If you're asked to name a national coffee chain in the United States, the two brands that spring to mind are Starbucks and Dunkin’ Donuts. But a slew of regional coffee chains are giving the two leaders stiff competition.
In the New York area, Gregorys Coffee, which debuted in 2006 in Manhattan, has expanded to 30 locations, including 24 in New York City, 4 in Washington, D.C. and 2 in Jersey City. And it’s not stopping there. It has plans to add five shops in 2019 and is hoping to open 15 more in 2020.
If all those plans materialize, there could be 50 Gregorys Coffee in two years.
Founder and CEO Gregory Zamfotis stemmed from a restaurant background, though he made a career detour to become an entrepreneur. The 36 year old studied business at Boston University and earned a law degree from Brooklyn Law School. During his time in law school, Zamfotis realized that his passion for launching a food business prevailed over practicing law.
Raising $250,000 through family and friends, he opened Gregorys Coffee near Madison Square Park in 2006. He calls his father George a “serial entrepreneur” who owned a donut shop, a coffee shop and pizzeria and serves as a role model for him.
For grammar fans, he kept the apostrophe out of Gregorys Coffee just as Starbucks did when it based its name on a character from Herman Melville’s novel “Moby Dick.”
Here’s what Gregory Zamfotis says about his company’s growth plans:
Gregorys Coffee faces competition from heavyweight chains and regional players La Colombe, Joe Coffee Company, Jack’s Stir-Brew Coffee, among many. How does it compete?
Zamfotis: We’ve always tried to blend this idea of quality and quantity. We can give a boutique coffee experience while serving many, many people, as you’d find at a mass market location, like Starbucks or Dunkin’ Donuts. We are able through systems, training and design to process lots of guests while maintaining an extremely high level of quality.
What’s Gregorys Coffee niche?
Zamfotis: We have become a destination for those seeking quality coffee and innovative products, be it an exotic coffee from Ethiopia, a vegan or gluten-free food product, or CBD oil lattes. Our regular customers are served up by our team of excellent baristas, all of whom have been through an intensive barista training program that focuses on welcoming and efficient service.
Describe your food.
Zamfotis: We serve homemade pastries and prepared foods, and limited sandwiches and some hot food. My father runs our food operations through our two local bakeries in New York and Washington, D.C. I’m a vegan and very health conscious. Over the years, we’ve introduced more vegan and gluten-free selections. We also roast our own beans in Long Island City, New York.
What’s your key to attracting repeat business?
Zamfotis: One of the key ways is our app, which has a built-in loyalty program. Loyal customers get discounts and incentives to reward them.
You’ve been in New York City, a tough place to do business, where rents are sky high. What are the key skills you’ve learned to succeed in the coffee business?
Zamfotis: New York forces you to be on your toes all the time. With all these pressures, if you’re not sharp as a tack, you’ll be gobbled up. You have to stay on the cutting edge of innovation, and do tons of outreach, or planting your flag in local communities and make them feel connected.
Speaking of innovation, you now serve CBD latte, a cannabis product. Why?
Zamfotis: It’s oil extracted from a hemp leaf. It recently became legal under the Farm Bill. It gives you the benefit of cannabis without the negative side effects.
Why did you decide to not franchise?
Zamfotis: We have only opened corporate-owned stores to date. We have been very protective of the brand, our identity and our image. We have spent the last 13 years cultivating who we are, what we stand for and how to deliver the best guest experience in specialty coffee. We continue to discuss internally whether franchising is something we would like to pursue, but historically we have been working tirelessly on our operations, branding and expansion.
How are you capitalizing your growth?
Zamfotis: Historically we have been self-financed and used private loans to grow the company to where we are today.
Are you pursuing private equity money or angel investors?
Zamfotis: We’re always having these conversations. It’s healthy to keep tabs on how people see you and where there might be a great opportunity to find a good partner or bring capital into the business.
You’re planning to open 15 new spots in 2020. That’s quite an undertaking. How will you accomplish that?
Zamfotis: That is the rough outline of where we’d like to go. I don’t have any leases signed. We’re looking to catch our breath in 2019 since we’ve doubled in size in two years.
On what basis do you decide on new locations?
Zamfotis: It’s all value-driven, based on real estate of what’s available in new markets, and see where rents are going that make the most sense.
Where do you see Gregorys Coffee going in two years?
Zamfotis: In two years our retail footprint will double in size, our reach will go from strictly retail to multiple channels, and we will cement ourselves as the leading specialty coffee company not only in New York and Washington D.C. but in multiple regions across the country.
You trained as an attorney so are you satisfied with the jump to entrepreneurship?
Zamfotis: I think there’s nothing more rewarding than creating something that others, given a multitude of options, go out of their way to choose you as a destination. When I see folks with my coffee cup, it’s a reminder, we’re doing something right.
Any long-term thoughts of going public?
Zamfotis: Today it’s not something we’re concerned with, but long-term as we continue to grow, it might interest us.
Describe the three keys to Gregorys Coffee future growth.
Zamfotis: 1) Staying hungry, so I don’t lose my edge; 2) Stay positive. It’s a challenge to grow and maintain a familial atmosphere; 3) Be smart with real estate.