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Java Estate Roastery: Business Resources Help Grow

By Staff Reports, posted Mar 29, 2013

Java Estate Roastery’s owners have learned that a thriving business depends on more than the quality of its products. It must focus also on the quality of its relationships and its business practices.

From the company’s inception 18 years ago, Java Estate’s owners have sought the counsel of experienced business advisors. More importantly, they have implemented strategies to enhance their customer relations, tracked the effectiveness of their advertising and marketing and skimmed every ounce of fat from their operations.

As a result, the coffee company has seen its sales grow every year except in 2008 and 2009, when sales were flat. It now employs 10 people and has expanded the scope of its operations more than tenfold, serving customers as far away as California.

In addition to its fresh-roasted coffee beans, the Hampstead-based company sells specialty teas, flavored syrups, chocolate powders and sauces, frozen chocolate drink ingredients and barista supplies to restaurants, gourmet grocers, coffee houses and bed-and-breakfast establishments.

About 30 percent of its sales are Internet-based. Area customers include Java Dog coffee house in downtown Wilmington and Jumpin’ Java Espresso Co. in Oak Island and Shallotte.

At least three Java Estate staffers, including co-owner Walter Bateman, make deliveries to customers from the Morehead City area south to Myrtle Beach and as far west as Fayetteville.

“It’s huge to [customers] when the Java Estate owner walks through their door,” said company co-owner Mike Greenwood. “We fix little things for them all the time, and we bend over backward to get stuff out for emergencies, even when it’s not their delivery day.”

When Bateman and his original partner, Robbie Robinson, launched Java Estate in May 1995, they knew a lot about the retail coffee business but less about coffee production. Robinson owned Kona’s coffee house, where Bateman worked during his undergraduate years at University of North Carolina Wilmington. After graduation, Bateman had headed to Hawaii to surf and learn more about coffee.

It was all part of a plan to launch a coffee roasting company in Wilmington.

The partners purchased a used coffee roaster and set up operations on Hinton Avenue in Wilmington.

“We had 680 square feet of space in an office warehouse. We had our roaster, a scale, a grinder and maybe five half-full sacks of beans from the guy that sold us the roaster,” Bateman said. “Our desk was two filing cabinets with a piece of Formica laid across them. We used our first tax return to buy a computer.”

Since its inception, the company has benefited from the business acumen available in Wilmington. Bateman and Robinson consulted business counselors at the Small Business and Technology Development Center (SBTDC), an extension service of the UNC system that’s operated in partnership with the U.S. Small Business Administration. Its services are available free of charge.

“They are willing to hear new ideas and implement them,” said SBTDC counselor Jim Howell, who has worked with Java Estate during the past decade.

The SBTDC was Java Estate’s advisor as Bateman and Robinson “knocked on doors” to peddle their roasted beans to local businesses, then used UPS to expand their delivery options.

“We got help with our plan for a larger roaster from the SBTDC,” Bateman said. “Our whole business plan came from the SBTDC; it’s a plan we are still following.”

That plan helped Java Estate outgrow its space. The company moved to a 1,100-square-foot office and warehouse on Judges Road, off Market Street.

“That place was the bomb,” Bateman said. “We thought if we outgrew it, it would really be something.”

In less than four years, however, Java Estate again needed more space and nearly quadrupled its square footage in an office and warehouse location in Hampstead. Last year, the company expanded into an adjacent space, increasing the size of its plant to 8,000 square feet.

With each real estate transaction, Howell worked with the company owners to get their numbers organized to present to the financing institution. He also helped them put together a proposal to finance purchase of a much larger roaster.

As time went on, Bateman bought out Robinson. Greenwood, newly graduated from UNCW and a longtime friend of Bateman’s, bought in. Howell assisted with both transactions.

“I did a financial analysis of the business,” Howell said. “When Walter wanted to buy out Robbie, we worked out the deal, made sure it was a fair price. I helped Walter put together a financial plan and business plan to take to the bank.

“A couple of years later, when Mike wanted to buy in, I helped put together the business documents.”

UNCW’s Cameron School of Business has also helped with Java Estate’s growth and success. In 2007, students in the professional MBA program took on the company as part of its Learning Alliance consultancy.

The students zeroed in on Java Estate’s need to identify its best customers and market to them, while cultivating relationships with other customers.

“The students recommended the company hire new route delivery people to improve their customer relationship management in a high-touch way,” said Vince Howe, director of the Cameron School’s MBA program. “We also identified an accounting system to calculate the profitability of individual customers.

“Our students are bright folks. Because they work with small- to mid-size companies for about a year, they really understand these companies. Our team did a really good job with Java Estate.”
One idea the company got from working with the program was to track advertising, which Java Estate wasn’t doing much of, Bateman said.

“We put a plan together and determined what was and was not working so we can redirect our marketing efforts to strategies that get results,” he said.

Another learning opportunity was the Great Recession.

“At the same time as the economic downturn, coffee prices were at crazy highs,” Greenwood said. “It looked like bad timing, but actually, it was perfect timing.”

Perfect, he said, because the company learned how to make its operations much more efficient, a decision that has served it well.

“I wrote down every step in our production process: bags, labels, tape, boxes, the cost of shipping. I looked at every single thing, like propane [for roasters] and coffee loss due to moisture loss in roasting,” Greenwood said.

Armed with that information, the two owners took a critical look at their operations.

“Mike was instrumental in revolutionizing the way we buy our coffee,” Bateman said. “We also went on a campaign to cut every cost we could. We changed our purchasing process to get the best prices. Luckily, through the economic downturn, we were fortunate to keep everyone employed, with no cuts in pay or benefits.”

Now, with several years of healthy growth on the books, Bateman and Greenwood are preparing to update their operations again, with an improved website, increased social media presence and an emphasis on e-commerce.

“We need a phone app so people can order from their cell phones,” Bateman said.“We have more than 500 regular customers,” Greenwood added. “We need to have access to everybody at one time so we can communicate announcements and move our product faster.”

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