Bucking Starbucks

A whole lot of coffee cups are adding up to a steaming pot of success for Greenberry's Coffee and Tea Co.

24th March 2006




Four years ago, Carol White left her job in hotel management and bought Texas' first Greenberry's Coffee and Tea Co. franchise. Since then, the shop's revenue has risen, one cup of coffee at a time.

"Our growth has always been upward, but there are months when it has been almost infinitesimal," White says. "When you think that a cup of coffee is $1.50, you see why it takes a lot to see a difference."

Her experience in the hospitality industry provided a solid background for running the franchise. A Rice University graduate who held management positions with Crowne Plaza and the Four Seasons, White opened Greenberry's to end her search for that perfect cup of java.

"I was not a big Starbuck's fan, but I was a big consumer because there was nothing else," she says. "When I opened, Starbuck's had 80 Houston locations. Now they have 115. It looked like there was room for opportunity."

According to the Specialty Coffee Association of America, 15 percent of adults drink coffee every day -- a 6 percent jump since 2000. The industry generated $9.62 billion in 2005 and employed more than 20 million people worldwide.

White hopes those numbers will continue to rise. In the meantime, she keeps on brewing.

The first cup
A native Houstonian, White chose to buy a Greenberry's franchise because of her own passion for coffee and because she knew the Greenberry's owners through a personal connection. She scouted for a location within Houston's inner Loop.

Through a combination of market research, consultants and driving around, White opted for a spot near the intersection of Kirby and West Alabama in a shopping center with a wine bar and a day spa. Several Starbuck's are within a three-mile radius.

"A lot of the location decision related to what I did in the hotel business," White says. "Although I didn't have to decide where to build those hotels, I did have to decide who my market was."

She spent many mornings sitting in Starbuck's in the area she was considering, counting customers who came in at certain hours and monitoring what they ordered. Her research paid off. Greenberry's annual growth has averaged 5 percent.

"This January we saw 15 percent growth over last January," she says. "I feel we finally hit that critical mass, where we finally have enough people telling enough people telling enough people."

She launched Greenberry's in 2002 with $500,000 in personal capital. That year the business earned $200,000, and 2005 revenue hit $300,000. In addition to her one-time franchising fee, she pays a 4 percent royalty each month.

One of her biggest obstacles in opening was dealing with the city.

"I had been involved in the process of building a hotel, but it was a lot more difficult to get things done with this because we are small," she says. "We had to fight all the way, and there were more expenses than I expected, like a $15,000 grease trap. Since we don't really cook -- we do some baking -- we thought that was excessive, but the city said we had to have it, so we have it."

White was able to finance these extra expenses herself. If she'd had to rely on banks or other loans, the process would have been more unsettling, she says.

Opening during the summer also created some uncertainty, since many of her target customers were on vacation, but several months after the store opened, her efforts paid off. Customers began to stop in on their way to work, and employees from nearby businesses bought coffee during the day. Word-of-mouth kept the business going.

Coffee for the community
White made headway in attracting new customers by working closely with the Houston Intown Chamber of Commerce, a business-to-business organization including the Upper Kirby District.

"Carol really knows how to network," says Jamie Brewster, president of the Houston Intown Chamber. "She always had her shop open for committee meetings -- every week, if necessary."

Holding meetings in Greenberry's drew new people into the shop, and they returned as regular customers.

"The competition in the area is stiff," Brewster says. "People have money, but they are picky and want to spend it on good things. The key is to provide good service and a quality product -- which she does."

White says one of her biggest challenges was spreading the word about Greenberry's. Initially, she tried using coupon incentives. They had worked well with other franchises, but she had limited success with them.

Recently, she started teaching "Master Coffee -- It's Not the Same Old Grind" through Leisure Learning. Coffee and tea drinkers learn about Greenberry's through attending class or reading about it in the course brochures distributed throughout the city.

Seven employees work at Greenberry's -- two behind the counter at all times. White finds new hires through walk-ins and newspaper advertising.

A quality product is her business' best asset, White says. If a pot sits on the counter for more than 70 minutes, the coffee is thrown out. She also credits the store's selection of teas with setting it apart from other coffee shops.

Within two years, White hopes to add another Greenberry's in Houston to help build brand recognition, but right now, her focus remains on serving coffee that has a full flavor without the whipped cream, sprinkles and other sprays and fizz.

"Our biggest growth is in the actual cups of coffee we sell," she says. "The good news is that I have a great product. The bad news is that it's $1.50 instead of $4. It's a double-edge sword. I love the fact that they love my coffee, but I might make more money if I covered it up with a lot of squirts."

© 2006 American City Business Journals Inc.