Their stores were staffed with people with a strong affinity to the local community. This helped create a unique feel and a strong customer fan base. The passion and spirit of a company’s founder is very powerful.

Caribou Coffee has expanded rapidly. Since opening, the chain has grown to over 500 locations in 22 states and the District of Columbia making it the second-largest operator of non-franchised coffeehouses in the United States, after Starbucks. This includes 24 licensed locations in the U.S. and two overseas markets. Caribou maintains its headquarters in the Minneapolis area. In 1998, the Pucketts sold their controlling interest in the company for $120 million to Atlanta-based Arcapita capital. In December, Caribou was purchased by the Joh A. Benckiser Group which also owns a majority stake in Peet’s Coffee and Tea.

Caribou recently announced the closure of 80 locations and the conversion of 88 stores to the Peet’s Brand. This elicited a very negative response from their fans in social media. This recent post on Facebook says it well:

“If you hadn’t shut down all Caribou locations within a 50 mile radius of Cincinnati I would be able to celebrate the hot weather. Now I’m just coffee-less and irritated and slightly sweaty”.  

Longer term it will be interesting to see how Benckiser, manages two brands in a category dominated by Starbucks. Will they be able to deliver a high quality customer experience that engages their fans?

Have you visited a Caribou Coffee’s location?

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One response to What does the Future Hold for Caribou Coffee?

  1. 
    Bryan Pazaras June 27, 2013 at 9:38 am

    Mark. Please call when u can. 914 242 0545.
    Sent from my Verizon Wireless BlackBerry

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