Tulsa coffee company eyes Springfield

After 26 years in business, the Tulsa, Okla.-based coffee retailer and wholesaler employed a new business model three years ago, leading to more than 300 percent store growth and about 20 percent annual wholesale sales growth.

Now, Springfield is a main target for expansion through both Java Dave’s licensing system and its office coffee delivery program.

Java Dave’s has evolved several times since its inception as solely a coffee delivery company called Executive Coffee, but the adoption of a licensing system in 2003 in lieu of a franchising system may have been its most significant change.

After 10 years of franchising, Java Dave’s Director of Licensing Mike Tiernan said the retail side boomed through its licensing system. Company revenues were more than $5 million in 2005, according to Herb Angle, sales manager for Java Dave’s Executive Coffee, the company’s route service. Revenues were $3.8 million in 2002, the year before licensing.

Tiernan predicts 30 new stores nationwide this year and 135 total by the end of 2007. Java Dave’s already has stores in Joplin, Monett, Mount Vernon and Neosho.

Tiernan said he would begin advertising for licensees in Springfield this month.

Meanwhile, Angle and crew are already on the ground in Springfield, delivering coffee and equipment to 15 area offices, including Mac-Clair Mortgage Services.

“Value-wise, we’re thrilled,” said Teresa McCammon, mortgage banker with Mac-Clair. “It (is) very nice (and) very convenient.”

Angle predicts regional sales representative Gloria Kelley will have established 80 to 100 accounts in town by the end of the year.

“We’ll make a mark in Springfield, I guarantee it,” Angle said.

Java Dave’s Executive Coffee serves about 2,500 offices in Oklahoma, Arkansas and Missouri, including the Joplin market.

Angle credited customer service and product quality with the success of his route service, which had $3.5 million in revenues last year.

Licensing difference

Licensing has been so popular, Tiernan said, because licensees save money over franchisees and have more flexibility in running their shops.

Whereas Java Dave’s charged 5 percent in royalties and 2 percent for advertising for franchisees, licensees only pay about $100 per year with no royalties.

Tiernan also said store setup is less costly because owners have more control. Java Dave’s franchised stores cost between $150,000 and $350,000 to open, while licensed stores can open for as little as $50,000.

Tiernan said Java Dave’s made the switch because it wanted to strengthen its bread-and-butter: product sales.

“Yes, we have lost the royalties,” he said, “but the product sales have more than made up for that.

“The more stores we put in, the more product sales we’re going to have.”

Java Dave’s offers more than 2,000 coffeehouse products and has the capability of roasting 1 million pounds of coffee each month at its 35,000-square-foot Tulsa warehouse. Tiernan said licensed stores order as much as $3,000 of product each month.[[In-content Ad]]