Starting From Scratch With Better Coffee

Joan Verdon

https://global.factiva.com/du/article.aspx/?accessionno=WPATHN0020150220eb2k0005u&fcpil=en&napc=T&sa_from=&cat=a

Copyright 2015 Herald News (Woodland Park, NJ). Distributed by NewsBank, inc.

The food-services company Mascott has fed its growth by introducing other people’s restaurant and food franchise ideas to North Jersey. Now it wants to build a beverage and food concept from the ground up.

Hillside-based Mascott, which brought the first Smashburger and Noodles & Co. restaurants to Bergen and Passaic counties, is launching a coffee-shop business called Ground Connection that it hopes will become a home-grown New Jersey hit. The company opened the first Ground Connection last week at The Shops at Riverside in Hackensack and plans to open three more locations in Livingston and Jersey City in the spring and summer.

Just as Smashburger sizzled as the “better burger” trend exploded, Mascott Chief Executive Officer Scott Gillman is betting the “better coffee” movement will create demand for Ground Connection. The shops serve small-batch roasts, use specially sourced milk and flavorings, and buy its sandwich breads, salads and other foods from local suppliers.

Gillman said he is trying to bring the coffee connoisseur experience found at some of the hot big-city artisanal coffee chains such as Blue Bottle Coffee, Stumptown Coffee Roasters and Intelligentsia Coffee to the suburbs, with prices and an atmosphere friendlier to suburban shoppers.

“There’s a huge movement into specialty coffee,” Gillman said. “It’s a better quality coffee. Often it’s handpicked. It’s relationship coffee,” he said, with the roasters developing a relationship with small farms.

Rather than trying to become a franchisee for an existing artisanal coffee brand, just as he did with burgers and Smashburger, this time Gillman decided to create his own response to a trend.

“I wanted to do what I thought would sell the best, and also what would sell the best in the suburbs,” he said. Brands like Blue Bottle, while it has millennials lining up and willing to wait for single-brewed cups, probably would be too expensive and too slow-paced to succeed with suburban mall shoppers. The Ground Connection’s prices are comparable to Starbucks’, at $1.75 for an 8-ounce cup and $2.75 for a 16-ounce, but are 50 cents to 75 cents lower than other specialty coffee brands.

Gillman and Mascott are entering the coffee field at a time when the competition is heating up, according to research firm IBISWorld, which noted in a report in December that the two biggest coffee chains, Starbucks and Dunkin’ Donuts, plan to open hundreds of stores over the next five years.

While the artisanal “better” coffee chains are growing their sales by more than 20 percent a year, big players such as Starbucks are hoping to cut into those sales by introducing their own better brands. Starbucks recently rolled out the Starbucks Reserve brand in some 500 of its more than 20,000 stores worldwide, and is selling the small-batch roasts through the mail to subscribers.

Gillman has a proven track record in the food-service industry and a reputation as one of the smartest franchise operators in New Jersey. His company owns an upscale restaurant in Jersey City, Markers, and has operated dozens of franchise restaurants over the past two decades, ranging from Popeye’s Chicken and Biscuits, Cinnabon, and Seattle’s Best Coffee, to more recently Smashburger and Noodles & Co.

Mascott opened the first Smashburger in New Jersey in 2010 in Glen Ridge and built the franchise into 14 locations, before selling them back to the Smashburger Corp., which wanted the high-performing stores in its corporate portfolio.

With the Ground Connection, “I wanted to do something that took everything I learned over 25 years,” and put his own stamp on a concept, Gillman said. He hired Casey Killo, a 21-year-old who already had a half-dozen years of barista experience, to train his baristas. Steve Parker, the corporate chef for Mascott, developed a breakfast and lunch menu that included muffins and pastries baked in a separate kitchen elsewhere in the mall, as well as soups, flatbread pizzas, sandwiches served heated, and salads.

The restaurant serves coffee from Toby’s Estate, a Brooklyn small-batch roaster. The lattes and cappuccinos use milk delivered fresh from Battenkill Valley Creamery in upstate New York, because it is richer than commercially available milk. Central Bakery in Hackensack supplies the sandwich breads, Gillman said. He estimated his start-up costs to open the Riverside location at $500,000.

Curtis Nassau, of Ripco Real Estate in Lyndhurst, which brokered the Riverside lease for Mascott, said Ripco “sees terrific growth potential” for the Ground Connection. Coffee, he said, “is a well-established, yet still expanding category in New Jersey retail.”

The Ground Connection was drawing a healthy lunch crowd on Thursday, and Gillman said the first week’s sales exceeded his expectations.

But success at Riverside could increase his risk from Starbucks, said Darren Tristano, executive vice president of food-industry research firm Technomics. “It isn’t just build them where Starbucks isn’t,” Tristano said. “Once you’ve built it, that kind of gives Starbucks a reason to build one there,” he said. “You’ve proven that the demand is there, and all they would do is come in and take your business away.”

But, Tristano said, there are customers looking for coffee shops that have more of an independent feel than Starbucks. “Although Starbucks fans are very loyal, there’s some really good opportunity to even go beyond that,” he said.

Grounds for expansion; * $30.2 billion – annual U.S. coffee and snack-shop revenue, 2014; * $1.8 billion – profit, 2014; * 2.7 percent – annual growth rate, 2009-14; * 3.8 percent – projected annual growth rate, 2014-19; * 42.4 percent – market share of dominant player Starbucks; * 25.5 percent – market share of second-largest competitor, Dunkin’ Donuts; Source: IBISWorld Coffee & Snack Shops in the U.S., December 2014

 

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