Caribou Coffee joins with Einstein Bros Bagels in one location scheduled to open this week in Colorado Springs, Colo. Joh. A. Benckiser Group (Wiki Link), a German private-equity firm owns both, Caribou and Einstein Bros’ parent, Einstein Noah Restaurant Group Inc., or ENRGI. It plans to open about 20 of the co-branded units by the end of 2015. 10 out of these will be new locations and the rest will mostly include existing Einstein Bros. units that will be converted.
This was a great opportunity to bring two well-known brands together in a unique way said Mike Tattersfield, president and CEO of Caribou and ENRGI. They are planning more growth beyond the first 20 co-branded units, though he did not reveal the number. Bagels and Coffee work together very well according to him and this would change the landscape altogether. This would be the only coffee shop where one will get customized, world-class coffee, as well as customized bagels the way the customers want, something that not all competitors can do.
JAB Holding Co., an affiliate of Jon A. Benckiser Group took over Einstein Noah private in the year 2014, in a $374 million deal. Einstein Noah includes the Einstein Bros. brand, which has about 600 locations in 40 states, as well as Noah’s New York Bagels and Manhattan Bagel. Based in Ludwigshafen, Germany, Joh A Benckiser, acquired Caribou in a $340 million deal in 2012. The Caribou chain includes about 400 locations in the U.S., and another 209 units internationally.
In 2013 Caribou experimented with a co-location strategy with Bruegger's bagels, but that was way back when JAB had acquired Einstein Noah. Dallas based Le Duff America Inc owns Bruegger's . Mr Tattersfield said that this partnership would continue with the eight co-branded Caribou/Bruegger’s units, but growth going forward will focus on the Caribou/Einstein combination. This will allow Caribou to move into new regions where Einstein Bros already has a presence.
The Colorado Springs location is about 2,700 square feet and has a signage outside with both the Caribou and Einstein logos, but in the inside a combined logo brings the brands together. Future locations will all be drive thru though the first location is not. There is an opportunity for growth through licensing and franchising, he said, though the first batch will be company owned said Mr Tattersfield. The company believes that a lot of learning will happen under the company's guidance. Catering and sundry off-premise sales are also other opportunity that they might be interested in the future.
In 2016 the company will experiment with delivery. Caribou already has a mobile app and Einstein Bros is expecting to add one next year. Families on Sunday morning will be able to have coffee and bagels delivered, which the company predicts to be hit.
Mr Tattersfield says that they are more customer-oriented and as their goals match the customer’s requirement they see huge growth potential in the future. Customers want home deliveries and drive thrus and if they can bring into action these convenience factors without compromising on the quality of the brand they could grow many-fold. He said that more co-branded units are planned for Colorado, but the Caribou/Einstein Bros. units will also open in Minnesota, as well as Arizona and Florida.
After acquiring Einstein Noah, the private-equity firm closed 39 under performing locations in February. Joh A Benckiser announced in 2013 the closure or re-branding of 168 Caribou locations. Out of these 88 were re-branded as Peet's Coffee & Tea locations, another brand JAB picked up in 2012 in a $1 billion deal. Peet’s brand is run separately within the JAB portfolio, and is not looking to co-brand says Tattersfield.
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