Peet's Coffee & Tea
|Industry||Retail coffee and tea|
|Key people||Alfred Peet (1920-2007), founder|
|Products||Coffee beans, coffee drinks, teas, and tisanes|
|Revenue||$284.8 mil. (FY2008 net)|
|Employees||3,750 (as of March 1, 2009)|
Peet's Coffee & Tea is a San Francisco Bay Area based specialty coffee roaster and retailer. Founded in 1966 by Alfred Peet in Berkeley, California as Peet's Coffee, Tea & Spices, Peet's is known for its early introduction of darker roasted arabica coffee, such as French roast and grades appropriate for espresso drinks, to Bay Area and US coffee retailing, for both freshly roasted beans and in-store brewed coffee.
Alfred Peet grew up in the coffee business while living in the Netherlands as a child. Moving to San Francisco when he was 35, he began roasting coffee in the 1960s. Peet started Peet's Coffee & Tea as a single store in 1966 in Berkeley, California. Peet's original outlet is still located on the corner of Walnut and Vine (2124 Vine Street) in the Gourmet Ghetto of North Berkeley, close to the University of California. Throughout the later '60s, the '70s, and well into the '80s, standing in line at Peet's to buy weekly beans was a Bay Area ritual. That original location now contains a museum space which displays Peet's memorabilia and historical coffee equipment.
Peet's predates the more celebrated specialty company, Starbucks, and served as a model for that enterprise. The three founders of the Seattle-based chain all knew Peet personally; when they began their store in 1971, they bought their beans directly from Peet's, and continued to do so for the first year of business.
Peet sold his business in 1979 to Sal Bonavita, staying on as mentor and teacher until 1984. In 1984 Jerry Baldwin, one of the founders of Starbucks, and Peet's former partner, along with co-owner Jim Reynolds, the coffee roaster, and a group of investors, bought the four Bay Area Peet's locations from Bonavita. In 1987, Baldwin and Peet's owners sold the Starbucks chain to focus on Peet's, and Baldwin and Howard Schultz, Starbucks' new owner, entered into a non-compete agreement in the Bay Area.
Peet's operated 193 retail locations within the US as of the first quarter of 2010. Most locations are in California, with further locations in Washington, Oregon, Colorado, Illinois, and Massachusetts.
Peet's has outlets at many transit centers, including several airport locations, such as both major Houston airports (HOU and IAH), Reno/Tahoe (RNO) in Reno, Nevada, Kennedy Airport (JFK) in New York City, Philadelphia International Airport (PHL), and all three major airports in the San Francisco Bay Area (SFO, OAK, & SJC). A number of franchised Peet's kiosks opened in BART stations around the Bay Area in early 2008.
In 2003, the first full-service Peet's store on a university campus was opened within the Clark Center building at Stanford University. Peet's coffee is also currently served at all Stanford Dining locations. In 2005, UC Berkeley opened its own Peet's franchise on campus in Dwinelle Hall and as a campus restaurant near its existing dining area. Similarly in 2009, locations opened at the UW–Madison, Villanova University, Memorial Union and at UC San Diego. The largest Peet's store in the U.S. is located in Evanston, Illinois, near the campus of Northwestern University.
Peet's has been much slower to expand than Starbucks, focusing more on coffee and tea retailing, with a more limited selection of coffee drinks at their stores. Peet's is still primarily a California operation, with a few stores in other metropolitan areas (see below) and a short-lived four-store partnership in Tokyo. Peet's also operated a store in Austin, Texas from 2001 to 2005.
The company went public in January 2001 (symbol PEET). After a very successful IPO, shares struggled through the first year but have posted solid gains ever since. As of May 2011, Peet's has a market cap of roughly $636 million, about 2.3% of Starbucks's roughly $27.2 billion.
In 2012, Peet's announced its acquisition by the German company Joh. A. Benckiser for $974 million. Benckiser is a holding company which is a part holder of the consumer products company Reckitt Benckiser. The same year, the Benkiser company also acquired Caribou Coffee, and on April 5, 2013, Caribou announced that they would close their stores outside an area encompassing Denver, Colorado and the states of Minnesota, Iowa, North Dakota, South Dakota, western Wisconsin, North Carolina, and Kansas. Those Caribou stores in the remainder of the country that would remain open, about half of the total, would be rebranded as Peet's.
Peet's was one of the first coffee bean and brewed coffee retailers to offer specialty grade coffee, and to roast the beans longer, producing a liquor that is darker, more bitter, with less of the sour taste of the coffees offered in the US at the time. They are viewed as one of the founding businesses in the gourmet coffee trade.
Employee and Labor Relations
With a significant population of part-time and relatively short-term employees, Peet’s, like Starbucks, was seen by economists and media sources as a model for the evolving service economy, notable for its extensive benefit plans for both full- and part-time salaried and hourly workers. By 2010, Peet's was offering health, dental and vision plans to part-time workers who had worked at least 500 hours, and were averaging over 21 -hour workweeks.
Peet's became a target for union organizing as early as 2002. At that time, workers at the Santa Cruz, California branch of Peet’s sought affiliation with the United Food and Commercial Workers International Union (UFCW) Local 839. In August 2003, after intensive anti-union lobbying by Peet’s Coffee & Tea, retail employees at Peet’s store 221 in Santa Cruz, CA, voted 11-6 against representation by the UFCWIU.
One consequence of that unionization effort and its failure was an increased media attention to Peet’s and its employee relations, primarily in the Bay Area. Articles based on interviews with retail employees pointed to increased dissatisfaction, especially after cuts in pay and benefits during the economic downturn, coupled with widespread reports of the corporation’s success in maintaining and expanding revenues and profits.
A significant factor in both profit-margin increases and employee turnover was the corporation’s implementation of worker-efficiency systems, including the use of task-timers, scripts for customer interaction, and a point system for disciplinary action over policy infractions. In response to employee complaints that Peet’s has steadily cut back on pay and benefits, while pushing employees to work faster and under unsafe conditions, a company spokesperson said, “We feel very comfortable that all our employees are treated fairly and with respect.”
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- Notes From Peet's Coffee & Tea's 2010 Shareholder Meeting, http://seekingalpha.com/article/209208-notes-from-peet-s-coffee-tea-s-2010-shareholder-meeting; "Careers at Peets," Peet's official website, http://www.peets.com/careers/job_postings.asp?rdir=1&
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