Peet's shuns Starbucks' grande growth plan

Peet's Coffee & Tea, the Bay Area company that inspired Starbucks' founders in the early 1970s, is doubling its presence in Seattle to six stores by the end of 2008 and hopes to have 20 stores here eventually.

Despite close ties to Starbucks, including a shared love of deep roasting and an overlap in ownership during the 1980s, Peet's is the anti-Starbucks when it comes to store growth.

It has almost 170 stores nationwide, more than half of them in the Bay Area, and plans to open 30 new shops in 2008. Starbucks has more than 15,000 stores around the world and is adding about seven a day.

Peet's opened its first Seattle store in Fremont in 2003. Last month, a fourth store opened on Queen Anne, and another shop will open on Capitol Hill next month. A sixth store is planned between Queen Anne and Magnolia later in 2008.

Peet's CEO Pat O'Dea says the company would love to have 40 or 50 stores in the Seattle area, because it's a market where people love good coffee.

"We'd rather go into a really well-developed coffee market and provide a superior, fresh and distinctive cup of coffee than go into a market where people haven't been introduced properly to specialty coffee and maybe don't appreciate it as much," O'Dea said.

But he doubts Peet's will find more than 20 suitable locations here.

"In Seattle, it's tough to find a good site, because apparently there are a lot of coffee shops up there," he said.

Peet's isn't worried about being a tortoise to Starbucks' hare in the race for locations.

It is focused on expanding the more profitable business of selling coffee beans in grocery stores.

Two-thirds of Peet's sales comes from retail stores, but two-thirds of its profit comes from the grocery and direct-to-consumer businesses.

Peet's plans to expand its grocery sales into 15 to 20 new markets in the Eastern U.S., where it has no immediate plans for more coffee shops.

That's where the growth is, because most coffee in the U.S. is still brewed at home, said Jerry Baldwin, a Starbucks co-founder who later bought Peet's with other original Starbucks owners.

They sold Starbucks to Howard Schultz and another group of investors in 1987; Baldwin and another Starbucks co-founder, Gordon Bowker, sit on Peet's board of directors.

"I rarely go into Starbucks stores. I don't even go into many of our [Peet's] stores any more," Baldwin said. "I prefer to brew our coffee at home."

— Melissa Allison

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Retail Report appears Fridays. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or mallison@seattletimes.com. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or amartinez@seattletimes.com.