Tully's Coffee

Tully's Coffee
Private
Founded 1992
Headquarters Seattle, Washington, U.S.
Products coffee
coffeeshops (licensees)
Revenue $36 million (2012 est)[1]
Number of employees
 480 (2012)[2]
Website Tullys.com
TullysCoffeeShops.com
Typical Tully's Coffee store

Tully's Coffee is an American specialty coffee manufacturing brand owned by Keurig, which acquired the Tully's brand and wholesale business in 2009.[3][4][5][6]

Keurig had also licensed the Tully's name to a now-defunct retailer and wholesaler chain of coffee shops based in Seattle, Washington. Its stores served specialty coffees, espresso, baked goods, pastries, and coffee-related supplies. The coffee-shop chain also has overseas licensing agreements in Japan, where its brand name is used for over 600 Tully's coffee houses. Tully's Coffee was well known for once following an expansion strategy of opening stores adjacent to those of the considerably larger coffee chain Starbucks, also based in Seattle.

History

Inception

Tully's opened its first store in Kent, Washington in September 1992.[7]

The founder of Tully's Coffee, Tom "Tully" O'Keefe, who retired from the company in 2010, 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 4,000 people. In 2006, Tully's made its first net profit. Tully's focus was no longer on competing against Starbucks, but on serving hand-crafted coffee in its local Seattle area retail coffee shops. The company had franchisees and grocery chain coffee shops in the U.S. and Asia.[8]

It operated stores in the Greater Puget Sound area of Washington, San Francisco, Los Angeles, Idaho, Arizona, California[8] and licensed its brand for use in South Korea and Japan. It had also opened stores in Singapore, Beijing and Stockholm, Sweden. Tully's sold its licensed unit to its Japanese licensee, Tully's Coffee Japan, for US$17.9 million in September 2005.

In August 2007, plans for an IPO were placed on hold by the company, citing a "volatile market." This decision was made right after the company was advised by its bankers to not go forward with the IPO due to a tremendously declining stock market. The company pursued alternative sources of capital and pursued all strategic investment or sale opportunities as a result. Fiscal 2006 losses amounted to $9.7 million.

Sale of wholesale coffee-bean distribution business, brand, and roasting operation

Tully's sold its North American wholesale coffee-bean distribution business, brand (which it licensed back for $1/year in perpetuity), and roasting operation to Green Mountain Coffee Roasters in 2009, earning $40.3 million in the deal, allowing the company to pay off 100% of its debt, including trade debt, make a cash distribution to shareholders, and maintain substantial cash reserves for the expansion of its retail business.[9] Tully's retained all retail rights for North America, and all wholesale and retail rights for the balance of the world, excluding Japan.

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.[10]

Founder and Chairman Tom T. O'Keefe retired in 2010.[11][12]

Coffeeshop closures

The Tully's Coffee board and management filed for a Chapter 11 bankruptcy in October 2012, citing low cash reserves and the need to renegotiate leases with landlords. At the time of the filing Tully's had recently closed or was about to close 17 unprofitable company-owned stores.[12] Global Baristas, an investment group led by actor Patrick Dempsey had the highest bid of US$9.15 million to buy Tully's at a bankruptcy auction on January 3, 2013.[13] U.S. Bankruptcy Court Judge Karen Overstreet subsequently approved the sale to Global Baristas, rejecting objections from Starbucks and other prospective buyers.[14] The deal became final on the last minute of June 30, with all employees keeping their jobs and getting a bonus of two vacation days as a "thank you" for their commitment to the company. Dempsey later backed out of the partnership and filed a lawsuit against his former partner and attorney Michael Avenatti.[15][16]

On March 8, 2018, Tully's announced that it was closing its remaining stores temporarily due to a lack of coffee.[17] Later that month, many Tully's locations remained closed with eviction notices posted by landlords indicating the lack of payment.

In April 2018, Tully's coffee was sued by Daytona International Speedway.[18]

References

  1. ↑ "Web Page Under Construction" (PDF). Tullyscoffeeshops.com. Retrieved 7 August 2018.
  2. ↑ "Judge upholds Dempsey group's bid for Tully's". The Seattle Times. Retrieved 7 August 2018.
  3. ↑ "Green Mountain Coffee Roasters, Inc. Completes Acquisition of Tully's Brand and Wholesale Business". Investor.KeurigGreenMountain.com (press release). March 30, 2009.
  4. ↑ "Stormy Days for Tully's Coffee". Seattle Weekly. 4 April 2018. Retrieved 7 August 2018.
  5. ↑ "Stormy Daniels' lawyer once bought a coffee chain for $9 million with a famous Hollywood actor — and all the shops mysteriously closed earlier this year amid dozens of lawsuits". Retrieved 7 August 2018.
  6. ↑ "What has happened to Seattle's Tully's Coffee?". Mynorthwest.com. 14 June 2018. Retrieved 7 August 2018.
  7. ↑ "Tully's Coffee: A Fully Handcrafted Coffee Roaster!". Tullyscoffeeshops.com. Retrieved 2012-10-24.
  8. 1 2 News, A. B. C. (2013-01-04). "'McDreamy' Wins Tully's Coffee". ABC News. Retrieved 2017-11-14.
  9. ↑ "Vermont coffee company will buy Seattle brand". The Boston Globe. 2008-09-16. Retrieved 2012-10-24.
  10. ↑ "Tully's Coffee Plan 100 Locations in South Korea". Chainleader.com. Retrieved 2012-10-24.
  11. ↑ Allison, Melissa (2010-03-26). "Tom O'Keefe, founder of Tully's Coffee, retiring as chairman in June". Seattle Times. Retrieved 2012-10-24.
  12. 1 2 Allison, Melissa. "Struggling Tully's new plan: bankruptcy protection | Business & Technology". The Seattle Times. Retrieved 2012-10-24.
  13. ↑ Allison, Melissa (January 3, 2013). "Patrick Dempsey, TV's "McDreamy," wins bid to buy Tully's". The Seattle Times. Retrieved 2013-01-04.
  14. ↑ "Tully's tussle over: Judge rules in favor of Patrick Dempsey's group". Bizjournals.com. Retrieved 7 August 2018.
  15. ↑ Dolan, Michael Finnegan, Maura. "Trump meets his match: Stormy Daniels' combative lawyer Michael Avenatti". Latimes.com. Retrieved 7 August 2018.
  16. ↑ "Dempsey group closes on Tully's deal, offers jobs to all workers". The Seattle Times. Retrieved 7 August 2018.
  17. ↑ Grunbaum, Rami (March 8, 2018). "Tully's suspends store operations for lack of coffee". The Seattle Times. Retrieved April 11, 2018.
  18. ↑ "Latest legal blow to Tully's Coffee comes from … Daytona Speedway". The Seattle Times. 2018-04-05. Retrieved 2018-05-06.
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