Minneapolis/st. Paul - 1 May, 1998 -

Chris Eilers and Skip Fay liked Dunn Bros. Coffee so much, they opened their own Dunn Bros. coffeehouses. Well, there was more than that to their decision to start opening franchised coffee shops in Minneapolis. They were both unhappy in their jobs and wanted to get into the coffeehouse business, which was just beginning to perk up at the time. When they approached Ed Dunn, owner of St. Paul-based Dunn Bros. Coffee, about opening a franchise, they learned that he was working on franchising his concept to open more stores. The foundation of Dunn's concept is a coffee-bean roaster in every store, producing what Eilers and Fay believe is the freshest -- and best -- coffee available. Susan Bonne, editor of the Minneapolis-based Coffee Journal, agrees. "They serve a very good quality of coffee, known for its dark roast and intensity," she said. "They fill an important niche that's between the [Seattle-based] Starbucks chain and the corner independent." Eilers and Fay approached Dunn because they thought they'd be better off with an established, reputable brand, as opposed to opening an independent shop. "We knew it was a more prudent step toward being successful," Eilers said. And they have been successful. Starting with one store at 34th Street and Hennepin Avenue in the Uptown area in 1994, Eilers and Fay, legally known as Ceefay Inc., now own four stores. (Ed Dunn also owns and operates four coffeeshops, including the original on Grand Avenue in St. Paul). Ceefay's revenues last year totaled $1.2 million, and they expect that to climb to $2 million this year. They're achieving those numbers in a competitive environment, where Starbucks, Minneapolis-based Caribou Coffee Co. Inc., a few smaller national chains and dozens of independents jostle for customers. One way they do that is through their real estate decisions, locating in larger spaces than either of the two larger chains normally do. "We're competing for the same demographics. We're trying to provide, instead of a coffee bar, a coffeehouse to our customers," Eilers said. Its newest location is a perfect example. Eilers and Fay were only going to use the first floor of the refurbished Milwaukee Depot freight house in downtown Minneapolis. "We ran out of room for chairs," Fay said. So they rented the entire 3,000 square feet, equally divided between two floors. The location defied many skeptics who thought it was a terrible place for a coffee shop by becoming their new No. 2 store on the first day it was open, Eilers said. It's several blocks from the central business district, and in an area that's been blighted for decades. But Eilers saw 2,000 cars a day parked in nearby lots, as well as thousands of apartment dwellers within a few blocks. The historic brick freight house is representative of the kind of real estate Eilers and Fay seek when planning new locations: old buildings with architecture that needs little embellishment. Not only does that give their shops a charming, comfortable feel, it saves the duo thousands of dollars in construction costs that Caribou and Starbucks normally put into a new store. So even with the addition of an expensive roaster, they can still outfit a new Dunn Bros. for between $50,000 and $180,000, Eilers said. As a bonus, the renovation project, completed under the guidance of Minneapolis-based The Leonard Parker Associates Architects Inc., recently won an award from the Minneapolis Heritage Preservation Commission. While Fay and Eilers plan to continue growth by opening one or two stores a year, they have no plans to expand outside of Minneapolis' city limits. "We really have focused on the urban market," Eilers said. So far, that market has been mostly in south Minneapolis, although the franchisees now want to work north, possibly in the quickly redeveloping North Loop area along the Mississippi River, just north of downtown. "We feel we have grown quickly, but at a comfortable pace," Eilers said. That pace allows the two, in consultation with Ed Dunn, to choose their locations carefully. "Location is so important. You pick one dog and it can really stifle your growth," he said.

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