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Tully's Coffee is an American specialty
coffee Coffee is a beverage brewed from roasted, ground coffee beans. Darkly colored, bitter, and slightly acidic, coffee has a stimulating effect on humans, primarily due to its caffeine content, but decaffeinated coffee is also commercially a ...
manufacturing Manufacturing is the creation or production of goods with the help of equipment, labor, machines, tools, and chemical or biological processing or formulation. It is the essence of the secondary sector of the economy. The term may refer ...
brand A brand is a name, term, design, symbol or any other feature that distinguishes one seller's goods or service from those of other sellers. Brands are used in business, marketing, and advertising for recognition and, importantly, to create and ...
owned by
Keurig Dr Pepper Keurig Dr Pepper Inc. ( ), formerly Green Mountain Coffee Roasters (1979–2014) and Keurig Green Mountain (2014–2018), is a publicly traded American beverage and coffeemaker conglomerate with headquarters in Burlington, Massachusetts, and ...
, which acquired ''Tully's'' brand and wholesale business in 2009. Tully's branded coffee continues to be sold by Keurig in its K-Cup format and as bagged ground coffee. At the time of the Keurig wholesale acquisition, the "''Tully's''" name and retail-store rights were retained by the now-defunct original retailer and wholesaler chain of coffee shops based in
Seattle Seattle ( ) is the most populous city in the U.S. state of Washington and in the Pacific Northwest region of North America. With a population of 780,995 in 2024, it is the 18th-most populous city in the United States. The city is the cou ...
, Washington, which had been originated by Tom "Tully" O'Keefe in 1992. Its stores served specialty coffees, espresso, baked goods, pastries, and coffee-related supplies. The U.S. chain permanently closed in September 2018. The coffee-shop chain also has overseas licensing agreements in
Japan Japan is an island country in East Asia. Located in the Pacific Ocean off the northeast coast of the Asia, Asian mainland, it is bordered on the west by the Sea of Japan and extends from the Sea of Okhotsk in the north to the East China Sea ...
, which since 2006 have been owned by Ito En, Inc. The brand name is used for over 760 ''Tully's'' coffee houses in Japan (as of April 2022). ''Tully's'' coffee shops were well known for once following an expansion strategy of opening stores adjacent to those of the considerably larger coffee chain
Starbucks Starbucks Corporation is an American multinational List of coffeehouse chains, chain of coffeehouses and Starbucks Reserve, roastery reserves headquartered in Seattle, Washington. It was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gor ...
, also based in Seattle.


