Industry News | February 3, 2009

Seattle’s Best Ready to Play with the Big Boys

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In a move foreshadowed by quick-service honcho Howard Schultz last week, Seattle’s Best Coffee announced today it is shifting its focus from licensed units to franchised locations.

“Our Seattle’s Best Coffee brand is uniquely positioned to grow through franchising because of its national footprint, operational experience, and the innovative café concepts it offers,” Schultz said during the most recent earnings call for Starbucks, parent company of Seattle’s Best Coffee.

When Starbucks acquired the brand in 2003, a franchising program had existed for about a decade at Seattle’s Best Coffee and the exiting franchisees were absorbed and supported by the new company. Despite having the foundations for a franchising program, Seattle’s Best pursued licensing as a growth strategy instead, setting up shop in grocery stores and Border Borders bookstores.

“We’re definitely entertaining interest nationwide,” says Tom Ehlers, vice president and general manager of the brand, “but we’re focusing on Western states, that’s where the brand has come from, and in Texas where we’ve had a ton of interest.”

The company hopes to sign experienced multiunit franchisees who are looking to capitalize on the slow economy and open their businesses in time for the market’s recovery.

If that seems like a tall order, Ehlers is one step ahead. “In a down economy, you tend to get better-qualified prospects because, yes, credit has tightened, but those that make it through are even more qualified,” he says. Add to that the access to better labor during a recession and he might have a feasible plan.

“When you dig into franchising, as an opportunity, it grows in times of financial tightness,” Ehlers says.

But if parent-company Starbucks’ wild ride over the last year is any indication, Seattle’s Best’s franchising success might not be that simple. As Wall Street spirals out of control, it’s hard to convince consumers that what they really need is a $4 coffee.

“People still want to come to specialty cafes, they just want a little value along the way,” Ehlers says. Seattle’s Best hopes that its expanded menu options beyond coffee will offer the value that consumers are seeking. “We actually think by offering variety we’re going to grow the industry along the way,” he says.

--Blair Chancey