FEAST invited some of the St. Louis region's most innovative entrepreneurs to discuss the current state of the culinary industry and its future.
After a roundtable discussion, we sat down individually with each Tastemaker to dive into how they approach building and broadening their businesses and find out what advice they have for others entering the food-business fray.
The following is our conversation with Josh Ferguson, co-owner of Kaldi's Coffee Roasting Co.:
FEAST: What attracted you to this business?
Ferguson: We partnered with the original founders of Kaldi's, Howard Lerner and Suzanne Langlois. I was working in the restaurant business. My wife was working for Edward Jones, and we'd always known that someday we wanted to have our own business. But we'd stumbled into a franchise restaurant concept that actually, originally, led us into a relationship with Howard and Suzanne ... because we were actually going to carry Kaldi's coffee in our café franchise concept. And really, through that relationship and through some concerns that we had with our investment as a franchisee, we began trying to figure out another option for our business. We approached Howard and Suzanne and wanted to know if they'd be interested in expanding their retail business because, at that point in time, they primarily focused on wholesale.
JF: DeMun is the original store. But following that, Kirkwood, Chesterfield and a store in Springfield, Mo., were actually all [slated for] this franchise restaurant concept that we were going to open. So we were scrambling to make some decisions and try to get a lot of good people on the bus. We went from about 35 employees to over 100 employees in a matter of six months. And then, about two years into our partnership with Howard and Suzanne, she had her second child. Suzanne was looking to get out of the business, and they actually approached us [and asked], "Would you be interested in just buying the rest of the company?" And we said, "Yes."
F: You focus on personally sourcing beans and overseeing exact roasting techniques. You also have your own cafés, and you support the restaurant industry. What drives you guys to perform at the level you do? What do you get from your efforts?
JF: We feel that who we are and what we hope to represent is a part of that specialty segment of our industry. The gap is going to continue to grow between commodity, lower-grade coffee companies and those [that] are really involved in the specialty side of our industry. And that whole term "specialty" isn't always understood. It's a pretty loosely thrown around word. But it actually has a meaning, and we're very involved with [the] Specialty Coffee Association of America. Coffee, not to get too much into the science, but it really, ultimately starts with the coffees that we source and their score. Coffees must have [a] certain score or higher in order for us to even consider buying them.
F: The raw beans?
JF: The raw beans, correct. We can buy the best coffee in the world, but if we aren't able to help people brew it correctly and serve it correctly, then the consumers aren't going to understand the quality side of it. And, really, quality is our number-one priority.
F: Coffee often is an afterthought in restaurants, but that's starting to change. How do you explain the benefits of high-quality coffee to restaurant owners, and how do you help these owners train their staff?
JF: Restaurants will try to do espresso, which is actually a very, very difficult beverage for coffee shops to do. Not only do you have to buy good coffee, but you have to train servers and bartenders to prepare it correctly or none of this matters. I come from a restaurant background. So I've been quite astonished that people put so much energy and effort into the foods they source and [the] quality of everything they do in a restaurant, and then they buy inexpensive coffee. This is the last thing that customers will experience when they're in the restaurants. This is a part of that whole dessert experience. I think those who are really into quality and pushing the envelope on food need to understand that the customer experience needs to remain at that high-quality level through the entire time that they're in the restaurant.
F: How do you uphold a high standard of social responsibility when sourcing?
JF: We have fair-trade coffees that are certified by Transfair USA [now Fair Trade USA] ... [and] we started something called Relationship Coffees a few years back that is a more transparent way of us communicating to consumers exactly where their money is going. And, through this Relationship Coffees program, we are working directly with farmers. ... Farmers are rewarded for the quality of bean that they are producing. In general, those farmers are receiving 15- to 20-plus percent more for their coffee than they would through fair trade [which sets a minimum market price for coffee]. And it's a much more quality-driven [model], which to us [means] a more long-term, sustainable model than saying everyone is going to be [paid the same amount]. Whenever one farmer works really hard and produces a great crop, we want to reward him for his hard work and hard effort. ... Coffee's journey from [its place of] origin to the United States is a long process, and the Relationship Coffees [program] allows us to say, "Hey, this is exactly where the coffee came from."
