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The Honolulu Advertiser
Posted on: Wednesday, May 5, 2010

Building a business, bean by bean

By Robbie Dingeman

Hawaii news photo - The Honolulu Advertiser

Ed Schultz aims to serve the best cup of coffee in the Islands.

Honolulu Coffee Co.

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Number of employees: 83 at seven coffee bars

How long in business: Ed Schultz has owned the business since February 2008

Describe your business: “Our goal is to be the best coffee bar in Hawaii with the most knowledgeable staff and to support as many local farmers as possible by roasting, selling and serving 100 percent Hawaii coffee.”

Next big thing? “Expand to Asia, Japan by end of the year, Korea by 2011.”

Find them at: www.honolulucoffee.com, seven coffee bars: Westin Moana Surfrider Hotel, Ala Moana Center (upper level) and kiosk; Sheraton Princess Kaçiulani Hotel; American Savings Bank Tower; on Maui at The Shops at Wailea and on Guam.

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Honolulu Coffee Co. roasted and sold 90,000 pounds of beans last year at seven coffee bars on O'ahu, Maui and Guam — 20 pounds at a time.

And often sold it one cup of coffee or latte at a time, owner Ed Schultz says.

(The Honolulu-based company does sell some coffee by the bean for $13 a pound and up.)

The coffee from Honolulu Coffee bars hovers around $4 a cup with an array of pastries that include French macarons (yes, only one "o") that cost $1.75 each.

"Our coffee is a little bit pricier," Schultz said. He said the company works to keep quality up by roasting 20 pounds at a time compared to 200 pounds, as is more common for large coffee producers.

"The smaller the batch size, the more control you have," he said.

Now, the company does all the roasting in a 1,600-square-foot roasting facility at the upper level of Ala Moana Center and is building a second roaster at a Sand Island facility.

He's pleased that the company has been able to continue to grow by studying what's working well and using existing assets.

Most of the online reviewers on Yelp say the company offers a change-up from the average coffee bar with pastries that make it worth the price, but others complain about the prices.

Originally from Western Massachusetts, Schultz worked as an investment banker in New York City before turning to coffee.

His financial background included evaluating the buyout of Starbucks suppliers and competitors as well as a chai company and a biscotti business that pulled him further into the coffee trade.

In 2004, Schultz bought LatteLand in Kansas City, starting with a single cafe and expanding to six cafes, bringing in $3 million within three years. He first came to Hawai'i on vacation and eventually began negotiating in 2007 to buy Honolulu Coffee Co., a deal that closed in early 2008.

"I kind of fell in love with the concept of being able to market the origin of coffee," he said.

Schultz works with coffee growers across the state to use more Hawai'i-grown coffee beans and said he was able to roast 45,000 pounds of Island beans last year, half of the total served. The other half came from Latin America, Brazil and Sumatra.

"Every Friday, we serve 100 percent Kona Peaberry for the same price as we do our (regular) cup of coffee every day of the week," he said. The house blend is 25 percent Kona coffee.

He still owns LatteLand and goes back to Kansas quarterly.

Despite the recession, Hawai'i farmers have expanded coffee production throughout the state.

While Kona was the primary growing region, farmers are also growing coffee in Ka'ū and on Moloka'i, Maui, Kaua'i and O'ahu.

Schultz said the company has increased the amount of coffee sold from Kona and Maui by about 25 percent.

As of 2007, state Department of Agriculture officials said coffee ranked fourth among Hawai'i's diversified agriculture crops at $31 .9 million. Statewide, 830 farms planted 7,800 acres in coffee with most on the Big Island.

And he has found a hit with two pastry chefs: Ron Viloria, who is originally from Guam and worked with Sam Choy; and Hiromi Okura, who grew up in New York and worked for Chef Mavro.

Schultz said he measures the company's success by the employees who stay on. "We're successful when we reduce our turnover."

Schultz still loves coffee as much as when he first got into the business. His favorite is a wet macchiato — two shots of espresso and about 4 ounces of steamed milk.

"Now, I drink it slower and enjoy it longer," he said.