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When Ted Abrams took over as CEO of Tampa-based Joffrey's Coffee in 2001, his accounting background and passion for resolving financial issues came into play immediately. His first order of business was shutting down the company's bakery, which cost $1.20 for every dollar in sales.
It was at that point that Joffrey's, the subject of the Jan. 22 cover, made the conversion from a chain of coffee and bakery shops to a coffee wholesaler by focusing on what it does best. The strategy has worked well in a lackluster economy, when customers are more likely to save a few bucks by making their morning brew at home.
After posting 18% higher revenue in 2009 to $13.4 million, Abrams says he expects to achieve double-digit growth through the remainder of 2010, but it won't be easy. Bad weather in coffee-growing regions caused futures to top the $2-per-pound mark this year, forcing Joffrey's and other distributors to pass higher prices along to customers.
“The cost of growth has increased,” Abrams says. “We're pleased that we are still growing, but we're also trying to manage that growth the best we can.”
Despite rising commodity costs, Joffrey's continues to do well in its wholesale niche. Bags of its product can be found in many grocery stores along the Gulf Coast and throughout Florida, and it's also available through various restaurants, office distribution services and independent coffee shops.
Mickey Mouse holds the biggest mug: Joffrey's maintains an exclusive distribution deal with Walt Disney Co. theme parks dating back to 1994 that generates 60% of its revenue, and its 90 employees are referred to as “cast members” in keeping with Disney terminology.
Joffrey's roastmaster Chris deMezzo will mark his 25th anniversary with the company, having become an expert in that time in distinguishing the effects of roasting each type of bean to a particular degree of doneness.
“We can bring you the best coffee you've ever tasted,” says deMezzo, who can identify the regions beans come from by taste. He points out that the Disney deal came down to the taste of a single cup.
“We're very much like the wine industry,” Abrams adds.
Even as other coffee sellers have expanded rapidly (namely Starbucks, Dunkin Donuts and even McDonald's), Abrams recognized early on that Joffrey's strength was in its small-scale roasting expertise. He hopes to continue growing the wholesale operation to increase its impact on annual revenues, thus reducing reliance on the relationship with Disney.
Joffrey's currently sells the majority of its coffee in Florida, but Abrams says its reach as a supplier extends as far as California by way of Disneyland and Crystal Cruise Lines. He would like to expand to other regions of the country, and isn't worried about big-name competition like McDonald's, which sells coffee for a little as $1 a cup.
“It actually raises the awareness of the coffee segment,” he says. “The more people look at wanting to drink better coffee, that's better for us.”
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