Tully's Coffee

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Tully's Coffee
Industry Restaurants
Founded 1992
Headquarters Seattle, Washington, United States
Number of locations
17 in western U.S. states;[1] brand licensed to Tully's coffee houses in Japan and South Korea
Products Coffee
Revenue $36 million (2012 est)[2]
Number of employees
480 (2012)[3]
Website tullyscoffeeshops.com
Typical Tully's Coffee store

Tully's Coffee is a specialty coffee retailer and wholesaler based in Seattle, Washington, United States. Its stores serve specialty coffees, espresso, baked goods, pastries, and coffee-related supplies. It also has overseas licensing agreements in Japan where its brand name is used for Tully's coffee houses in those countries. Tully's Coffee is well known for once following an expansion strategy of opening stores adjacent to those of the considerably larger coffee chain Starbucks, also based in Seattle.


Tully's opened its first store in Kent, Washington in September of 1992.[4]

The founder of Tully's Coffee, Tom "Tully" O'Keefe, who retired from the company in 2010, planned to rival the quickly expanding Starbucks coffee. Tully's quickly developed into a strong regional specialty-coffee retailer that was concentrated in Puget Sound, where coffee loyalty is so deep there is one coffee shop for every 4,000 people. In 2006, Tully's made its first net profit. Tully's focus is no longer on competing against Starbucks, but on serving fine hand crafted coffee in its local Seattle area retail coffee shops.

It operates stores in the Greater Puget Sound area of Washington, San Francisco, Los Angeles, Idaho, Arizona, and licenses its brand for use in South Korea and Japan. It had also opened stores in Singapore, Beijing and Stockholm, Sweden. Tully's successfully sold its licensed unit to its Japanese licensee, Tully's Coffee Japan, for US$17.9 million in September, 2005.

In August 2007 plans for an IPO were placed on hold with the company, citing a "volatile market." This decision was made right after the company was advised by its bankers to not go forward with the IPO due to a tremendously declining stock market. The company pursued alternative sources of capital and pursued all strategic investment or sale opportunities as a result. Fiscal 2006 losses amounted to $9.7 million.

Tully's subsequently sold its North American wholesale bean distribution business, brand (which it licensed back for $1/year in perpetuity), and roasting operation to Green Mountain Coffee Roasters in 2009, earning $40.3 million in the deal, allowing the company to pay off 100% of its debt , including trade debt, make a cash distribution to shareholders, and maintain substantial cash reserves for the expansion of its retail business.[5] Tully's retained all retail rights for North America as well as all wholesale and retail rights for the balance of the world, excluding Japan.

In 2010, Tully's Coffee International and DK Retail Co., Ltd. entered into a Master Licensing Agreement to develop up to 100 retail stores in South Korea.[6]

Founder and Chairman Tom T. O'Keefe retired in 2010.[7][8]

The Tully's Coffee board and management made the decision to file for a Chapter 11 bankruptcy in October 2012, citing low cash reserves and the need to renegotiate leases with landlords. At the time of the filing Tully's had recently closed or was about to close 17 unprofitable company-owned stores.[8] Global Baristas, an investment group led by actor Patrick Dempsey who later backed out of the partnership while filing a lawsuit against his former partner and attorney, had the highest bid of US$9.15 million to buy Tully's at a bankruptcy auction on January 3, 2013.[9] U.S. Bankruptcy Court Judge Karen Overstreet subsequently approved the sale to Global Baristas, rejecting objections from Starbucks and other prospective buyers.[10] The deal became final on the last minute of June 30, with all employees keeping their jobs and getting a bonus of two vacation days as a "thank you" for their commitment to the company.[11]


Tully's uses standard hot cup sizes: 8 US fl oz (240 ml) short, 12 US fl oz (350 ml) tall, 16 US fl oz (470 ml) grande, and 20 US fl oz (590 ml) veinte. Until October 2009, iced drinks were 4 US fl oz (120 ml) larger in order to accommodate the addition of ice to the drinks. All of its espresso drinks were made using organic and fair trade beans, but this was discontinued near the end of 2008. Tully's signature drink is the Bellaccino - similar to Starbucks's Frappuccino, it consists in a blend of milk (non-dairy options included), ice, and other base ingredients such as flavorings and sauces; it is usually topped with whipped cream.[12]

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