What Happened to Caribou Coffee?
Caribou Coffee experienced a significant shift in its business model; while not entirely disappearing, the company dramatically reduced its corporate-owned locations after being acquired, shifting its focus to licensing and grocery store sales following a period of substantial losses.
A Minnesota Start-Up Story: Caribou’s Early Days
Caribou Coffee, founded in 1992 by John and Kim Puckett, quickly became a beloved Midwestern coffee chain. The Pucketts, inspired by a trek in Denali National Park, envisioned a coffee house that evoked the spirit of adventure and the comfort of a warm beverage. Their initial success was fueled by a commitment to quality coffee beans, a cozy atmosphere, and a focus on customer experience. The brand expanded rapidly throughout the Upper Midwest, challenging the dominance of Starbucks in the region. The company’s focus extended beyond just coffee, offering a range of pastries, sandwiches, and other beverages to appeal to a broader customer base.
The Challenge to the Coffee King: Expansion and Competition
As Caribou Coffee expanded beyond its Midwestern roots, it faced increasing competition from Starbucks and other national coffee chains. The expansion strategy, while ambitious, proved to be costly and less successful in new markets outside of its core region. Maintaining consistent quality and brand identity across a wider geographic area proved challenging. The increased operational complexity, coupled with the relentless competitive pressure from Starbucks, led to declining profitability in some locations.
A Turning Point: The JAB Holding Acquisition
In December 2012, Caribou Coffee was acquired by JAB Holding Company, a German conglomerate with a diverse portfolio of consumer brands, including Peet’s Coffee & Tea and Keurig Green Mountain. This acquisition marked a significant turning point for the company. JAB Holding initiated a strategic review of Caribou Coffee’s operations, aiming to improve profitability and streamline the business. One of the key decisions following the acquisition was the closure of a significant number of underperforming company-owned stores.
The Great Purge: Store Closures and Strategic Shift
Following the JAB Holding acquisition, Caribou Coffee shuttered approximately 80 company-owned stores in early 2013. Many of these locations were in markets outside of the Upper Midwest, where the brand struggled to gain traction. While some of these locations were converted to Peet’s Coffee & Tea stores, the closures represented a significant downsizing of Caribou Coffee’s corporate-owned footprint. This move signaled a shift away from direct retail operations and a greater emphasis on other avenues, such as licensing partnerships and grocery store distribution.
Focus on Licensing and Grocery: A New Business Model
Following the store closures, Caribou Coffee redirected its focus to licensing agreements and expansion of its retail presence through grocery stores and other retail channels. This approach allowed the company to leverage its brand recognition without the financial burden of operating and maintaining a large network of corporate-owned stores. The licensing agreements allowed Caribou Coffee to partner with other businesses to offer its coffee in a variety of settings, such as hotels, airports, and college campuses. The company’s grocery store distribution expanded its reach to a wider audience, making its coffee available for home brewing.
The Resurgence: Modern Revival and Continued Relevance
Despite the changes in its retail footprint, Caribou Coffee has maintained a strong brand presence, particularly in its core markets. The company continues to innovate with new coffee blends, seasonal beverages, and online ordering options. Caribou Coffee also actively engages with its customers through social media and loyalty programs. The brand’s commitment to quality coffee and a welcoming atmosphere has helped it retain a loyal customer base. The company is also expanding internationally through franchise partnerships, bringing the Caribou Coffee experience to new markets around the globe.
A Look at Competitors
Below is a brief comparison of the major coffee chains.
| Coffee Chain | Corporate Owned Stores (Approximate) | Franchised/Licensed Stores (Approximate) | Total Stores (Approximate) | Primary Market |
|---|---|---|---|---|
| Starbucks | 8,900 | 16,600 | 35,000 | Global |
| Dunkin’ | 9,300 | 3,700 | 13,000 | US, East Coast |
| Caribou Coffee | 100 | 700 | 800 | US, Midwest, Global |
| Peet’s Coffee | 330 | 14 | 350 | US, West Coast |
Impact on Employees and Customers
The closures of corporate-owned stores had a significant impact on employees, many of whom lost their jobs. While some were offered positions at other JAB Holding companies, the transition was undoubtedly difficult for many. Customers in affected areas were disappointed to lose their local Caribou Coffee shop. However, the company attempted to mitigate the impact by offering promotions and discounts to customers who switched to Peet’s Coffee & Tea locations. The shift in business model ultimately aimed to ensure the long-term viability of the Caribou Coffee brand.
Frequently Asked Questions (FAQs)
Why did Caribou Coffee close so many stores?
The closure of many corporate-owned stores was primarily driven by a desire to improve profitability after the acquisition by JAB Holding Company. Many of these stores were underperforming and located in markets where the brand struggled to compete effectively.
Was Caribou Coffee bought out by Starbucks?
No, Caribou Coffee was not bought out by Starbucks. It was acquired by JAB Holding Company, a German conglomerate that owns a variety of consumer brands, including Peet’s Coffee & Tea.
Are all Caribou Coffee stores closed?
No, not all Caribou Coffee stores are closed. While the number of corporate-owned stores has significantly decreased, Caribou Coffee continues to operate stores through licensing and franchising agreements.
Where can I still find Caribou Coffee?
You can still find Caribou Coffee at a limited number of corporate-owned locations, as well as licensed locations in places like hotels, airports, and college campuses. You can also find Caribou Coffee products in many grocery stores.
Is Caribou Coffee the same as Peet’s Coffee?
No, Caribou Coffee and Peet’s Coffee are separate brands owned by the same parent company, JAB Holding Company. While some Caribou Coffee locations were converted to Peet’s Coffee stores, they remain distinct brands with different offerings and brand identities.
What’s the difference between Caribou Coffee and Starbucks?
Caribou Coffee and Starbucks are both coffee chains, but they differ in terms of their brand identity, menu offerings, and geographic presence. Starbucks has a much larger global footprint, while Caribou Coffee is more focused on the Upper Midwest and select international markets.
Did the quality of Caribou Coffee decline after the acquisition?
While some customers have perceived changes in the quality or consistency of Caribou Coffee after the acquisition, the company maintains that it is committed to providing high-quality coffee. It is likely that individual store experiences vary.
Is Caribou Coffee still based in Minnesota?
Yes, Caribou Coffee is still headquartered in Minneapolis, Minnesota. Despite the changes in its business model, the company maintains its ties to its Midwestern roots.
Does Caribou Coffee have a loyalty program?
Yes, Caribou Coffee offers a loyalty program called Caribou Perks. Members can earn points for purchases and redeem them for free drinks and other rewards.
Is Caribou Coffee expanding internationally?
Yes, Caribou Coffee is expanding internationally through franchise partnerships. This allows the company to bring its brand to new markets without the financial burden of direct ownership.
What is Caribou Coffee’s future?
Caribou Coffee’s future appears to be focused on continued growth through licensing, franchising, and grocery store sales. The company aims to leverage its brand recognition and customer loyalty to expand its reach and profitability.
Is it possible that Caribou Coffee will return to widespread corporate ownership?
While not impossible, it seems unlikely that Caribou Coffee will return to widespread corporate ownership in the near future. The company’s current strategy is focused on a more capital-efficient model that relies on partnerships and licensing agreements.