Joining Forces PJ˙s Coffee adds wine to its repertoire to tap its sophisticated audience and drive evening sales.
By Maya Norris
PJ˙s Coffee added a wine bar to differentiate itself in the coffee segment as it attempts to become a national brand.
PJ˙s Coffee and Wine Bar˙s decor conveys a European coffeehouse feel with a jewel-toned palette and banquettes.
Founded in New Orleans in 1978 by Phyllis Jordan, PJ˙s Coffee imports and roasts coffee beans from Ethiopia, Brazil, Colombia, Sumatra and Kenya.
Franchisees initially invest $250,000 to $300,000 to open a PJ˙s Coffee and Wine Bar, as opposed to $200,000 to $250,000 for the coffee-only concept. Both concepts require franchisees to pay a $20,000 franchise fee and ongoing royalty fees of 5 percent and marketing fees of 1.5 percent of gross sales.
Coffee and wine seem to be a natural pairing at PJ˙s Coffee and Wine Bar, the new spinoff concept that 43-unit PJ˙s Coffee launched last year. The new wine bar is helping boost sales as the chain prepares to expand nationally and position itself as the No. 2 player in the specialty-coffee segment behind Starbucks.
Atlanta-based Raving Brands added the wine bar after purchasing PJ˙s Coffee from founder Phyllis Jordan in 2002. Jordan had grown the chain to 30 units in New Orleans, Alabama and California, having built a reputation around its medium-roast coffee. But to turn it into a national brand, Raving Brands wanted to differentiate the concept and drive sales in the evening daypart.
So it took advantage of the ´easy marriage between wine and coffee,ˇ says Tanya Mareno, vice president of franchise development for PJ˙s as well as two other Raving Brands concepts.
Two of a Kind
Wine complements a coffeehouse more so than a bar because wine and gourmet coffee attract a more sophisticated consumer looking for ´a more mellow experience. It˙s a slower experience. It˙s a quieter experience. It attracts a more thoughtful crowd overall,ˇ says franchisee Joseph Macaluso, who opened a PJ˙s Coffee and Wine Bar in June and two PJ˙s Coffee units in 2003 and 2004. ´I think it˙s a good synergy.ˇ
The wine bar will certainly help differentiate PJ˙s in the coffee category and capture sales in the evening, but it won˙t be enough to catch up with Starbucks, according to Arlene Spiegel, president of New York-based Arlene Spiegel and Associates, a restaurant and food industry consultancy. ´If their goal is to be the No. 2 behind Starbucks, I don˙t think this is going to do it,ˇ Spiegel says. ´I think it should focus on what their coffee differentiators are and their coffee experience, and top Starbucks on different metrics of measurement in terms of the guest experience and the quality of the coffee. Their real estate and locations are going to be very important.ˇ
Nonetheless, Raving Brands contends that bringing coffee and wine under one roof is working. The average volume of the six units with wine bars are on track to generate $400,000 vs. $350,000 for the coffee-only concept. ´I totally anticipate within the next year or two our average store sales being $500,000 plus,ˇ Mareno says.
While the coffee bar rings up an average check of $4, the wine bar˙s average ticket is $10. In units with the wine bar, wine makes up 10 percent to 40 percent of sales, and beverages, which include coffee, espresso-based drinks and tea, make up 45 percent of sales. Beverages account for 65 percent of sales at the coffee-only concept.
Familiarity Breeds Comfort
Raving Brands says the wine bar works because it˙s accessible and affordable for customers. PJ˙s Coffee and Wine Bar offers 20 wines by the glass, $5 to $9, and the bottle, $19 to $48. Raving Brands works with its wine vendor to choose 14 of the wines based on how popular they are in the areas where franchisees open their units; the franchisee chooses the remaining six.
´We want our consumers to be comfortable,ˇ Mareno says. ´Seeing familiar wines on the list makes them feel comfortable.ˇ
The company also helps make wine less intimidating for franchisees and employees. Before they open their stores, franchisees must attend six hours of wine training in addition to the initial four-day training at Raving Brands University in Atlanta and five days of training at a local PJ˙s store. The wine vendors conduct the classes, covering topics such as how to describe the wines, upselling, inventory control and pouring procedures.
PJ˙s encourages franchisees not to change the wine list for six months to see what wines sell. After six months, franchisees rotate some of the wines seasonally and feature new wines as limited-time promotions. Whenever franchisees add new wines to the menu, the vendors train the staff.
PJ˙s Coffee and Wine Bar
Raving Brands, Atlanta
2005 U.S. Systemwide Sales
$12 million (company estimate)
Average Unit Volume
$4 coffee bar, $10 wine bar
15 to 20 in 2005
To further ease the transition of opening units with wine bars, PJ˙s created a tapas and dessert menu that isn˙t labor intensive. The dessert menu offers various cakes, tortes and specialties made by the pastry chef at Atlanta-based Café Intermezzo. The tapas menu consists of light fare such as Marinated Olives and Tomatoes, $5.50, served with petite toast; and Strawberries and Cheese, $6, fresh strawberries and dark chocolate dipping sauce accompanied by aged Piave Vecchio cheese.
´We wanted it to be very easy for the franchisee to execute from an operations standpoint and also be appealing and exotic to the consumer,ˇ Mareno says.
A new design accompanies the new food and wine menu. Unlike PJ˙s Coffee, which averages 1,500 square feet, PJ˙s Coffee and Wine Bar requires at least 1,800 to 2,000 square feet. The sophisticated yet relaxed ambience features a jewel-toned palette of red, gold and purple; stone arches; a copper-plated bar; and sofas and banquettes.
PJ˙s will continue to choose freestanding or inline locations in shopping centers with higher-end retail like Gap for both concepts. However it hopes to attract a more upscale demographic with the wine bar: college-educated consumers between the ages of 30 and 55 with a household income starting at $50,000 to $60,000. The coffee bar targets college students and professionals between 20 and 45 years old with a household income of at least $30,000. According to Mareno, anecdotal observations from corporate and franchisees indicate the wine bar is drawing its target audience.
Through the Grapevine
Franchisees have opened six PJ˙s Coffee and Wine Bars in Georgia, Florida and Louisiana since 2004; they will open 15 to 20 this year and next year in the chain˙s current markets as well as Texas and New Jersey. The company expects 500 units to be open within five to 10 years in California and markets east of the Mississippi River.
But for now, PJ˙s is concentrating on enhancing its wine-bar experience. The company plans to add dessert wines and port to the wine list and is considering more single-serve desserts and more chocolate desserts such as cheesecakes and tortes. It is also encouraging franchisees to bring in local jazz bands at least once a week.
By year-end, the company plans to use focus groups and phone and in-store surveys to learn more about the needs of its customers and study its competition.
While the wine bar is taking up much of its focus right now, PJ˙s is quick to point out that coffee remains its core product, and the wine bar merely differentiates it from other coffee chains. ´First and foremost we are a coffeehouse, and part of our marketing with our franchisees is to make sure they˙re educated and know that they˙re here to market our coffee,ˇ Mareno says. ´The wine bar is an added niche.ˇ