The Perfect Cup of Coffee
Ed Schultz, President, Honolulu Coffee Co.
"It all ends up with what's in the cup."
by Jacob Kamhis
This article has been published in the July-Sept. 2013 issue of Pacific Edge Magazine. To see the magazine's layout, visit Pacific Edge.
When Ed Schultz worked as an investment banker in New York, he wondered what it would be like to be on the people side – the operating side of a business. At BNP Paribas, parent company of First Hawaiian Bank, he often traveled to Paris for business. He enjoyed the French food, the cafe culture and learned how to conduct business with coffee suppliers. He studied Starbucks and watched how the leading coffee company performed from a financial analysis perspective. After all, research was the name of the game in his field, just as it is for any successful entrepreneur no matter the city, state or country.
Ray Suiter founded the Honolulu Coffee Company in 1991 and started selling joe from their first retail store at the Dillingham Building in Downtown Honolulu. Ed Schultz was able to realize his dream of operating his own business when he and his associates purchased the company in 2008. By then Starbucks, his biggest competitor, had educated consumers about a variety of coffee drinks. As a result, people developed certain expectations of coffee retailers. Starbucks also accustomed consumers to a high level of service.
To compete, Shultz decided he had to do better by keeping product quality high while improving customer satisfaction with his Kona coffee farmed on the slopes of Mauna Loa. Schultz developed a 4-step program called “Seed to Cup.” He leveraged personal experience from his visits to coffee plantations in Costa Rica, Brazil and Hawaii to develop his own style of procesing the fruit, which yields the coffee bean. When it came to roasting, he created his own method of varying temperature for optimal coffee taste. In addition, he set up a personable delivery line so baristas could make drinks before regular customers placed their order. A friendly tie grew with customers who knew the barista by name.
“In the coffee shop, managing customer relationships is just as important as managing a $10 million loan,” Schultz explains. On the flip-side, the company's internal culture has to make employees want to come to work. One example is Row Aczon who started at Honolulu Coffee as a part-time barista at 16 years of age. Today, Aczon is the director of coffee quality. He trains the trainers of the 125 baristas serving the company's Hawaii-grown coffee in various parts of the world.
While Hawaii is the base, company activities are international. In 2011, Honolulu Coffee competed in the World Barista Championship in Bogota, Columbia where they came in second behind the winner from El Salvador. This contest came after the company won the regional competition in Los Angeles, California and also won the U.S. Barista Championship in Houston, Texas.
Today, Honolulu Coffee is a $12 million business in 18 locations, half of which are on Oahu, Kona and Maui. By the end of the year, Schultz expects to double the number of stores in Japan to 10, with plans of increasing to 50 in five years. The latest store in Yokohama opened May 3, 2013. The expansion plan is to seek locations that offer a mix of local population and tourists.
The company's store in Taiwan is their stepping stone to the China market. Schultz wants to open stores in Hong Kong and Korea as well and believes stability in that three-area zone must be a strong part of a viable business plan for long-term financial survival in China.
The fact that Honolulu Coffee operates from Hawaii is an advantage, according to Schultz. “The positive appeal and love of Hawaii is amazing in Asia,” he says. This, too, he discovered while performing research on the continent.
“There's a depth and demand for Hawaii products in Asia if it's executed well,” he continues. “Hawaii businesses aren't doing it enough.”
While everyone searches for opportunities in the East, the United States mainland also presents fertile territory for growth. Schultz says it's the direct access to customers – simply approaching them and talking story – that keeps his business on track. “You know immediately if you've made a good decision or a bad one. Either way, it's an opportunity.”
Schultz has traveled a long way from the world of New York finance to his social niche business in the Pacific. The key has been serving the right cup of coffee.
When Ed Schultz worked as an investment banker in New York, he wondered what it would be like to be on the people side – the operating side of a business. At BNP Paribas, parent company of First Hawaiian Bank, he often traveled to Paris for business. He enjoyed the French food, the cafe culture and learned how to conduct business with coffee suppliers. He studied Starbucks and watched how the leading coffee company performed from a financial analysis perspective. After all, research was the name of the game in his field, just as it is for any successful entrepreneur no matter the city, state or country.
Ray Suiter founded the Honolulu Coffee Company in 1991 and started selling joe from their first retail store at the Dillingham Building in Downtown Honolulu. Ed Schultz was able to realize his dream of operating his own business when he and his associates purchased the company in 2008. By then Starbucks, his biggest competitor, had educated consumers about a variety of coffee drinks. As a result, people developed certain expectations of coffee retailers. Starbucks also accustomed consumers to a high level of service.
To compete, Shultz decided he had to do better by keeping product quality high while improving customer satisfaction with his Kona coffee farmed on the slopes of Mauna Loa. Schultz developed a 4-step program called “Seed to Cup.” He leveraged personal experience from his visits to coffee plantations in Costa Rica, Brazil and Hawaii to develop his own style of procesing the fruit, which yields the coffee bean. When it came to roasting, he created his own method of varying temperature for optimal coffee taste. In addition, he set up a personable delivery line so baristas could make drinks before regular customers placed their order. A friendly tie grew with customers who knew the barista by name.
“In the coffee shop, managing customer relationships is just as important as managing a $10 million loan,” Schultz explains. On the flip-side, the company's internal culture has to make employees want to come to work. One example is Row Aczon who started at Honolulu Coffee as a part-time barista at 16 years of age. Today, Aczon is the director of coffee quality. He trains the trainers of the 125 baristas serving the company's Hawaii-grown coffee in various parts of the world.
While Hawaii is the base, company activities are international. In 2011, Honolulu Coffee competed in the World Barista Championship in Bogota, Columbia where they came in second behind the winner from El Salvador. This contest came after the company won the regional competition in Los Angeles, California and also won the U.S. Barista Championship in Houston, Texas.
Today, Honolulu Coffee is a $12 million business in 18 locations, half of which are on Oahu, Kona and Maui. By the end of the year, Schultz expects to double the number of stores in Japan to 10, with plans of increasing to 50 in five years. The latest store in Yokohama opened May 3, 2013. The expansion plan is to seek locations that offer a mix of local population and tourists.
The company's store in Taiwan is their stepping stone to the China market. Schultz wants to open stores in Hong Kong and Korea as well and believes stability in that three-area zone must be a strong part of a viable business plan for long-term financial survival in China.
The fact that Honolulu Coffee operates from Hawaii is an advantage, according to Schultz. “The positive appeal and love of Hawaii is amazing in Asia,” he says. This, too, he discovered while performing research on the continent.
“There's a depth and demand for Hawaii products in Asia if it's executed well,” he continues. “Hawaii businesses aren't doing it enough.”
While everyone searches for opportunities in the East, the United States mainland also presents fertile territory for growth. Schultz says it's the direct access to customers – simply approaching them and talking story – that keeps his business on track. “You know immediately if you've made a good decision or a bad one. Either way, it's an opportunity.”
Schultz has traveled a long way from the world of New York finance to his social niche business in the Pacific. The key has been serving the right cup of coffee.