Find Your Niche
Emily Mange and Doug Zell run a specialty-coffee business in Chicago that competes successfully with Starbucks.
Emily Mange and Doug Zell discovered just how risky a business start-up could be when they tried to drive the van that carried their new $20,000 coffee roaster under a too-low underpass in downtown Chicago. Says Mange, "We heard a horrible screeching and scraping" -- sure signs of a roof being peeled back.
The mishap cost Mange and Zell $4,000 -- and turned out to be a "small window" into what it would be like to run a business. "It's never what you expect," says Mange, "and it's ten times harder."
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Ten and a half years later, Intelligentsia Coffee and Tea has grown into a business that generates $12.5 million in annual sales, with three coffeehouses in downtown Chicago, online retail sales and several hundred wholesale accounts. The company roasts about 1.8 million pounds of specialty beans a year and has added tea to its roster. Its coffees win consistently high marks from tastemakers, such as Coffee Review, which is an independent buying guide that conducts blind tastings.
Why did a pair of newlyweds, then 28, dare to take on Starbucks? After failing at a bottled iced-tea business in the early '90s, Zell trained at smaller coffee companies, such as Peet's and Spinelli, in San Francisco. "Both had been very successful against Starbucks in their own markets, so I knew it was possible," says Zell. Mange contributed her experience as a manager at Whole Foods to the brew. Their idea was to buy a top-notch product and roast it on-site. They figured that if they executed things well, they had a chance to make a go of it.
Zell was mostly tapped out financially when the tea business fizzled, but Mange and her parents contributed money, and Zell's parents were willing to spot the couple another loan. With a start-up fund of $300,000, they set up shop in Chicago, which at the time "was very overlooked from a regional specialty roaster's standpoint," says Zell. "No one was doing outstanding quality." Meanwhile, the food scene in general was "starting to take off." In addition to operating the coffeehouse, Intelligentsia was soon selling wholesale to high-end restaurants. It turned a profit in its second year, and Mange and Zell started paying themselves a salary -- $7 an hour. They hit the million-dollar mark in sales in 1998, when the wholesale side of the business gathered steam.
Intelligentsia slings a mean cup of coffee; baristas mix espressos with the care of chemists and add steamed milk to their lattes with a floral flourish. But the company's main claim to fame is its beans. About five years ago, Zell and Mange initiated relationships with small and midsize growers in Central and South America and in Ethiopia, which allowed them to develop signature coffees from the grounds up. "Our buyer spends about seven months a year at the source," says Zell. "We select coffee beans, screen them for size and work on how they're going to be dried. The emphasis is on quality and on paying a fair price."
Their success has allowed Mange to stay home with their 4-year-old daughter, Scarlet. The couple travel to Whistler, Vail and Snowbird for occasional skiing and enjoy buying contemporary art. But their greatest job satisfaction is still traveling the world and rubbing elbows with interesting characters in the coffee community. Their focus on quality, and their willingness to take on the competition, have kept Intelligentsia percolating nicely, even though Starbucks continues to dominate the beanscape. "Our goal was to be critically acclaimed and commercially successful," says Zell. "As the expression goes, make no small plans."
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