The Coffee Bean & Tea Leaf Bet on "Starbucks Fatigue"



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Twinings: Tea infusion for more than 300 years

The coffee bean and tea leaf is ready to join the major leagues.

The Los Angeles-based independent coffee retailer said Tuesday that he planned to open a few franchises in New York this year. Finally, he will increase this number to 100.

We "are looking to grow dynamically across the rest of the United States over the next few years," said CEO John Fuller. "It's just the first step of this commitment."

In New York, Fuller said, Starbucks (SBUX) is the main competition.

Fuller argued that the coffee bean could benefit from "Starbucks fatigue".

People who are tired of seeing a Starbucks on every street corner might want a change, he said. "It helps us as well as other brands," Fuller said.

Nicole Miller Regan, an analyst who covers restaurants for Piper Jaffray, said that "everyone wants to try something new".

The Coffee Bean is proud to serve high quality coffee in a cozy atmosphere. "A lot of the third wave coffee is rolling like we do," said JJ Smith, vice president of franchise operations and business development. Third wave, or specialty coffee sellers, include the likes of Blue Bottle Coffee and Intelligentsia.

Related: Can Starbucks be repaired?

Fuller said Starbucks' "fatigue" could also help business partners join the table.

"We are not as a society," said Fuller. "It's us who decide," he said of himself and Smith. The small team means that developers, landlords and franchisees face less paperwork than they would with a large company. And Starbucks is "always making political statements … sometimes it can be incendiary".

And with "tea" in the name, the independent retailer says that it can take advantage of customers' preferences for healthier and less caloric drinks. "Tea is a big platform for us," Fuller said.

Currently, the coffee chain has only 311 stores in the United States, mainly in Southern California. Over the next five to ten years, Fuller said he hoped to bring that number to about 1,000. This would still place Coffee Bean far behind Starbucks, which has about 15,000 stores in the United States.

This is the second incursion of the Coffee Bean in New York. It entered the market in 2011 and had about 13 stores in the city in 2016. The company closed its stores that year and now has another franchisee.

Even if the coffee bean manages to attract some customers away from Starbucks, it is unlikely that it will hurt Starbucks' business.

Starbucks is "the victim of their own success," said Regan. "Their density is a problem."

CNNMoney (New York) First published on June 26, 2018: 4:33 PM ET

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