Tully's Coffee is a specialty coffee retailer and wholesaler based in Seattle, Washington, United States. Its stores serve speciality coffees, espresso, baked goods, pastries, and coffee-related supplies. It also has overseas licensing agreements in Japan and South Korea where its brand name is used for Tully's coffee houses in those countries. Tully's currently has the highest sales of whole bean coffee in grocery and supermarket stores in the US.[citation needed] Tully's Coffee is well known for once following an expansion strategy of opening stores adjacent to the opposing coffee giant Starbucks, also based in Seattle. There's a running joke in Seattle that the easiest way to find a Tully's is to stand in front of a Starbucks and turn around. The busiest Tully's in the world is located inside the Boeing Everett factory, near where 747 aircraft are built. Tully's is now owned by Green Mountain Coffee Roasters.

Founded in 1992, Tully's Coffee Corporation is the third largest company-owned specialty coffee retailer in the United States. Tully's Coffee currently has 101 locations in Washington, Oregon, California, Idaho, and the Pacific Rim. Its wholesale division provides Tully's whole bean coffee, related products, and supplies to domestic supermarkets, food services, restaurants, office coffee services, and institutions, as well as to customers through Tully's mail order and Internet sales. The company's international division sells Tully's coffee, related products, and supplies to foreign licensees.
Tully's opened its first store in Kent, Washington, in 1992. The founder of Tully's Coffee, Tom Tully O'Keefe, planned to rival the quickly expanding Starbucks coffee. Tully's quickly developed into a strong regional specialty-coffee retailer that was concentrated in Puget Sound, where coffee loyalty is so deep there is one coffee shop for every 4000 people. In 2006, Tully's made its first net profit. But more recently, the president and CEO has described Tully's focus as no longer on competing against the mega giant Starbucks, but on serving fine hand crafted coffee (and expanding into the Wholesale market).
It now operates nearly 100 stores in the Greater Puget Sound area of Washington, San Francisco, Los Angeles, Idaho, Arizona, and licenses its brand for use in South Korea and Japan. It has also opened one store in Stockholm, Sweden. Tully's sold the most profitable unit of the company—its Japan partnership—for US$17.9 million in September, 2005.
In August 2007 plans for an IPO were placed on hold with the company citing a "volatile market." This decision though was made right after the company was unable to secure investor financing for the IPO. Fiscal 2006 losses amounted to $9.7 million.
Tully's sold its bean distribution business and brand to Green Mountain Coffee Roasters in 2008, earning $40.3 million in the deal, allowing them to pay off part of its balance sheet of 102.1 million dollars and expand its retail business.
In 2010, Tully's Coffee International and DK Retail Co., Ltd. entered into a Master Licensing Agreement to develop up to 100 retail stores in South Korea.
The founder of Tully's Coffee, Tom O'Keefe, is set to retire June 30 as chairman of Seattle's second-largest coffee retailer.

Since we opened our first store in 1992, Tully’s Coffee has been focused on creating remarkable handcrafted coffees that truly stand apart from the rest. Now the last independent Seattle-pedigreed coffee company in the world, we look forward to sharing our passion for small-batch roasted specialty coffee with every customer who walks through our door.

Our neighborhood stores have an amazing ability to bring people together. Perhaps it’s the welcoming aroma of fresh-roasted, just-brewed coffee. Maybe it’s the warm greeting and expert advice you’ll get from our highly skilled baristas. Or it could be the comfortable atmosphere and lively hum of laughter and conversation. Whatever draws you in, you’re surrounded by others who share your appreciation of exceptional, handcrafted coffee—and all the knowledge, hard work, and care that goes into creating it.


