Want more? Click here to listen to the full interview with Michael Coles
Upsize first visited with Michael Coles when he joined Caribou Coffee as CEO in 2003, and revisited him this spring. The latest: Caribou, with about 500 stores, has started franchising, and has launched brand extensions including with Coca-Cola.
“Caribou Coffee started here in Minneapolis-St Paul in 1992, and we are currently the second largest coffeehouse chain in America, but a long distance away from our biggest competitor.
While we don’t have any aspirations of becoming the biggest, our goal has always been set to be the very best coffeeshop experience anyone could have.
We’ve grown the company at a rate of about 20 to 25 percent a year since I’ve been there, but not just our general retail coffeehouse sales. We’ve also expanded our reach from a brand standpoint.
We now sell coffee in grocery stores, with the mass merchandisers like Costco and Sam’s. We also have partnerships with people like General Mills that makes a Caribou Coffee granola bar; Kemp’s ice cream, they have five flavors of Caribou ice cream available.
And we also have a partnership with the Coca-Cola Co., and this summer Coca-Cola will be coming out with ready-to-drink Caribou Coffee drinks. We don’t know exactly how big it will be, but we think it will be pretty darn big.
We’re heading out in a lot of different directions than we were before I got here.
Our mission statement is Caribou Coffee, an experience that makes the day better. It’s broad enough that we stay focused on what we want to offer is a quality experience, but it also recognizes the fact that there are a lot of different ways to provide that experience to customers. We’re expanding our brand beyond the reach of our stores today.
It was exciting for me this past December, I was in a little town called West Yellowstone, Montana, and I found our granola bars on the shelves. So we’re obviously reaching a lot of people today that hadn’t been able to experience Caribou Coffee.
The majority of our business will always be the stores. We have stores in the Middle East and now South Korea, so about 25 or so stores outside the United States. Hopefully that number will almost double by the end of the year.
We’ve entered into a domestic franchising program as well. We operate today in five or six airports, which when I came to Caribou we operated in one airport.
The franchising, it just has been launched since January of this year. We’re looking for people who understand how to grow a brand, and they’ve done it before. We’re looking for people who can develop areas for the company, such as Orlando, or Nashville, Tennessee.
One, it’s all about the customer, that’s something I’ve grown up with, being in the retail business basically all my life.
Then, getting people to understand that there is a big difference between brand intelligence and brand arrogance. It’s very important for people to understand that you want to provide that kind of brand experience for a broad section of people, but always understand that what you’re offering has to be what the customer wants.
One of the things that happened early on, we really moved the customer to the center of every decision we made. And creating the mission statement like we did, it also had to work for our employees. All of those things at the very beginning were very important to getting people energized and moving forward.
Brand arrogance would be to say that your brand is more important than the customer experience. Brand arrogance would be to say, we’re not going to allow our brand to be in ice cream, or ready-to-drink coffee. It would be discounting the fact that customers are demanding this. They love our product, they love Caribou. There is an emotional connection to the Caribou brand. If we can maintain the kind of quality, to me that’s brand intelligence.
That’s doing something very smart that helps build the brand and connect to customers that we would not otherwise be able to connect to.
Not only do I focus on the Big Green [Starbucks], but I focus on all the competition that’s out there, and we focus on it on a daily basis. I think that our people have a very clear understanding of what we’re up against. Not only are we up against a giant competitor, but we’re up against a very good giant competitor that doesn’t make many mistakes, that does what we consider to be a very good job.
We don’t believe it’s as good as what we do, but on the other hand the reason that I believe that we excel is we are focused every single day on understanding that we have a big competitor that we go up against.
It’s important to understand that the retail business is very difficult. There are no contracts. You can have the biggest day, the biggest week, the biggest month, even the biggest year, but the bottom line is when you shut your lights off every single day, you start over the next day, and you have no contract that the customer will come back. There are no gimmes here. There are no guarantees that when you turn on the lights the next day that anyone will come back.
We can’t become arrogant that we’re No. 2, and we don’t. Caribou remains humble to its core, that we don’t own anything. We rent it on a day-to-day basis. We’re only as successful each day as the day before experience that we’ve provided to people.
I started working in retail when I was 11 years old, in a clothing store in Miami. I worked in that same store until I was 19 years old. Everything I learned about the retail business I learned in those years.
We had a Saturday that we opened the store at 9 in the morning, and it was a day that should have ended at 6 o?clock that evening, but it was so busy that we went to 10 at night.
As we were leaving the building, I turned to my boss and said, “These people love us. We own them.” He looked at me and said, “Kid, the day you think you own any of your customers you might as well close up shop and forget it. None of those people who bought things today have any obligation to come back again, and don’t ever forget it.” And I’ve never forgotten it.”
-As told to Beth Ewen
