Franchise shops to boost recognition of name
Coffee lovers will see their options expand, as a homegrown roaster prepares to put its red, black and yellow signs on more shops.
Dazbog Coffee Co. plans to open its first franchise store on South Colorado Boulevard in Glendale soon, a move that the brothers who started the privately held company 10 years ago say is the next step in giving their brand a higher profile. Nine Colorado coffee shops now bear the Dazbog name under licensing agreements with the 30-employee roasting and wholesale company.
Now, the Denver-based company is adding franchises as a way to expand its brand, first regionally then nationally, say founders and owners Leo and Tony Yuffa.
"We've evolved in the last 10 years from a wholesale company," said CEO Tony Yuffa. "We believe in branding as well as putting out the best quality beans. We found that the more we brand a store, the more success they've had."
Franchises will cost between $220,000 and $450,000, the company said, and franchisees will need a net worth of about $400,000. The Glendale franchise store will open soon.
Some of the stores that bear the name were previously Capri Coffee shops, which sold Dazbog's products under the Capri name.
When Capri, forced by a lawsuit to change its name, settled in a deal that let its 11 franchisees out of their agreements, some paid a licensing fee of between $10,000 and $20,000 to become Dazbog shops.
Valerie Rick, who changed the name of her shop at 12th Avenue and Speer Boulevard about 18 months ago, said her customers have been fine with the change.
"It helps to have a name that's local and recognizable," she said.
Until recently, Dazbog had co-packing agreements with other companies to provide their private-label coffee beans.
Now, the Yuffa brothers say, they've given those up in favor of pushing their own brand. Dazbog doesn't operate any corporate-owned stores - and doesn't plan to.
It does sell its beans online as well as in a host of other retail outlets, and all Colorado Lamar's Donuts stores serve the coffee.
Dazbog - which is Russian for "god of richness" - has its roots in the brothers' Russian birthplace, though their family fled to Italy when they were boys. They came to Denver in the 1970s.
The product's branding and packaging trades on that Russian heritage, including Cyrillic letters and names including Caspian Espresso, Siberian Blend and KGBlend.
Dazbog's growth announcement comes at a time when another homegrown chain, Peaberry Coffee, is turning over leases on 11 of its 28 stores to coffee giant Starbucks.
Peaberry founder and President Bill Tointon said the company also plans to use franchising and wholesale bean sales as a vehicle for future growth. Unlike Dazbog, though, Pea-berry doesn't have aspirations to grow beyond Colorado.
Changes at the coffee companies come at a time when consumption is relatively stable.
Last year, 15 percent of U.S. adults drank specialty coffee daily, about the same as the previous year. Additionally, 60 percent reported occasional consumption, according to the Specialty Coffee Association of America.
Sales at shops, carts and kiosks totaled $9.13 billion in 2004, the association says, with more than 18,600 locations in operation.
That year, independents with one to three shops commanded 57 percent of the market, with chains of 10 units or more coming in second at 40 percent.
Since then, though, Starbucks has continued its aggressive growth.
Dazbog hasn't signed any franchisees out of state yet, the company said, but is in talks in several markets, including Kansas, Nebraska and Arizona.
And they plan to grow by standing out from the crowd.
"We have a great cross of customers," Tony Yuffa said. "Everything from kids who really think our brand is really edgy and has a lot of energy, to those who love the European touch of it. We're telling the our story of our brand, and that becomes a relationship. It's a conversation through the coffee."
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