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A full-strength expansion: Vancouver’s JJ Bean takes on Toronto’s coffee scene

Small business

East Vancouver's JJ Bean café takes on Toronto

In a new, competitive market, the West Coast chain remains true to its beliefs and values

Coffee is packaged at the JJ Bean coffee roasters warehouse in Vancouver, Dec. 8, 2017.

On Vancouver's east side, across the street from the city's port and in the shade of two century-old elm trees, JJ Bean Inc. took root.

It was here, in 1996, that John Neate started his boutique coffee chain. Two decades later, operating his business in an unusual style, Mr. Neate has made his biggest move – expansion eastward to Toronto, where he can see as many as 40 JJ Bean cafés eventually thriving.

Coffee has long been the Neate family business. Mr. Neate's grandfather co-founded a wholesaler in 1945. His father joined, and then John Jr. (JJ) did, too. In 1990, when the youngest Mr. Neate was in his early 30s, the company was sold to the Canadian unit of Nestlé SA. He toiled six years for the multinational – "everything was driven by spreadsheets," he recalls – before striking out on his own, supported by his wife, Melanie.

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Owner of JJ Bean John Neate is photographed in the JJ Bean Coffee Roasters warehouse in Vancouver. There are now 19 JJ Beans in the Vancouver area and the company has opened its first four locations in Toronto.

Mr. Neate wanted JJ Bean to be a different kind of company, one about people and place, not about making as much money as possible. Each new JJ Bean was carefully chosen and individually designed, a cousin of the others with its own unique character. The early years were "all about surviving and being better than Starbucks." JJ Bean expanded slowly – there were only four in Vancouver after a decade – but in that time, Mr. Neate developed unconventional management strategies that now underpin more rapid growth.

In the company's second decade, bigger ambitions began to percolate. The past five years have seen annual sales double to about $26-million. There are now 19 JJ Beans in the Vancouver area and the company has opened its first four in Toronto. But as JJ Bean stretches itself, the challenge to guard its character and not turn into just another coffee chain becomes more difficult.

The challenge excites Mr. Neate. On a recent morning, the 60-year-old sits with a coffee at JJ Bean's first location at the corner of Powell Street and Victoria Drive in east Vancouver. The company roasts its coffee fresh every day in the back and has a small, bustling café out front. Mr. Neate greets staff and jokes with Grady Buhler, who, along with Mr. Neate and his son, Jesse, form the company's senior leadership team. The grinding of coffee beans and whistle of steam from the espresso machine add a soundtrack to the pleasing aroma of the space. On one wall hangs a carved East Van cross, the locally iconic symbol of the area's working class and left-leaning history.

Toronto reminds Mr. Neate of the ups and downs of JJ Bean's early days. The company opened its first Toronto location in early 2016, in North York, where it also roasts its coffee and bakes its goods. Three more cafés, all near the subway, followed: one downtown and two in midtown neighbourhoods.

Brand and retail experts say JJ Bean delivers on resonant themes, such as freshly roasted coffee and a sense of community for each location.

The culture of the city is different. Unlike Vancouver or other West Coast cities such as San Francisco, getting coffee happens before work, or midmorning or at lunch. There's less lingering and there are long-standing allegiances to Tim Hortons and Starbucks.

"Toronto has not yet fully embraced it yet," Mr. Neate says. "It's going to happen."

Brand and retail experts say JJ Bean has, so far, done it right. The company delivers on resonant themes, such as freshly roasted coffee and a sense of community for each location, says Doug Fisher, president of franchise consultant FHG International.

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David Kincaid, who used to run marketing at Labatt Breweries, says a brand boils down to a "promise consistently kept."

"What JJ Bean appears to have done is remain true to their beliefs and their values," says Mr. Kincaid, chief executive of consultancy Level5 Strategy. But in a market such as Toronto, packed with aggressive competitors, he adds: "Staying true to your promise is difficult."

The way JJ Bean makes decisions may help. While Mr. Neate and his wife own most of the company – some employees hold shares through a stock-ownership plan – decisions are made by a three-way consensus between Mr. Neate, Mr. Buhler and Jesse.

The past five years have seen annual sales double for JJ Bean to about $26-million.

The first thing Mr. Neate does when describing this system is laugh. He calls it "bizarre" and then says, "It's really cool."

Different teams sit down regularly to talk things out. The vibe is positive, says Neto Franco, a former company senior leader who led the building of new cafés.

"It's fun, because John makes it a lot of fun," says Mr. Franco, who now has his own firm and still builds new JJ Beans. "John's also very humble. He listens to everybody around him."

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For Mr. Neate, the management structure keeps his vanity in check. "I'm a person with a large ego that likes my way to happen. My personal sins are ego and pride. I'm constantly aware of that and that's why the system we have is so wonderful for me. I often have to eat humble pie."

The first time Toronto expansion was considered, about eight years ago, it was dismissed, deemed too big a jump that would threaten what JJ Bean had built at home. Expansion beyond Vancouver was considered again several years later. About 40 staff attended an all-hands meeting. Toronto was embraced.

Over time, Mr. Neate sees the North York operation supporting around 40 cafés. JJ Bean also counts wholesaling as one-sixth of its total business – including private-label roasted coffee for a national grocery chain. Growth will remain paced.

As JJ Bean grows, what drives Mr. Neate is his love of his product.

"I can't function without coffee," Mr. Neate jokes. "But probably most importantly, I love what coffee does in terms of bringing people together for conversation and community. Life without coffee just wouldn't be very fun."

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