History


Inception

Tully's opened its first store in
Kent, Washington Kent is a city in King County, Washington, King County, Washington (state), Washington, United States. It is part of the Seattle metropolitan area, Seattle–Tacoma–Bellevue metropolitan area and had a population of 136,588 as of the 2020 Unit ...
in September 1992. The founder of Tully's Coffee, Tom "Tully" O'Keefe, who retired from the company in 2010, planned to rival the quickly expanding
Starbucks coffee Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Seattle's Pike Place Market i ...
. Tully's quickly developed into a strong regional specialty coffee retailer concentrated in Puget Sound, where coffee loyalty is so deep there is one coffee shop for every 4,000 people. In 2006, Tully's made its first net profit. Tully's focus was no longer on competing against Starbucks but on serving hand-crafted coffee in its local Seattle area retail coffee shops. The company had franchisees and grocery chain coffee shops in the U.S. and Asia. It operated stores in the Greater Puget Sound area of Washington,
San Francisco San Francisco, officially the City and County of San Francisco, is a commercial, Financial District, San Francisco, financial, and Culture of San Francisco, cultural center of Northern California. With a population of 827,526 residents as of ...
,
Los Angeles Los Angeles, often referred to by its initials L.A., is the List of municipalities in California, most populous city in the U.S. state of California, and the commercial, Financial District, Los Angeles, financial, and Culture of Los Angeles, ...
,
Idaho Idaho ( ) is a landlocked U.S. state, state in the Pacific Northwest and Mountain states, Mountain West subregions of the Western United States. It borders Montana and Wyoming to the east, Nevada and Utah to the south, and Washington (state), ...
,
Arizona Arizona is a U.S. state, state in the Southwestern United States, Southwestern region of the United States, sharing the Four Corners region of the western United States with Colorado, New Mexico, and Utah. It also borders Nevada to the nort ...
,
California California () is a U.S. state, state in the Western United States that lies on the West Coast of the United States, Pacific Coast. It borders Oregon to the north, Nevada and Arizona to the east, and shares Mexico–United States border, an ...
and licensed its brand for use in
South Korea South Korea, officially the Republic of Korea (ROK), is a country in East Asia. It constitutes the southern half of the Korea, Korean Peninsula and borders North Korea along the Korean Demilitarized Zone, with the Yellow Sea to the west and t ...
and Japan. It had also opened stores in
Singapore Singapore, officially the Republic of Singapore, is an island country and city-state in Southeast Asia. The country's territory comprises one main island, 63 satellite islands and islets, and one outlying islet. It is about one degree ...
,
Metro Manila Metropolitan Manila ( ), commonly shortened to Metro Manila and formally the National Capital Region (NCR; ), is the capital region and largest List of metropolitan areas in the Philippines, metropolitan area of the Philippines. Located ...
,
Beijing Beijing, Chinese postal romanization, previously romanized as Peking, is the capital city of China. With more than 22 million residents, it is the world's List of national capitals by population, most populous national capital city as well as ...
and
Stockholm, Sweden Stockholm (; ) is the Capital city, capital and List of urban areas in Sweden by population, most populous city of Sweden, as well as the List of urban areas in the Nordic countries, largest urban area in the Nordic countries. Approximately ...
. Tully's opened its first Japanese outlet in
Ginza Ginza ( ; ) is a district of Chūō, Tokyo, Chūō, Tokyo, located south of Yaesu and Kyōbashi, Tokyo, Kyōbashi, west of Tsukiji, east of Yūrakuchō and Uchisaiwaichō, and north of Shinbashi. It is a popular upscale shopping area of Tokyo ...
,
Tokyo Tokyo, officially the Tokyo Metropolis, is the capital of Japan, capital and List of cities in Japan, most populous city in Japan. With a population of over 14 million in the city proper in 2023, it is List of largest cities, one of the most ...
, in 1997. Tully's opened in Japan after a 33-year-old
Sanwa Bank The was a major Japanese bank headquartered in Osaka, which operated from 1933 to 2002. It resulted from the merger of three local banks, (est. 1877 as 13th National Bank), (est. 1878), and (est. 1879 as 148th National Bank). In 2002, Sanwa ...
employee, Kota Matsuda, personally appealed to O'Keefe to open a chain of high-quality coffee shops in Japan. Matsuda became the CEO of Tully's Coffee Japan, a joint venture between Tully's, Matsuda and several outside investors. Unlike its rival Starbucks, which chose to run its stores in Japan directly, Tully's expanded in Japan through franchising. Tully's sold a portfolio of intellectual property to TCJ in August 2005 for over $13 million, and the Japanese tea maker acquired TCJ Ito En in 2006. In August 2007, plans for an
IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...
were placed on hold by the company, citing a "volatile market." This decision was made right after the company was advised by its bankers to refrain from going forward with the IPO due to a tremendously declining stock market. The company pursued alternative sources of capital and sought all strategic investment or sale opportunities as a result. Fiscal 2006 losses amounted to $9.7 million.


