11/16/2023
It's been 40 years since Coffee People first opened its doors. To celebrate this milestone, we've been reflecting on it's history.. and what a dizzying history it's been!
We've noticed there's been some confusion about the details of what exactly happened to our once 48 location strong coffee chain. If you go to Google right now and ask- "what happened to Coffee People?" It will give you the incorrect answer we were acquired by Starbucks. -An understandable error, given the circumstances of our history.
So for those interested, we figured we'd help to set the record straight and give you the whole true story of exactly what happened with Coffee People. It's quite an interesting tale;
It all began in 1973 when Jim was attending the University of Oregon, studying poetry and creative writing. He and his wife Patty were pretty much broke so in order to raise money for tuition, they began selling coffee at Eugene’s Saturday Market. In those days, Jim and Patty bought their coffee from a little company called The Coffee Bean, also located in Eugene. Jeff Ferguson, who Jim started working for at this location, founded the small coffee roaster.
(When Jeff started Coffee Bean, he had a little counter, 150 square feet and a roaster. He stood behind the counter and sold his coffee out of a jar. Jeff wouldn't hire Jim at first, but Jim was determined to get the job. After some perseverance, Jeff finally gave him a chance.) It was while working there with Jeff that Jim fell in love with the art of coffee. So not long after, he and Patty began selling Jeff's coffee at the Eugene Market.
Over the years, Coffee Bean ended up becoming the huge Portland roaster known as Coffee Bean International (CBI). At the time, though, The Coffee Bean was just a small company struggling to survive. It expanded from Eugene into the Portland market, however in 1976, the company went through bankruptcy.
So an opportunity arose where Jim and Patty could buy one of the Coffee Bean locations from Jeff at a bargain. So they scraped together a small amount of money and bought Coffee Bean’s Portland location located on NW Westover. Then he, Patty and the kids moved to Portland and lived in the little apartment above the store. Jim changed the name of the store from 'Coffee Bean' to 'Coffee Man'. They picked the new name mostly for economic reasons. (The B-E was easy to change into an M and wouldn’t cost us much, so they called it 'Coffee Man'.)
This little storefront became a known spot for quality coffee beans in the neighborhood as well as a gathering place for curious coffee enthusiasts seeking beans and a cappuccino or espresso. During this time, Jim and Patty built many relationships within the local community. Although many customers became friends, sales were not performing enough to stay afloat.
In 1981, the couple eventually sold Coffee Man to a relative and moved to live with Patty's family at the Oregon Coast. After a couple years of roasting coffee there with Patty's father, they moved back to Portland where Jim and Patty started working with Jeff Ferguson again at his Coffee roasting company, now called Coffee Bean International (CBI).
For a while, Jim and Patty worked at CBI doing inside sales but Jim was becoming restless. He kept thinking about his idea for Coffee People. He was dreaming of exotic espresso drinks with quirky names like Velvet Hammer and Black Tiger Mindsweeper. So one day he asked Jeff for a loan of $4,000 to start his coffee store. The idea, of course, would be that Coffee People would sell and promote his beans. Jeff agreed, so Jim & Patty opened Coffee People at 806 NW 23rd Avenue in the spring of 1983.
Over the next decade and a half, Coffee People would take them on a roller coaster ride of successes and failures. It would grow from just Jim and Patty selling coffee behind the counter in their lone café, to 48 stores in cities across the country—reaching as far east as Chicago and as far south as Phoenix.
Early on, though, this growth seemed impossible. In 1985, just two years after starting Coffee People, Jim & Patty found themselves without any money, credit, or coffee beans. There came a point, one Monday morning where Jim saw no reason to open; They didn't have anything to sell. No beans. No merchandise. Nothing. ..and they couldn't buy any more, so he went to CBI and told Jeff that he was done, that he couldn’t do it anymore and handed him the keys. Jim still owed CBI the $4,000. In response, Jeff and his business partner, Gary Talboy, offered to buy Coffee People for $4,400. -Meaning Jim's debt would be forgiven, plus he could walk home with a much needed $400. So Jim accepted. Jeff and Gary now owned all of Coffee People.
As soon as Jim accepted the offer, he got up and started to walk out the door. Just then Jeff asked-
"Well, do you need a job?"
"Yes, I suppose I do."
So Jeff and Gary hired Jim & Patty to manage Coffee People with the understanding that they could someday buy back half of it. For five years, the couple spent every day running the company, but they didn't own any of it.
It was during this time when Jim and Patty felt as though they needed to establish some job security moving forward. So they decided to create a new logo for the company with their faces on it. They figured if their picture was right there on the logo, Jeff and Gary would have a hard time firing them. Jeff and Gary didn’t raise any objections to the new logo, so the iconic logo was born and Jim and Patty became the public faces of a company they didn't own.