At this point, O'Keefe recognized that he no longer had the expertise needed to manage a company of more than 100 stores. To prepare Tully's for its long-awaited initial public offering, the company brought in its first president and chief operating officer and later chief executive, Jamie Colbourne. Colbourne, who came from Coca Cola and 7-Up Canada, took over Tully's day-to-day operations in February 2001.
Colbourne brought Tully's rapid expansion to a halt. His first move, focusing on profitability over expansion, was to land a major licensing deal with Japan-based Ueshima Coffee Co. Ltd., making it the exclusive Tully's supplier for all of Asia except Japan. This helped resolve the company's immediate cash crisis. In place of O'Keefe's vision of a Tully's across the street from every Starbuck's, Colbourne substituted the idea of Tully's becoming a niche player. "We need to be a little more selective in our store sites," he was quoted in a 2001 Portland Business Journal article. "I want to make sure we've got the business right first." Colbourne also focused on expanding the company's wholesale business beginning in March 2001.
However, in July 2001, Colbourne suddenly resigned, citing differences with the board of directors and saying that the company's finances were in worse shape than he'd been told. Marc Evanger became interim president and chief executive of Tully's and continued to implement Colbourne's profitability plan. Evanger closed some U.S. stores and all stores in Sweden, stopped offering sandwiches and salads in some locations, and cut corporate employees almost 20 percent. He continued to put expansion plans on hold while increasing the company's wholesale and grocery business. Through the remainder of 2001 and into 2002, the emphasis on the company's wholesale business continued, and by January 2002 Tully's had signed on four supermarkets: Rosauers Supermarkets, Albertson's, Safeway, and Quality Food Centers in the Pacific Northwest. By the middle of 2002, Tully's coffee was selling in 650 grocery stores.
Despite Tully's losses in 2001, it closed the year debt free because of the cash it received from Ueshima Coffee and Tully's Coffee Japan. Tully's Coffee Japan turned a profit of $758,000 on sales of $8.6 million in 2001, and in fiscal 2002 brought in nearly $2 million to the company. In fiscal 2002, Tully's lost $11.2 million on increased revenues of $51.5 million, despite the fact that sales fell 6 percent at established stores.
Tony Gioia, former president of Southwest Supermarkets and before that of Baskin-Robbins, as well as co-founder of Wolfgang Puck Food, assumed the roles of chief executive officer and president of Tully's in June 2002. To pit Tully's against its competition and prepare it for going public, Gioia focused attention on improving the company's financial performance and strengthening its market position, saving costs and increasing sales at its 103 stores.
With $700,000 left in cash in late 2002, Gioia hired an investment firm to pursue additional short-term and long-term financing for Tully's. Yet he insisted that he had not "lost one minute of sleep over our cash position" in a 2002 Puget Sound Business Journal article. "We decided it was important to focus on our existing assets and make them generate more cash flow for the company." It was also important to continue to expand Tully's international licensees.
Gioia had high hopes for the company's new gourmet, soft-serve ice creams, free samples of which were bringing in new customers. With the introduction of the ice cream, as a separate item and as a part of a drink, Tully's was finally moving in a direction entirely different than Starbuck's. Despite the fact that same store sales were down 6 percent in 2002 and the company continued to close stores, management firmly believed that strong revenue growth and slower increases in expenses would pay off for Tully's in the end.
Principal Competitors: Diedrich Coffee, Inc.; Starbucks Corporation.


Statistics:
Private Company
Incorporated: 1992
Employees: 1,000
Sales: $51.5 million (2002)
NAIC: 722213 Snack and Nonalcoholic Beverage Bars; 312111 Soft Drink Manufacturing; 445299 All Other Specialty Food Stores

Key Dates:
1992: Tom Tully O'Keefe founds Tully's Coffee Corporation in Seattle.
1994: Tully's holds its first of many private placements.
1995: The company opens a new roasting plant and corporate offices.
1997: Tully's begins to sell its coffee overseas.
1998: The company founds Tully's Coffee Japan Co. as an entirely separate venture and buys Spinelli Coffee Co.
2001: Jamie Colbourne becomes president and chief executive officer.
2002: Tony Gioia becomes president and chief executive officer.

Tully's Coffee
Customer Service Department
3100 Airport Way South
Seattle, WA 98134
 
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