The Coffee Bean and Tea Leaf company has several weaknesses under their control, but also a few strengths which completely outweighs the negative. While most coffee retailers, such as Starbucks, offer a department store type of feel by quickly serving customers in a get-in, get-out fashion, there is a growing market for more warm, cozy, and relaxing cafes (ReComparison, 2012). This is one of Coffee Bean and Tea Leaf’s greatest strengths, by presenting itself as a boutique style café appealing to those seeking the personal touch they offer. In a world full of similar coffee’s, Coffee Bean and Tea Leaf represents originality in the industry by attracting millennials need for self-identity. Another prodigious strength Coffee Bean and Tea Leaf has is remaining a privately held company, so as to better manage its coffee bean sourcing and commitment to quality for its customers benefits. By having total control, enhancing the quality of products they offer has become instrumental to their business model, and rightfully so. As Coffee Bean and Tea Leaf is considered a mid-sized specialty coffee retailer, the quality and variety of beverages allows them to sit comfortably between “big” coffee and “hip” coffee companies and compete (Erica, 2017). By remaining a privately held company, Coffee Bean and Tea Leaf is able to quietly yet steadily grow the brand across the globe, with the most recent developments being in North America from Asia.
The weaknesses Coffee Bean and Tea Leaf endures are troubling, however there are constant changes being made to ensure the company is adhering to their commitment to quality and target markets. The first weakness Coffee Bean and Tea Leaf suffers from is a lack of wide target markets, as instead they prefer to appeal most notably to millennials. If targeting primarily millennials, the company will lose potential market share from many other consumer demographics. The appeal of hand-crafted coffee is not restricted to only younger demographics, and Coffee Bean and Tea Leaf is essentially limiting their growth potential in doing so. Also, millennials and younger demographics typically have less spending power, so even if marketing to a young consumer is successful, they may not necessarily purchase anything regardless of cost. With this diminished spending power comes cost-conscious coffee decisions, introducing new competitive forces such as food chains offering a $1 cup of coffee, as is the case with McDonalds, Jack In The Box, and Carl’s Jr. Another weakness the Coffee Bean and Tea Leaf has is its franchisee’s policy, which significantly limits its potential for exponential growth and increased competitiveness. Their current policy has a very stringent list of requirements, inhibiting ambitious owners from “trying out” a Coffee Bean and Tea Leaf store (Gleeson, 2019). Franchisers must have a substantial amount of experience in operating food and beverage stores, with roughly $3 to $5 million in working capital to open the 15 or more stores required (Gleeson, 2019). The days of single franchise locations and fading out as companies embrace multistore owners. Due to these reasons, Coffee Bean and Tea Leaf has restricted itself from acquiring more investors and brand recognition to the masses. To Coffee Bean and Tea Leaf, however, the benefit of identifying only the highest qualified individuals to preserve the company’s brand name and commitment to quality outweighs the negative franchise policy requirements.
Competitive Analysis:
Within the boutique coffee and tea retail industry are several major competitors such as Starbucks, Seattle’s Best Coffee, Dunkin’ Doughnuts, Peet’s Coffee and Tea, and finally The Coffee Bean and Tea Leaf. In comparison to our target market in Canada, the major competitors are Starbucks Coffee Canada, Tim Hortons, and The Second Cup. It may seem as though the Canadian market is not as competitive, but Tim Hortons retains about four times the coffee market share of Starbucks in the country, signifying a large hurdle to overcome. The prices charged by each key competitor in both markets can be seen in the following table. To keep prices relative, the baseline coffee product and price used is a medium vanilla latte for comparison.
