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ANCHORAGE, AK-Throughout most of the US, Starbucks has the market cornered when it comes to coffee. But in this city of 280,000, locally owned Kaladi Brothers, which operates 11 locations throughout Southeast Alaska (it also has a Seattle store), more than holds its own. Kaladi, founded out of a coffee cart in this city’s Downtown in 1991, now has two types of customers, traditional coffee-drinking consumers and many independent stores in the area to which it sells its roasted beans. It also sells its products to two Costcos in the area, hotels and other venues, and roasts about one-million pounds of beans a year. Named after a mythical goat herder who is said to have discovered coffee, the chain’s logo is a noticeable red goat that many mistake for a reindeer. But the animal probably won’t travel to a locale near you. Despite the company’s success, it is not planning a large ramp-up of stores or aggressively entering any more non-Alaska markets. Tim Gravel, co-owner of the chain, spoke with GlobeSt.com about his business and expansion plans.

GlobeSt.com: What kinds of sites do you like best for new-store openings?

Gravel: We definitely like in-bound traffic, there needs to be a decent amount of parking and we try not to position ourselves too close to any of our customers. Sometimes its hard not to do that depending on the situation. We have a certain amount of stores we’d like to see open in each town we’re in, and we have to be somewhat competitive in getting those spots when they open up. But there isn’t a big plan of where stores are going to go; it’s more of an opportunistic deal.

GlobeSt.com: So you don’t have investors pushing you for growth?

Gravel: Not at all. To a certain degree the growth is necessary. But it’s difficult too. It’s not something we want to just jump into. We’ve been in business for 22 years, so it’s not like there are a lot of other coffee places that have been in business less than us that have a heck of a lot more stores than us.

GlobeSt.com: Have you seen what some other companies have done, watched that example, and decided not to over expand?

Gravel: My background is accounting, and I have certain amount of conservatism not wanting to overextend. I don’t like the idea of a bunch of debt and stores that might be slow. That’s always been in the back of my head. I’ve seen companies like Caribou Coffee that are younger than us that have grown much faster than us, but I’ve never wanted to be accountable to a board of directors. We just want to do our coffee the way we think it should be done.

GlobeSt.com: It’s interesting that there are independent cafes around that are also your customers, and you’re sensitive to that. If you need to open a store near them do you give them any concessions?

Gravel: Yes. There have been a couple times where we ran into a situation where we were going to be very close. We knew we were probably going to hurt their business a little bit. So we spoke to them before we made it public that the store was going to open. We lowered the price of our roasted coffee to them, so they could maintain a certain profit margin still using our product. In one example, they sold sandwiches and soups, and we offered to carry those items in our location that was really close to theirs so people would know what’s going on down the road. You have to have a conscience. We want to be proud of our product and our company. We don’t want to do things that we regret and hurt anyone else’s business. We’ll be competitive and do our thing, but try to help out people the best we can.

GlobeSt.com: As you’ve expanded to other areas, like Seattle, have you considered hitting other states?

Gravel: Not really. If something happened, we might do something. We have a store Oslo. It was someone who knew us from here and moved to Oslo. Now he’s doing super well and selling about 150 pounds a week. We air freight it to him. He’s done very well in Oslo, and he uses our logo, but it’s not like we’re going to venture to Oslo and start opening cafes. He was really interested in our product and how we handled our product, so he was a good candidate. But once we opened a store in Denver, and it’s very hard to keep good tabs on it without having one of us there. Not knowing the area, we closed that store down.

GlobeSt.com: But do you think selling your coffee in hotels and grocery stores will drive more interest by potential franchisees?

Gravel: It’s a very difficult business to get into. With our Silverhook brand over the last couple of years we tried to get onto Alaska Airlines jets. It’s a lot of product and very, very thin margins. It can hurt a company like us very bad to have that kind of business. We’ve backed off the idea of being on jets also because there are some inherent issues with trying to brew coffee on jets. But on the flipside, the boardrooms for Alaska Airlines are totally into how we do things. We ship them coffee, it goes in their freezers, they take out what they need for a few days, and they treat the product the way we like it to be handled. But it hasn’t really developed into a lot of online sales. That’s really where we’d like to see some of the growth. We have quite a few out-of-state sales from our website, but it’s not a significant amount of our business. But we’re working on that.

GlobeSt.com: How have you had to adjust the way you do business as a result of the economic downturn?

Gravel: We’ve been trying to cut costs in areas where we have some room. We made those adjustments. We increased some prices, but not much, to deal with it. On the other hand, Alaska is a little different than the lower 48, as we haven’t been impacted so much by the fuel-cost increases. Our housing market is relatively stable. Our fuel costs are the highest in the country, but like most people in Anchorage, I drive five miles to work, so I don’t have to commute for an hour and a half. But I do notice a lot of people drinking Americano’s, and that’s one of the least expensive drinks we have, so there is somewhat of a switch. Before there were a lot of lattes, mochas and cappuccinos. But people really held on to the social aspect. If I were a customer, the hard thing would be to let go of showing up and seeing all of the people I see in the morning. So I think people adjust what they get and still show up.

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