Caribou Coffee pulls in its horns

The company is closing 80 stores and rebranding nearly 90 others in an apparent attempt to separate itself from industry giant Starbucks.

By Bruce Kennedy Apr 9, 2013 1:03PM

A barista makes drinks at a Caribou Coffee store on January 2, 2004 in Mount Prospect, Illinois (© Tim Boyle/Getty Images)More dispatches from the highly competitive caffeine front: Minneapolis-based Caribou Coffee has announced a strategic retreat of sorts. It's closing 80 of its shops nationwide and converting 88 others into Peet's Coffee & Tea stores. Both Caribou and Peet's were bought last year by Joh. A. Benckiser (JAB), a German holding company that purchased Caribou for $340 million while paying close to $1 billion for Peet's.

As a result, Caribou will be withdrawing from several major urban markets, including Chicago and Washington, D.C. -- as well as eliminating its presence in parts of the South and Midwest. "Over the past few months, we at Caribou have revisited our business strategy, including closely evaluating our performance by market to make decisions that best position us for long-term growth," the company announced in a statement.

Caribou has positioned itself as a popular alternative to Starbucks (SBUX) and just last year a contributor to Seeking Alpha called Caribou an underestimated David to the Starbucks' Goliath. Some business observers, however, wonder if Caribou customers might have trouble with the different, more upscale ambiance they'll find at Peet's.

Companies "don't make this kind of decision casually," Robert Passikoff, president of Brand Keys consulting firm, told the Chicago Tribune. He thinks JAB believes consumers wanting a coffee shop other than Starbucks "are in fact looking for a different kind of experience, and they have (Peet's) in their arsenal, so why not try it?"

According to the Minneapolis/St. Paul Business Journal, Caribou will continue to operate nearly 470 stories -- about 200 of them franchised -- in Minnesota, the Dakotas, parts of Wisconsin, Iowa, Kansas, North Carolina and metro Denver. It also has stores in 10 foreign markets.

Some affected Caribou employees and their customers apparently aren't taking the news quietly. A Boycott Caribou Coffee site recently appeared on Facebook denouncing the company for giving the employees short notice that their jobs are going away.

"The company prides themselves on family values, yet gave 1000's of people no where to turn," says the page. "Please let them suffer from this! Stop buying Caribou product!!!!! "

More on moneyNOW

Apr 10, 2013 1:37PM
"The company prides themselves on family values, yet gave 1000's of people no where to turn," says the page. "Please let them suffer from this! Stop buying Caribou product!!!!!"   It seems people think companies are in business exclusively to provide employment even if they're going broke or losing money.  People need lessons in economics.
Apr 10, 2013 12:04PM
i love caribou KCUPS nice flavor hopefully this won,t affect those
Apr 10, 2013 12:32PM
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
100 character limit
Are you sure you want to delete this comment?


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

Trending NOW

What’s this?


[BRIEFING.COM] The major averages posted solid gains ahead of tomorrow's policy directive from the Federal Open Market Committee. The S&P 500 rallied 0.8%, while the Russell 2000 (+0.3%) could not keep pace with the benchmark index.

Equity indices hovered near their flat lines during the first two hours of action, but surged in reaction to reports from the Wall Street Journal concerning tomorrow's FOMC statement. Specifically, Fed watcher Jon Hilsenrath indicated that the statement ... More