In 2001, when Ted Abrams was asked to take over as chief executive officer of Joffrey's Coffee and Tea Co., one of the first things he did was walk up to the company's longest employee and ask a simple question: “What is it that we do best?”
Roastmaster Chris de Mezzo started his answer by telling Abrams what the company didn't do best: run coffee shops. “But we've always roasted great coffee,” de Mezzo said. Abrams was quick to act on the advice.
Within two weeks, Abrams shut down the company's bakery, and within six months, he had shut down or licensed out all of the company's retail locations, the main drivers of revenue but also financial drains, he says. He told executives they needed to refocus on producing great coffee, concentrating on manufacturing, distribution and the company's business with Disney.
The overhaul has worked. Abrams has grown Joffrey's from near bankruptcy in 2001 with $3.9 million in revenue, to a thriving company with $22.3 million in revenue in 2013. In the last year, the company has grown revenues 24.8% from $17.9 million in 2012.
The coffee company is now the largest specialty coffee roaster in the Southeast, roasting 1.6 million pounds of coffee in 2013. This year Abrams expects to roast around 2.2 million pounds, bringing in nearly $27 million in revenue. Confident the growth will continue, Abrams says, “We can easily get to a $40 million company in the next three to five years.”
Sticking to Abrams's strategy, the company sells its coffee to large food distributors, office suppliers, restaurant chains, big box stores, and military bases around the country. It's also been named the exclusive specialty coffee provider for all of Disney.
Disney is Joffrey's largest customer, with more than half of the company's revenue coming from its 20 locations on Disney resorts, according to Abrams.
The company started in Disney at Typhoon Lagoon, after a Disney executive tried the coffee at one of the retail locations and asked Joffrey's to set up a small stand in the park. In 1997 the company won the espresso contract for Disney World. By 2001, the company was in nine locations at the park.
In November 2012, the company made its most significant deal with Disney, becoming a corporate alliance partner. With this long-term partnership, Joffrey's will fully brand its locations at Disney resorts by June. In addition to being the coffee served at all quick service locations at its resorts, Joffrey's coffee will be featured on the menu at all resort restaurants, and used as the in-room coffee at all
Disney hotels, including those in Orlando, Disneyland and Vacation Club resorts. Starting this month, the coffee will be provided on all Disney cruise lines.
Disney claims “we will be the third most recognized brand on Disney property,” Abrams says. Though he's not allowed to disclose the details of the contract, he assures it covers “many, many years.”
The company has partnered with Disney resorts to create around 20 unique blends for Disney's 15 signature restaurants. “Because of our size, we're able to do the custom blending and that's what Disney wants — a unique guest experience,” Abrams says.
Due to the popularity of these unique blends, Disney and Joffrey's also created an e-commerce site where visitors can purchase the coffee online.
In addition to its Disney business, the company partners with Aramark, a national office space distributor, to supply coffee to around 38 market centers around the country.
Locally, Joffrey's works with Tampa's Suncoast Coffee Service and Vending and Bradenton's Snackworks, who also supply office coffee.
For grocery and other distribution, the firm works through Sysco and Cheney Brothers, the largest independently owned food distributor in the Southeast. Joffrey's Coffee is currently available in Publix chain-wide, and in three Costco stores.
For its restaurant business, the company created specialty iced teas for PDQ and Beef O'Brady's, two food chains based in Tampa. Restaurants are beginning to recognize that they need to improve the quality of coffee and iced tea offered, Abrams says. “At the end of the day, the highest percentage profit product in any restaurant is iced tea. The second is coffee. But they are small-dollar items. That's why for so many places it's an afterthought.”
In a study with Beef O'Brady's, Joffrey's found that the average restaurant profited roughly $15,000 to $20,000 annually from upgrading its iced tea to Joffrey's. On a per cup basis, the specialty tea cost about a penny more than a conventional product.
But Abrams doesn't let the company get too bogged down in pushing sales to restaurants that don't appreciate spending more for higher quality. “We don't need to sell to every restaurant and chain that's out there. What we do best is produce high quality coffee and we custom blend. Because of that we don't play in that commodity space segment.”
Most of the company's business has been won through word of mouth, Abrams says. “I can't remember the last time we lost a taste test.”
Handle on Growth
To keep up with the growth, the company is expanding into additional manufacturing space. In 2001, the company's manufacturing and office space was around 7,500 square feet. In June, the company will expand its footprint to cover 30,000 square feet.
The growth opportunities are what keep Abrams going. He's now going on 13 years with the 30-year-old company.
According to de Mezzo, Abrams is a “walking calculator,” so focused and determined that he can be impatient. Jim Fanaro, Joffrey's chief financial officer agrees, “He doesn't wait around. He's the type of guy who picks up the phone” and takes action.
Despite being a self-proclaimed “turnaround” guy, Abrams was “bitten by the same bug I was, and started to enjoy the business,” de Mezzo says. According to de Mezzo, Abrams has freely admitted, “I want to stay and build this thing.”
Dealing with Change
Abrams, experienced in mergers and acquisitions, has revamped a range of companies from a window and door company to a glass manufacturer to a tire recycling firm. He says the key to a successful overhaul is communication, “to an extent where you over communicate to them.” It's also important to focus on the little wins, to make sure all feel like a part of the overall success of a company.
When Abrams was hired at Joffrey's, he bought all of his direct reports a copy of the book “Who Moved My Cheese.” Though a simple story, the book packs a powerful message about dealing with change. Abrams asked each report to read the book and discuss. “Those that embraced it are with us, those that didn't aren't,” he admits candidly. “In any turnaround, if you aren't willing to embrace change, you won't be able to turn around the company. If you continue to do the same old thing, you'll get the same old results.”
Issue. Growth Industry. Coffee Key. Embracing Change