By GREG STILES, (Medford) Mail Tribune
MEDFORD, Ore. (AP) — Amid the parade of closures, layoffs and cutbacks ravaging the economy, there is some good news brewing in Southern Oregon.
Medford-based Human Bean and Grants Pass icon Dutch Bros. are roasting and grinding like never before at their double-sided drive-thrus.
While neither is as well-known nor as ubiquitous as Seattle-based Starbucks, the local, privately held franchisers continue carving out niches. At the same time, Human Bean and Dutch Bros. don’t have the specter of shareholders demanding increasing profits and higher stock prices that led Starbucks to retrench last year and close hundreds of stores.
“The high-dollar ticket items are challenged, but people are still wanting to treat and reward themselves,” says Dan Hawkins, co-founder and co-managing partner at Human Bean. “I think that’s why our industry is less affected than higher-ticket sales. People still want a positive experience in the mornings — that’s what’s separating us from competitors and other industries.”
Since Hawkins and Tom Casey opened their first location in Ashland in 1998, Human Bean has grown to 51 stores, including 12 corporately owned, in eight states. Jobs, ranging from eight to 12 at each store, number about 500.
“I attribute most of the (Starbucks) issue to overbuilding, lack of controlled growth and getting into lease arrangements at locations that just weren’t worthy,” Hawkins says.
With that in mind, Human Bean has methodically controlled growth in specific locations.
“We’ve refined how we choose locations, and it definitely takes a lot of research,” Hawkins says. “We study the data and if all the issues fall into place we check out the demographics. From there, we go view it and get a feeling for the site. We drive it, get a feel for visibility and how traffic performs. We look for easy in-and-out access at any particular location.”
Although Human Bean has locations in North Carolina, you’re more likely to see a Dunkin’ Donuts outpost on the Atlantic seaboard.
“The whole coffee thing started in the Pacific Northwest,” Hawkins says. “When you see little pockets of double-sided stores, more often than not, (the operators) are from here.”
The $93,150 to $235,000 startup costs are attractive to franchisees, but exponential growth isn’t part of the Human Bean’s game plan.
“We have no huge desire to open 30 or 40 stores a month,” Hawkins says. “That’s not who we are, or who we want to be.”
Up the interstate in Grants Pass, another coffee company continues to fire on all cylinders.
Dutch Bros., born on a cart outside Wal-Mart in 1992, now sports 139 outlets in seven states with 1,500 employees.
The home office staff — including quality control, human resources, development, and legal and accounting functions — numbers 25.
There are 45 franchisees, up at least 50 percent from two years ago, and store growth has been 20 to 25 percent annually. After opening 21 stores in 2008, Dutch Bros. expects to open another 20 this year.
True to the company’s long-standing avant-garde approach to corporate life, co-founder Travis Boersma says Dutch Bros. continues to sell fun in a cup.
“We are in the business of selling smiles,” says Boersma, who started the company with his older brother, Dane. “Certainly, the business model has a lot to do with it. However, the bottom line is whatever the business model that any individual or company has, they have to execute it in the trenches to make it happen.
“We’re about customers and employees. Our method of growth has been growing with the right people in the right areas. It’s got to work well for everyone, or it doesn’t work. We work hard to keep that focus.”
Sometimes it takes more than focus to persevere. A 2004 fire consumed the company’s coffee and other supplies.
“We lost everything,” Travis Boersma says.
Surpassing that setback has been Dane Boersma’s deteriorating health. At 55, he is in the latter stages of amyotrophic lateral sclerosis, often referred to as Lou Gehrig’s disease. ALS is a progressive degenerative disease that affects nerve cells in the brain and the spinal cord.
The company donated nearly $750,000 last year to a variety of organizations, including the Muscular Dystrophy Association. A second generation of Boersmas is hard at work, with Dane’s sons both involved in corporate operations. Jonah is regional manager in Eugene and Brant is regional manager in Grants Pass.
“My brother’s health is the greatest blow we’ve taken,” Travis Boersma says. “Our whole focus is how can we make this work to get through trials and tribulations and make every effort to get the result we want.”
Commodity items and ubiquitous diluted brands are the first to suffer when the days of “irrational exuberance” go sideways. Specialty purveyors with a strong brand image, unique product and or concept and above all consistent experience are best insulated from economic recession.
While unique specialty coffee brands will weather the days of global financial brouhaha, tough times are ahead for big name coffee suppliers that use warehouse clubs, airplanes, hotel rooms and office coffee rooms as their brand outlets.