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REVIEW SUMMARY
Business. Barnie's CoffeeKitchen
Industry. Coffee retail
Key. Firm believes resurgence will be led by loyal and passionate customers.
Orlando-area entrepreneur Jonathan Smiga, with an executive career that stretches from the Cheesecake Factory to Williams-Sonoma to Robert Mondavi wine, has sipped into the coffee industry.
A former Sarasota resident, Smiga went straight for the good stuff, too, in his new role as president and CEO of Barnie's CoffeeKitchen. The approach: Attack coffee king Starbucks by being everything the behemoth isn't. The attack has so far taken place in Orlando, but expansions are planned in 2013 for the Tampa-St. Petersburg region, followed by Sarasota-Bradenton.
Starbucks, says Smiga, has commoditized coffee and turned the experience into speed over substance. Smiga's plan is to turn Barnie's, formerly Barnie's Coffee & Tea, into a champion of the coffee house motif. To Smiga, that means designs in the drinks and an attitude that welcomes lingering, not pushes the drive-thru.
“You have the right to good food and the right to authenticity,” says Smiga, a graduate of New College of Florida in Sarasota. “If I can't get something that makes them go wow, shame on me.”
Still, taking down Starbucks will be a tall order.
The first step was to rebrand, rename and essentially redo Barnie's. The new model, says Smiga, is more Apple than Starbucks. So just like the iconic technology firm, the goal at Barnie's is to meld high customer satisfaction with higher prices. Smiga hopes that leads to increased demand.
New stores will have lunch and breakfast menus, with a focus on fresh-baked products made from local ingredients. Some stores are standalone models, while others are in existing locations, including the Amway Arena and the University of Central Florida.
Smiga says when the firm opens new stores, including any on the Gulf Coast, it will seek locations customers can access by walking. The products, he says, aren't “for mindless consumption.” Adds Smiga: “We want someone who gets up in the morning and thinks about what he wants to eat.”
The Barnie's reinvention, moreover, includes new agreements with retailers. Its products are now in Publix and Walmart, for example.
Barnie's was founded in the late 1970s, and before Starbucks it was one of the largest coffee retail chains in the country. Revenues, back when the chain had 120 stores at its peak, were consistently more than $80 million a year.
The ownership structure changed several times over the last 10 years, however, and the brand began to slip. Annual sales in 2009 and 2010 hovered around $6 million.
Orlando developer and philanthropist Jim Pugh bought the chain in 2008. He hired Smiga in 2010 to turn the business around. “It was a great legacy brand,” says Smiga. “We just needed a product offering that was compelling.”
Smiga, during a recent New College presentation on powerful branding messages, projected Barnie's would surpass $15 million in 2012 sales. The chain now has about 25 stores, mostly in and around Orlando.
If Smiga connects with his Barnie's turnaround strategy, it will be the latest in a long line of beverage and food industry branding successes. Smiga's past career stops, in addition to Cheesecake Factory, Williams-Sonoma and Robert Mondavi, include General Mills and the Culinary Institute of America. He even worked for a coffee company before, when he was with Illy Espresso, an Italian cappuccino firm.
Smiga spoke with the Business Review recently about Barnie's, his career and powerful brands. His answers have been edited for length, style and clarity.
Q: What attracted you to take on the challenge of redoing Barnie's?
A: I saw an opportunity to take a brand that had a tremendous following and customer loyalty and had fallen a little out of step with the 21st century. We've rebranded Barnie's
CoffeeKitchen to really help emphasize two things. One is the expertise in the kitchen, where we actually make products. We also have a gathering, comforting and nurturing environment.
Q: What have you learned so far in the process?
A: One of the things I learned is that coffee has really been treated like a commodity in the market. The coffee business seems to have gotten stuck on the brew of the day, take it or leave it. That doesn't make any sense because consumers wants personal choice, they want freshly made and they want a sense of discovery.
So we built all that into our new store model. We custom brew over 50 coffees to order. We roast coffee in the store like baking bread. You can personally pick the one you want and go on an adventure of learning about coffee.
Q: You would like Barnie's CoffeeKitchen to emulate Apple, opposed to Starbucks. What about the Apple brand approach resonates with you?
A: What makes Apple so amazingly successful is what I call the emotional connection. It's not about products, although everything they do is high-performing. But what really creates the evangelism of support is the emotional connection to the value.
The way they manage the stores is part of that. There isn't a cash register in sight. It's not about selling you things. It's about solutions. It's about you coming in and finding things to play with and touch. You can learn and be creative there with other people. It becomes a community that brands the name on an emotional level. I think that's critical to a business today, otherwise it is all about low cost and convenience.
Q: Still, how do you sell luxury coffee and coffee-related products in a struggling economy?
A: Overall what we are offering is an affordable luxury. People want a better coffee and they will spend extra for it. People are increasingly looking at value as not just about more for my money, but as a reward. We serve our coffee drinks without the lid. We hand it to you so that you can validate that it's made to your liking. This isn't a commodity. It's a handmade product.
Q: What branding mistakes have you learned from in your career?
A: Sometimes you kind of miss a little bit. We did a restaurant concept in the '80s that was a wine restaurant. We had 500 wines, 60 by the glass. We were ahead of the wine-by-the-glass and taste-before-you-buy concept by 20 years. But it was early, and it was in Pittsburgh. The steel industry had just collapsed.
So it was just an inopportune time. It was a highly regarded restaurant that never made it.
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