F: So are you guys still sourcing your food locally at the six Kaldi's cafés? How's that going?
JF: The food has been interesting, because, you know, coffee's our bread and butter. We've spent the last 12 months trying to get our food program to [the] level that our coffee program is, and it was very important to us. When people come into our cafés, we want them to have great coffee but also have some great food and bakery products. And so, you know, our commitment to programs like the Relationship Coffees, we wanted to take that to the local level on our food side. I mean, even some of your larger food suppliers realize the importance of local products. And so most of them now are helping companies such as us source local products and distribute [them] to multiple locations.
F: Tell us your plans for growing Kaldi's Coffee Roasting Co.
JF: We look at ourselves as a regional coffee company. We see ourselves helping others support and improve their coffee programs. Continuing to grow as a coffee resource in St. Louis, that's really what we want to do. We are, and have been looking for, a new roasting facility for the last few months, and that's something that we hope to identify, I would say, in the next year. But a part of our new roasting facility is really developing a coffee educational center, so that it's a resource, once again, for our own cafés, for our own employees but also for others in the community.
F: Why is education part of your mission, and how will you establish the center?
JF: Coffee, as we knew it 50 years ago, is not what coffee is today. Tricia and Tyler [Zimmer] and myself - since we've been involved in the industry and with Kaldi's in the last seven years, this industry has drastically changed. And, just when I thought I was learning a little bit about coffee, the next thing I know the industry's evolving so quickly, from farming to roasting to brewing and to kind of all the steps that go in between. Things are continuing to improve, and so we're just trying to help keep the consumer informed with where we're going as an industry. In the last 20 years, the wine industry and peoples' knowledge of wine has drastically improved. And it's drastically improved because people have been committed to teaching others about wines - varietals, processing and all that kind of stuff. And it's kind of the same thing with coffee. And so we have to help educate. Restaurants are a direct contact for us with consumers. And so when people go in, and they experience Kaldi's at a restaurant in St. Louis, we want it to be a good experience. And, sometimes, it's out of our control, which is a scary thing when we're selling an unfinished product to a restaurant ... [restaurant staff] might possibly not do well; and then a consumer has a bad experience and says, "Oh, that Kaldi's coffee isn't very good." But it really wasn't the coffee itself, it was how it was prepared. So, once again, if we don't help support, train and invest a lot of time and energy into making sure our coffee is being brewed correctly, then we're never going to ultimately achieve our goal of education and helping people understand what good coffee is.
F: What do you think could stand in the way of the growth of your company?
JF: Coffee prices. That and the economy. Coffee I think is looked at as an affordable luxury. ... So coffee has made it through, and we really haven't seen a dip in sales. Actually, [it's] quite the opposite of that. We've seen an increase in sales. But with coffee prices being double what they were three or four years ago, we felt the effects of the amount of money we have to utilize as a resource for other stuff we're doing.
F: And you've created strategic partnerships with companies like Schnucks.
JF: Well, you know, the cafés with Schnucks ... it's a relationship where we've made an investment. They made an investment. It gets us more exposure to consumers, and it has allowed us the opportunity to touch people that we probably never would have. Some people are [too] intimidated to come into a coffee shop and go through kind of the coffee lingo and look up at menu boards and read words that they don't understand. Whereas, I think inside of a grocery store, it's much less intimidating, and so we're able to reach a whole new segment of people.
F: From an outside perspective, it seems there's no real limit for you guys as far as where you can take the business.
JF: There are so many different things that we're trying to do to improve quality, once again, across the board. We're in several businesses ... from our service department to our roasting crew to allied product that we sell to our retail stores to bakery goods. And I think all of them have a potential to grow. As we try to grow as a company, our focus [is] on [the] ... quality of [our] services, quality of [our] coffee, quality of [the] food in our cafés. That's really our goal ... and [it] will [continue to] be our goal. And we'll see what happens. Hopefully, people will understand and respect that, and, hopefully, it's something that consumers will understand and buy our products.