"Cleveland is really the first stop for a number of places we'll go," said David Burwick, president and CEO of Peet's Coffee & Tea. "There's a really great coffee culture here."
SOLON, Ohio -- Northeast Ohio will get a major jolt of caffeine on Thursday, when Peet's Coffee & Tea opens the first of 10 area stores inside a former Caribou Coffee shop in Solon as part of the largest expansion in company history.
Peet's, founded in Berkeley, Calif., in 1966, is stretching beyond its predominantly West Coast territory, where it has about 200 stores, to open more than 90 coffee and tea shops in the Midwest and East Coast. And it will take off from Cleveland.
Over the month of August, Peet's will open inside 10 former Caribou shops in downtown Cleveland, Akron, Avon, Beachwood, Hudson, Lakewood, Middleburg Heights, North Olmsted and Youngstown.
At an average of
15 workers per store, the company will end up hiring about 150 people, many of them former Caribou employees.
"Cleveland is really the first stop for a number of places we'll go," said Dave Burwick, recently hired president and CEO of Peet's Coffee & Tea. "We see this great market opportunity for coffee here. There's a really great coffee culture here."
Chip Crittendon, regional manager for Peet's Midwest region and a native of Medina, said when he recently came back to Cleveland, "I was just really blown away by the artisan culture here, the great high-end restaurants and the people focused on food here."
Having worked in many mom-and-pop coffee shops, he was always on a quest for the perfect cup of coffee. He said he knew when he took his first sip of Peet's that he had found the coffee he was looking for, and he feels certain that other Clevelanders will feel the same way when they try it.
"It was new, it tasted fresh, and I knew I wanted to work here," he said.
From Cleveland, Peet's will open eight stores in Columbus in September and then
move on to Western Pennsylvania and Michigan. "We'll be at 300 stores a year from now," Burwick said.
"When you're a smallish public company, it's hard to justify making a huge investment like that," Burwick said. "As a private company, we're fortunate to have owners who take a long-term view of the business. Being private enables us to make larger, long-term investments in the business and maybe do one thing really well. We have a greater appetite to invest in growing our retail footprint."
Burwick said there are no plans to build a roastery in Ohio. Peet's coffee beans are roasted in California and shipped to order the next day. "People don't necessarily recognize the importance of freshness in your beans," he said. He said the beans at the stores are at the latest three weeks old, "and then they're gone."
Besides
its coffee shops, Peet's also sells its coffee beans in supermarkets, including
Giant Eagle and Heinen's, and online at Peets.com.
Cleveland-area stores will carry baked goods from Mediterra Bakehouse in Pittsburgh.
The National Coffee Association, the trade group for the U.S. coffee industry, said 83 percent of adults 18 and older now drink coffee, up 5 percentage points from 2012. Seventy-five percent of Americans drink it at least once a week, and 63 percent get their caffeine fix every day.
Both Caribou and Peet's are owned by Joh. A. Benckiser, a German
investment group. JAB bought a majority share of Peet's last July for $73.50
a share, or about $1 billion cash. In December, it announced it was buying
Caribou Coffee of Minneapolis for $340 million. But Peet's and Caribou still operate as separate companies.
Peet's expansion into Ohio means that Caribou will withdraw from the Buckeye State by the end of September as it focuses on growing west of Ohio, between the Mississippi River and the Rocky Mountains, Burwick said. "We were able to pick up a bunch of stores that were no longer right for them," and convert them into Peet's.
Dominic Caruso, vice president of Caruso's Coffee Inc. in Brecksville, said that even though Caribou entered the Northeast Ohio market years ago, "I don't think the brand ever got as much traction" as a destination coffee shop.
Caruso's is a specialty coffee roaster that produces Caruso's Brand Coffee, Erie Island Coffee and Zack Bruell's Zack's Brews, as well as private label brands for local retailers. However, it doesn't operate any coffee shops.
Unlike Caribou, Caruso said Peet's takes a more upscale approach to the coffee experience. "It's less of a 'me, too' brand than Caribou was. It's more distinctive. The coffee's pretty dark, almost darker than Starbucks," he said.
As part of opening-day promotions, Peet's will donate $1 to Planet Aid for every customer who visits a Cleveland-area store on its opening day, up to $5,000. Planet Aid is a local non-profit that collects and recycles used clothes and shoes and uses the proceeds from selling those items to support international development projects.
Now that both Caribou and Peet's are owned by the same company, Caruso said their parent company seems to be deciding what stores are better for what markets, similar to the way Gap Inc. might say "where do I put a Gap (store) versus a Banana Republic?"
"It's as much a branding decision as anything else," he said. Even if Peet's markets itself as an ultra-premium brand, "at the end of the day, the consumer has to like what's in the cup."
That's why he believes that the popular independent coffee shops like Erie Island Coffee, Phoenix Coffee, A.J. Rocco's on East Fourth Street, and Rising Star in Ohio City will continue to thrive despite Peet's.
When it comes to where people like to get
their favorite cup of joe, "it's very location-driven," he said.
"If a local company runs it like a first-class operation -- the place is clean,
the coffee tastes great, customer service is taken seriously, and the employees
are nice and interact with customers -- they can compete with the national coffee
shops, no problem."
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