Dunn Bros Perks Up!
Minnesota-based coffee roaster brews up opportunities for franchisees.
Susan Fishman

St. Paul, Minnesota-based Dunn Bros Coffee has 90 locations in seven states, with 25 to 30 franchised stores, run by owner-operators, opening per year.

In 1987, at a time when Starbucks was just starting its infiltration into American culture, brothers Ed and Dan Dunn were opening their first coffee house in St. Paul, Minnesota. A coffee roaster from Oregon, Ed had the original intention of opening a bean-selling retail outlet and selling the equipment that goes along with that business. But he soon discovered that people also wanted beverages, so Dunn Bros Coffee was born.

Ed was quite successful with selling beverages in addition to beans, and he felt the reason for that success was because all the coffee beans were roasted right in the shop to deliver the freshest tasting, highest quality coffee possible. When people came into the store, they were experiencing the effects of roasting on site — not only the aromas, but watching the beans being roasted. So when the brothers decided to add a second store, they also added a second roasting operation, even though the new store was less than 15 miles away from the first location.

“Where others would roast in the first store and then ship to the second store, Ed decided to invest in a second roasting operation to duplicate the experience,” notes current president and CEO Chris Eilers. “That’s really our point of difference — the fact that we’re a chain that roasts on site. So our franchisees are essentially coffee roasters.”

Ed continued to expand the chain and began franchising in 1994. Eilers and partner Skip Fay became the first franchisees and opened five stores in Minneapolis between 1994 and 1998. But the duo soon went from franchisee to franchisor when Ed sold them the franchise company, with a total of 10 stores, in 1998.

Dunn Bros Coffee’s store design features both tabletops and single soft seating. Most locations have a fireplace, free WiFi and computer kiosks, which also sets the company apart from the big coffee chains.

“We grew rather organically for the first 2 years,” says Eilers. “We would get enough interest from people in the Twin Cities just because of the sheer excitement associated with coffee shops. Minnesota-based Caribou Coffee was growing rather dramatically but not franchising and, of course, Starbucks doesn’t traditionally franchise. So we would also get a lot of people interested in Dunn Bros because we were the only one in this market offering franchises.”

Today, the company continues to grow, with a little more professional expertise, and has 90 locations in seven states. With just one corporate location, Dunn Bros is opening 25 to 30 franchised stores, run by owner-operators, per year. This allows the company to grow in a more controlled fashion, says Eilers.

“The idea is to have actively engaged owner-operators who are engaging in the communities their stores are located in, and that’s all they do; it’s 100 percent of their focus,” he says. “That model really seems to be effective for us.”

A traditional Dunn Bros is found in traditional locations, whether in strip shopping centers or high-impact shopping areas or, if urban-based, in high-density neighborhoods. The company also has a format called “Dunn Bros Express,” which is found in non-traditional locations for the company, such as airports, shopping mall kiosks, hospitals — places that can’t accommodate a coffee roaster.

Currently the average square footage is between 1,600 and 1,800 square feet for a traditional store, and between 500 and 900 square feet for an Express unit. Dunn Bros doesn’t have a cookie-cutter décor package, so the company works with its design team to create stores that are more reflective of the environments they are going into.

“We have stores in historic buildings, and we retain as much of the historic integrity as we can,” explains Eilers. “If it’s brand-new, modern architecture, we can coordinate with the landlord, developer or high-end architect to create a décor package that’s more reflective of the aesthetic they’re after.”

What sets Dunn Bros Coffee apart is the fact that it roasts its own coffee beans on site.

The store design is fairly traditional, says Eilers, with a combination of both tabletops and single soft seating so as not to sacrifice a lot of space to one person on a couch. Most locations have a fireplace, free WiFi and computer kiosks, which is another point of differentiation from the big chains.

Dunn Bros’ growth plan is to continue to develop in markets the company is currently in. The company currently has stores from Minnesota down to Texas and is also just beginning to enter Illinois with the first store opening this fall.

“We will open up in small markets where we can put one or two stores successfully because that’s what they would accommodate anyway,” adds Eilers.

And success does seem to follow Dunn Bros, despite the prolific Starbucks and Caribous of the world.

“There seems to be a trend with a lot of shopping center developers to not become so ubiquitous and so vanilla by having the same 20 concepts that people are used to,” Eilers notes. “So offering something different can be a real advantage.”


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