Wednesday, November 14, 2007

Falling Moose Loses Its Head

CEO leaves a sagging Caribou
The man who survived personal disaster to become the head of Caribou Coffee Co. Inc. stepped down from the job Monday, his tenure marked by a two-year slide in the company's stock price.Michael Coles, 60, oversaw the company's expansion from about 207 stores to 473 in his nearly five years on the job. The company began trading in 2005 at $15.51 a share but has since lost two-thirds of its value, closing Monday at $5.15.

I didn't call this development specifically but I've been decrying the steady decline of Caribou Coffee and felt something would have to give soon. I prefer Caribou over Starbucks (although I like Pumpkin Loaf better without the Pecans) and would prefer to support a locally-founded and based company even though the Puckett's have long since moved on to greener pastures.

Plus, I think Starbucks burns their beans too much sometimes.

Watching Caribou corporate drive the company and the stock straight into the ground was hard to watch especially given the apparent and persistent strong market for the third-destination coffee shop.

That's a fancy way of saying paying more for a good cup of coffee so as to enjoy a venue somewhere between home and office to park oneself whilst enjoying said cup of coffee. Why people would sit in a drive-through for same overpriced cup of coffee is beyond me.

Coles, who survived a life-threatening motorcycle crash in 1977, went on to build the Great American Cookie Company from scratch before selling it for millions in 1998.

I am sure its an awesome story. I hate to point out the obvious, but coffee isn't cookies.

For this year, the average analyst estimate calls for Caribou to lose $1.01 per share, while in 2008 the company is projected to lose 63 cents per share. While market leader Starbucks has an operating margin of 10 percent, Caribou's is now negative 4 percent.

I think Coles is doing the right and noble thing. I wish him well.

ALSO - check this out: Cake Eater Chronicles Gotta Chuckle


Jeff Kouba said...

Yeah, Caribou is my favorite coffee haunt, too.

Bike Bubba said...

The Cake Eaters have a wonderful companion post that might explain a lot about why Caribou doesn't make much money.

Night Writer said...

We like Caribou better than Starbucks generally, but my wife's favorite coffee shop now is Black Sheep in South St. Paul. The coffee really does taste better there (and they've got a very comfortable room and great presentation) and she asked the owner why it seemed she could taste such a difference (e.g., she's never, in her opinion, had a good cup of coffee at a Dunn Bros). He said it wasn't the shop as much as it was the roaster the shop (or chain) used. Black Sheep gets their beans from a local outfit call Paradise; they're pricey but very good. Since then she's bought coffee beans directly from Paradise for home use and I could taste the difference without even knowing she'd changed our bean.