Caribou Coffee Company (CBOU)

 

Our primary competitors for coffee beverage sales are other gourmet coffee shops and restaurants. In all markets in which we do business, there are numerous competitors in the gourmet coffee beverage business, and we expect this situation to continue. Starbucks is the gourmet coffeehouse segment leader with approximately 7,200 locations in the United States and approximately 2,000 locations internationally. Our primary competitors in addition to Starbucks are regional or local market coffeehouses. We also compete with numerous convenience stores, restaurants, coffee shops and street vendors as well as quick service restaurants. As we continue to expand geographically, we expect to encounter additional regional and local competitors.

 

We believe that our customers choose among gourmet coffeehouses based upon the quality and variety of the coffee and other products, atmosphere, convenience, customer service and, to a lesser extent, price. Although we believe consumers differentiate coffee brands based on freshness (as an element of coffee quality), to our knowledge, few significant competitors focus on craft roasting and product freshness in the same manner as Caribou Coffee. We spend significant resources to differentiate our customer experience, which is defined by our products, coffeehouse environment and customer service, from the offerings of our competitors. Despite these efforts, our competitors still may be successful in attracting our customers.

 

Competition in the gourmet coffee market is becoming increasingly intense as relatively low barriers to entry encourage new competitors to enter the market. The financial, marketing and operating resources of these new market entrants may be greater than our resources. In addition, some of our existing competitors have substantially greater financial, marketing and operating resources. Our failure to compete successfully against current or future competitors could have an adverse effect on our business, including loss of customers, declining net sales and loss of market share.

 

We also face intense competition in the expansion of our franchise program as the number of franchising alternatives for potential franchisees increases. We will continue to seek franchisees to operate coffeehouses under the Caribou Coffee brand in both domestic and international markets. We believe that our ability to recruit, retain and contract with qualified franchisees will be increasingly important to our operations as we expand. Along with our high-quality products, our unique coffeehouse environment and our exceptional customer service, we believe that our innovative development of the “store within a store” kiosk program will allow us to differentiate ourselves from other franchise offerings.

 

In our commercial business, we face competition from a number of large multi-national consumer product companies including Kraft Foods Inc., Nestle Inc. and Proctor & Gamble, as well as, regional gourmet coffee bean companies. As we seek to expand our opportunities with existing and potential commercial customers, we may not be successful.

 

We also compete with numerous other retailers and restaurants for retail real estate locations for our coffeehouses.

 

 

Our primary competitors for coffee beverage sales are other
gourmet coffee shops and restaurants. In all markets in which we
do business, there are numerous competitors in the gourmet
coffee beverage business, and we expect this situation to
continue. Starbucks is the gourmet coffeehouse segment leader
with approximately 7,200 locations in the United States and
approximately 2,000 locations internationally. Our primary
competitors in addition to Starbucks are regional or local
market coffeehouses. We also compete with numerous convenience
stores, restaurants, coffee shops and street vendors as well as
quick service restaurants. As we continue to expand
geographically, we expect to encounter additional regional and
local competitors.

 

We believe that our customers choose among gourmet coffeehouses
based upon the quality and variety of the coffee and other
products, atmosphere, convenience, customer service and, to a
lesser extent, price. Although we believe consumers
differentiate coffee brands based on freshness (as an element of
coffee quality), to our knowledge, few significant competitors
focus on craft roasting and product freshness in the same manner
as Caribou Coffee. We spend significant resources to
differentiate our customer experience, which is defined by our
products, coffeehouse environment and customer service, from the
offerings of our competitors. Despite these efforts, our
competitors still may be successful in attracting our customers.

 

Competition in the gourmet coffee market is becoming
increasingly intense as relatively low barriers to entry
encourage new competitors to enter the market. The financial,
marketing and operating resources of these new market entrants
may be greater than our resources. In addition, some of our
existing competitors have substantially greater financial,
marketing and operating resources. Our failure to compete
successfully against current or future competitors could have an
adverse effect on our business, including loss of customers,
declining net sales and loss of market share.

 

We also face intense competition in the expansion of our
franchise program as the number of franchising alternatives for
potential franchisees increases. We will continue to seek
franchisees to operate coffeehouses under the Caribou Coffee
brand in both domestic and international markets. We believe
that our ability to recruit, retain and contract with qualified
franchisees will be increasingly important to our operations as
we expand. Along with our high-quality products, our unique
coffeehouse environment and our exceptional customer service, we
believe that our innovative development of the “store
within a store” kiosk program will allow us to
differentiate ourselves from other franchise offerings.

 

In our commercial business, we face competition from a number of
large multi-national consumer product companies including Kraft
Foods Inc., Nestle Inc. and Proctor & Gamble, as well
as, regional gourmet coffee bean companies. As we seek to expand
our opportunities with existing and potential commercial
customers, we may not be successful.

 

We also compete with numerous other retailers and restaurants
for retail real estate locations for our coffeehouses.

 

 

Our primary competitors for coffee beverage sales are other gourmet coffee shops and restaurants. In all markets in which we do business, there are numerous competitors in the gourmet coffee beverage business, and we expect this situation to continue. Starbucks is the gourmet coffeehouse segment leader with approximately 8,800 locations in the United States and approximately 3,600 locations internationally. Our primary competitors in addition to Starbucks are regional or local market coffeehouses, such as Dunn Brothers in the Minneapolis market. We also compete with numerous convenience stores, restaurants, coffee shops and street vendors as well as quick service restaurants such as Dunkin’ Donuts and McDonald’s. As we continue to expand geographically, we expect to encounter additional regional and local competitors.

 

We believe that our customers choose among gourmet coffeehouses based upon the quality and variety of the coffee and other products, atmosphere, convenience, customer service and, to a lesser extent, price. Although we believe consumers differentiate coffee brands based on freshness (as an element of coffee quality), to our knowledge, few significant competitors focus on craft roasting and product freshness in the same manner as

 

The retail segment of the gourmet coffee industry remains highly fragmented and, with the exception of Starbucks Corporation (“Starbucks”), contains few companies with strong brands. Because of the fragmented nature of the gourmet coffee market, we cannot accurately estimate our market share. Only Starbucks has attained a national presence, and to date, no national high-quality alternative to Starbucks has emerged. Our competitors in addition to Starbucks are primarily regional or local market coffeehouses, such as Dunn Brothers in the Minneapolis market. We also compete with numerous convenience stores, restaurants, coffee shops and street vendors and, to a certain degree, with quick service restaurants such as Dunkin’ Donuts. As we continue to expand geographically, we expect to encounter additional regional and local competitors. In the Middle East and South Korea, the first two regions in which we are expanding internationally, we believe there is a small, but growing market for American branded coffeehouses, with Starbucks being the clear leader based on number of coffeehouses.