Most companies want to be No. 1. Making it to No. 2 would be good enough for Coffee Bean & Tea Leaf, a fast-growing Los Angeles-based coffeehouse chain.
It's an admission that in the coffee business, there is Starbucks Corp., and then there is everybody else.
Coffee Bean, on schedule to have more than 400 stores by the end of this year, is one of at least half a dozen small players vying for the second spot. They range in size from having 200 to 400 cafes, and none has a clear bead on second place.
Coffee Bean's rivals include Peet's Coffee & Tea Inc. of Emeryville, Calif., Caribou Coffee Co. of Minneapolis, Diedrich Coffee Inc. of Irvine and franchiser It's a Grind Inc. of Long Beach.
"Starbucks will open 1,800 units worldwide this year," said Nicole Miller, an analyst with ThinkEquity Partners in Minneapolis. "None of these other chains have anywhere near 1,800 units."
Yet the dominance of Starbucks and its 11,000 stores doesn't stop others from making money. The entire coffee house and kiosk industry is growing at 20% annually, Miller said. Americans spend about $10 billion annually at coffee outlets, according to the Specialty Coffee Assn. of America.
"There's a new person drinking a cup of coffee outside their home every day, and there's also someone going from one cup to two," Miller said.
That's what Coffee Bean Chief Executive Sunny Sassoon counts on for growth in the family-owned business, which he says is profitable and will hit $200 million in sales this year. Sassoon wants to grow the business at a 30% annual rate over the next decade.
"The potential is huge," he said, especially in California.
In Starbucks' hometown of Seattle, there's 1 coffeehouse for every 2,500 residents, Sassoon said. In California, the ratio is 1 to every 28,000 residents.
Coffee Bean owns, licenses or franchises 160 locations in the state and plans to jump past the 200 mark this year. Most of the growth will be in Southern California.
The chain recently signed a deal to license as many as 40 mini-cafes in Ralphs Grocery Co. stores over the next three years, including 11 this year. Coffee Bean will supply the coffee, tea and baked goods for the cafes, which will be staffed by Ralphs.
"We plan to open 11 this year," Ralphs spokesman Terry O'Neil said. "Customers like to be able to get a coffee or tea while they are in our stores."
