Long Beach, Ca - 1 February, 2002 -

Laughter and the aroma of flavored coffee filled the upper floor of the new corporate headquarters of It's A Grind, Long Beach's fast-growing chain of coffeehouses. Nestled comfortably in one of the chain's signature wing chairs, one of the company's executives casually launched into a funny little story about a recent trip to Seattle. It was a story that, in retrospect, President Marty Cox said he would have like to keep quiet. The tale took place in October, when Cox and his team were in town for a coffee industry convention. One of the executives had called to make reservation for a private dining room at a fancy Seattle restaurant. As it happens, the same private room had been occupied the night before by Howard Schultz, chief executive of the Starbucks coffee chain. It was understandable, then, that the restaurant employee who took down the reservation mistook Cox's party for Schultz's party. Compliment or not, the employee had confused It's A Grind with Starbuck's. (After dinner that night, the waitress who was serving Cox and his team decided to have a little fun by serving their coffee in mugs emblazoned with the famous Starbucks logo.) Though Cox still gets a good laugh out of that memory, he makes it clear that he does not wish his company to be associated with his Seattle-based competitor. At the same time, he no longer wishes to be seen as the Starbucks-basher he once was. "We don't want to be a Starbucks, not that that's a negative thing," he said. "We want to be known as the friendly neighborhood coffeehouse." That's easier said than done, especially now that It's A Grind is on the brink of becoming a nationwide franchiser. That goal represents a big distinction from Starbucks, which wholly owns all of its coffeehouses. Cox and his team are now preparing to open 20 locations a year through at least the next three years. That's a big step for the 7-year-old chain that started with a single coffeehouse at Spring Street and Los Coyotes Diagonal and now operates six stores in Long Beach and Lakewood. In 2001, the company said its revenues reache$3.2 million, a 10 percent increase over the previous year. The challenge now, Cox's wife, Louise Montgomery, said, is to stay focused on controlled growth. "We never want to jeopardize quality. That's the key thing," Montgomery said. "The goal is not to open a ton of stores." Much of the work begins today with the arrival in Long Beach of Gerry and Toni Alesia, two founding partners of Kinko's copy store chain. With their partner, Darrell Luery, the former president of Bally's Las Vegas casino, the Alesias have signed franchising agreements to open 27 It's A Grind stores in Nevada over the next few years. As soon as the Alesias arrive, they are set to begin an intensive two-week training program that all new franchisees must go through. For 12 days, from 8:00am to 8:00pm, they will have to learn the intricacies of running an It's A Grind coffeehouse. It all happens at the chain's headquarters, a 3,200 square-foot office that opened in December at the Marina Pacifica mall. Much of the Alesias' time will be spent in an upstairs coffeehouse mock-up, which like the actual stores, has a complete coffee bar and a series of paintings of blues and jazz musicians. All of the company's employees are trained here over a period of two weeks before poring a single cup of coffee for customers. The training program is designed to ensure consistency, something company CEO Steve Shoeman considers crucial to the chain's success. A franchise expert, Shoeman wrote strict uniformity into the company's franchise agreement. Once someone signs one of these agreements, he said, there are few choices to be made. All the walls of every It's A Grind coffeehouse, for example, must be lined with slate. All the decorative steel must be corrugated. And most importantly, all the coffee and all the customer service must be exactly the same from one store to another. Shoeman calls this uniformity the company's underlying strength. It's what makes the franchisee's estimated $255,000-per-store investment a relatively minor financial risk. The system is tried and true, Shoeman said. "That's why they come aboard," he said. Coz put it jokingly, "You do it our way or no way." The system does not come cheap. Franchises must pay a $25,000, 10-year franchising fee. After that, the corporation receives an annual percentage of gross sales. Given that the corporation's reputation is very much on the line with every new coffeehouse, Cox and his team said they are particular about whom they license. Already they said they have ruled out eight or ten applicants, some of who said they were simply looking to semi-retire into a part-time job. Cox said he looks for a "passion to serve" in applicants. He said he must get a "gut feeling" that the person has the necessary attention to detail. Montgomery has different requirements. She needs to see a high energy level in future franchisees. That, she said, and a special sensitivity to customer service. "It's treating everyone like you want to be treated yourself," she said. "That's what has made us a success. It's a golden rule that Cox hopes will carry over to the chain's relation to Starbucks. Instead of getting worried whenever Starbucks opens a location near an It's A Grind, as the Long Beach chain used to do, the company now views Starbucks openings as a good thing. It expands the coffee-drinking market. Shoeman, like Cox, prefers to keep a professional distance from the Seattle giant. That's especially important, he says, with all the new locations opening. "They (Seattle executives) are aware of us now," he said. "That's enough."

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