They spent years introducing most Portlanders to their first ever latte or cappuccino. Under Jim's creative vision, the menu expanded to boast creative, exotic drinks like Kaluha Chargers, Fabulous Coffee Coolers and the iconic Black Tiger Shake just to name a few.
Then one cold, rainy day in 1989 as Jim was sitting out front of the 2nd Coffee People location at Holladay's Market near Lloyd Center, he was noticing how many people were willing to drive up to the parking lot, get out of their car, get completely soaked in the rain, go inside… then get completely soaked again going back to their car- all for a cup of coffee. So he thought to himself- there had to be an easier way. That's when he came up with the idea for Motor Moka: the nation's first drive-thru espresso bar. Jim's vision was realized shortly thereafter and Motor Moka was opened on NE Grand Avenue. Motor Moka was effectively another Coffee People, just manifested in drive-thru form. It had it's own radio station, broadcasting skits and song parodies that advertised Coffee People products, all inspired by Jim's poetic expression and wry sense of humor. ( https://youtube.com/playlist?list=PLYsV-5gHFU4oONX-p-n-TempokeIimj8Z ) They filmed the encounter with the first customer who pulled into the drive thru. Bewildered and confused, he ordered a hot dog.
Motor Moka was a big hit. The drive thru line often got so backed up with customers, it often caused traffic problems on Grand Ave. This one location went on to fund the opening of several more coffee people and Motor Moka locations.
In 1991, Coffee People's value finally allowed Jim to be able to make that deal with Jeff to buy half of the company, using the earnings to fund the purchase.
In the mid-1990s, with the economy looking good and Starbucks on the rise, Coffee People prepared to expand nationally. Jim wanted to go big. He had visions of Coffee People becoming like a "Burger King" to the Starbucks' "McDonald's" in the national market.
Jim decided he was going to need expert help to bring his brand nationwide. So he hired a man named Taylor DeVine to take over the expansion project. (Taylor had been credited with bringing Blockbuster Video and Mrs. Field's Cookies into nationwide chains.) Under Taylor's direction, Coffee People funded the expansion by taking small, private offerings, using the money to build new stores.
In 1996, Coffee People held its initial public offering on Nasdaq. The owners sold about half the company for $9 million. Expectations for growth were high, but it quickly became obvious that things were not going as planned. This was the beginning of the end.
By the second quarter of '96, Jim and Patty found that the expansion was not succeeding. They had opened multiple locations across the U.S. but they weren't ramping up fast enough. They were losing money and the ability to raise more capital had completely dissipated. All they could do at this point was seek a buyer.
So Coffee People entered into a reverse merger with Second Cup, the number one coffee chain in Canada at that time. Second Cup was looking to expand into the US, so it bought Coffee People and Gloria Jean’s, another American coffee retailer. Second Cup struggled to incorporate its new acquisitions, however, and about a year later, sold them to Diedrich Coffee.
Diedrich didn't have much success with Coffee People either; They kept the Coffee People name on the storefronts. However, Coffee People was now serving Diedrich coffee in Diedrich labeled coffee cups. Customers could easily sense that the cafés were no longer run like the original Coffee People. In 1998, Jim and Patty decided to leave Coffee People, saying that they no longer recognized the company. Upon leaving, they were required by Diedrich to sign a 5 year non-compete agreement, prohibiting them from pursuing a business in Coffee for 5 years.
Diedrich then sold the Coffee People name to Green Mountain Coffee from Vermont. Green Mountain was interested in the Coffee People name because they were looking for brands to use on their K-cups for their Keurig machines. Since Green Mountain Coffee did not operate brick-and-mortar coffee stores, they closed down all the remaining Coffee People storefronts.
Starbucks had taken notice of how well the coffee drive thru market was working for Coffee People in Portland. So with the lease now available at the Coffee People drive thrus, Starbucks quickly came in and took over the lease contracts to all the closed Coffee People drive thru locations. -This is why most Portlanders fell under the misconception that Coffee People sold to Starbucks. Several articles were published soon thereafter that Coffee Ceople sold to Starbucks, further fueling the public's false perception.
After five years, Jim and Patty's non-compete contract with Diedrich expired, allowing them to get back into the coffee business.
In November 2002, Jim and Patty opened up Jim & Patty's Coffee; a neighborhood bakery and cafe with 4 locations still in operation today.
Jim passed away at home of congestive heart failure on July 17th, 2023. He was 74 years old.
Today, Patty still leads the company, continuing to preserve the legacy of Good Coffee, No Backtalk on in to the future. ❤️☕️
