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Home grown brew: Coffee Bean takes on Starbucks with atmosphere and Ice Blended.

Article Excerpt
WHEN it comes to growing a business--fast--a good place to look is the Coffee Bean & Tea Leaf location on La Cienega Boulevard near the Santa Monica (10) Freeway.

It's around 10 a.m.--well after the usual rush-hour crowd--and most of the half-dozen or so tables are filled with a familiar mix. There's a criminal attorney going over a case with an associate, a couple of guys talking rap music and a middle-aged businessman reading the paper.

"What attracted me to them first were their Ice Blendeds," says customer Mark Brandt, referring to the coffee-milkshake concoction topped with whipped cream that has become Coffee Bean's signature drink. "They were the first to have them and then Starbucks copied them with the Frappuccino."

But how many more Coffee Beans and Starbucks and Peet's can the world possibly support? With the number of U.S. coffee stores skyrocketing to the current 18,000 from 500 in 1989, when does saturation start eating into everybody's business? And how does a mid-sized chain that's growing fast manage the tricky matters of hiring and quality control?

For now, overexpansion is not an issue for the owners of Coffee Bean, a unit of International Coffee & Tea LLC. In fact, the company is on a tear, with a two-year growth rate of 30.7 percent and 2003 revenues of $114.3 million. That puts it on the Business Journal's list of L.A.'s 100 fastest growing private companies--and with its local expansion in the past two or three years, its name has become nearly as ubiquitous in some spots as the Seattle-based behemoth, Starbucks.

For true connoisseurs, Coffee Bean is considered the alternative coffeehouse, with brown-striped awnings and burlap coffee sacks instead of the more fast-food feel of Starbucks. "It's almost like an obsessive following," explained Melvin Elias, the company's senior vice president and chief operating officer. "Our customers have a real connection to the brand. They think of it as their local coffeehouse."

The trick is holding onto those customers--whether by keeping the stores clean, keeping the lines short or making sure the coffee is used soon after roasting. "It's not that barista training is brain surgery," said Bruce Milletto, president of Bellissimo Inc., a coffee consulting and training firm in Eugene, Ore. "But there are probably 10 to 20 things the barista has to do properly, and no matter how expensive the beans are. if you don't have proper training, you can turn out garbage."...