Sale of wholesale coffee-bean distribution business, brand, and roasting operation

Tully sold its North American wholesale coffee-bean distribution business, brand (which it licensed back for $1/year in perpetuity), and roasting operation to Green Mountain Coffee Roasters in 2009, earning $40.3 million in the deal, allowing the company to pay off 100% of its debt, including trade debt, make a cash distribution to shareholders, and maintain substantial cash reserves for the expansion of its retail business. Tully's retained all retail rights for North America, and all wholesale and retail rights for the balance of the world, excluding Japan. In 2010, Tully's Coffee International and DK Retail Co., Ltd. entered into a Master Licensing Agreement to develop up to 100 retail stores in South Korea. Founder and Chairman Tom T. O'Keefe retired in 2010.


US coffeeshop closures

The Tully's Coffee board and management filed for Chapter 11 bankruptcy in October 2012, citing low cash reserves and the need to renegotiate leases with landlords. At the time of the filing, Tully's had recently closed or was about to close 17 unprofitable company-owned stores. Global Baristas, an investment group led by actor
Patrick Dempsey Patrick Galen Dempsey (born January 13, 1966) is an American actor and racing driver best known for playing neurosurgeon Derek Shepherd in ''Grey's Anatomy'' (2005–15; 2020–21). He is also known for his leading man romantic film roles, such ...
had the highest bid of US$9.15 million to buy Tully's at a bankruptcy auction on January 3, 2013. U.S. Bankruptcy Court Judge Karen Overstreet subsequently approved the sale to Global Baristas, rejecting objections from Starbucks and other prospective buyers. The deal became final on June 30, with all employees keeping their jobs and getting a bonus of two vacation days as a "thank you" for their commitment to the company. Dempsey later backed out of the partnership and filed a lawsuit against his former partner and attorney
Michael Avenatti Michael John Avenatti (born February 16, 1971) is an American former attorney currently incarcerated in federal prison for felony fraud and extortion. He is best known for his legal representation of Pornographic film actor, adult film actress S ...
. In September 2017, Tully's Coffee announced it would close 12 locations in the Puget Sound region that were located inside
Boeing The Boeing Company, or simply Boeing (), is an American multinational corporation that designs, manufactures, and sells airplanes, rotorcraft, rockets, satellites, and missiles worldwide. The company also provides leasing and product support s ...
facilities, including the Everett and Renton assembly factories. They had originally opened in 2006 as part of an agreement between the two companies. On March 8, 2018, Tully's announced that it was closing its remaining stores temporarily due to a lack of coffee. Later that month, many Tully's locations remained closed with eviction notices posted by landlords indicating the lack of payment. In April 2018, Tully's coffee was sued by
Daytona International Speedway Daytona International Speedway is a race track in Daytona Beach, Florida, Daytona Beach, Florida, United States, about north of Orlando, Florida, Orlando. Since opening in 1959, it has been the home of the Daytona 500, the most prestigious race ...
. Tully's US coffeehouse business was officially closed when Keurig and Global Baristas entered a permanent injunction in September 2018. Global Baristas agreed to never operate a coffee chain, or any other food or beverage business, under the name again, and Keurig will continue to sell Tully's branded coffee. An involuntary
Chapter 7 bankruptcy Chapter 7 of Title 11 U.S. Code is the bankruptcy code that governs the process of liquidation under the bankruptcy laws of the United States. This is in contrast to bankruptcy under Chapter 11 and Chapter 13, which govern the process of ''re ...
liquidation petition was filed against Global Baristas in October 2018. Tully's still operates overseas through franchise agreements, with 760 stores in Japan as of April 2022.


References


External links


Tullys.com
* Archived May 19, 2018 {{Food chains in Japan Coffee brands Coffeehouses and cafés in Japan Coffee in Seattle Defunct companies based in Seattle Defunct restaurant chains in the United States Regional restaurant chains in the United States American companies established in 1992 American companies disestablished in 2018 Keurig Dr Pepper brands 1992 establishments in Washington (state) 2018 disestablishments in Washington (state) Food and drink companies established in 1992 Food and drink companies disestablished in 2018 2009 mergers and acquisitions Companies that filed for Chapter 11 bankruptcy in 2012