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Growth With two more cafés set to open, future is bright for Balzac’s coffee

French novelist Honoré de Balzac loved coffee. He would famously fuel his late-night writing routine with cup after cup of the strong black stuff. It was after studying the works of history’s great coffee aficionado at university that Diana Olsen – living in Paris at the time – had the idea to merge her passion for coffee with Balzac’s. It was a match made in caffeine heaven.

Ms. Olsen, the president and founder of Balzac’s Coffee Roasters, learned to roast coffee at a specialty coffee institute in San Francisco in the early nineties and launched her first Balzac’s coffee stand in Toronto, and then a physical café in Stratford, Ont. three years later, filling what she saw as a gap in the province’s coffee culture.

Diana Olsen is the founder of Balzac's Coffee Roasters.

But what started out as a small coffee cart outside Toronto’s Ontario Place has expanded to nine locations across southern Ontario, with lease negotations in the works to open two more cafes in Port Dalhousie and Davenport Village in the next year.

We spoke with Ms. Olsen about her plans for Balzac’s expansion, how she sources her locations and what it’s been like partnering with Canada’s famous Dragons.

How did you raise the money to start Balzac’s?

The very first Balzac’s was a little coffee cart, launched in 1993 through a new venture loan – kind of like what they do for entrepreneurs now. It was a government guaranteed loan, so I put up $15,000 and then the bank lent me $15,000.

How did you grow the company to have nine locations?

It happened gradually. It wasn’t something I necessarily had planned to do. I was open to expanding the business, but didn’t aggressively push for it.

I opened my first physical cafe in Stratford in 1996. In 2002, I was approached by the developers of the Distillery District – they wanted to know if I was interested in opening a cafe there. That was one of those moments in my career that just made the direction change. The Distillery was unknown then, and I felt that it was risky, but I was in love with the project and its potential, so I couldn’t say no.

In 2006, I was approached to open a café in Liberty Village, another neighbourhood that was under revitalization and not high-traffic at that point. So I was again taking a bit of a risk, but felt it would eventually take off.

That’s been my model: work with developers in neighbourhoods that are revitalizing. In fact, for all of my cafés I have been approached by the developer or landlord with one exception. In 2008, I opened a cafe in Niagara Falls and it failed.

Balzac's location in the heart of Niagara-on-the-Lake's historic district.

So the only cafe location you sourced yourself didn’t make it?

Other than my very first café in Stratford, Niagara Falls was the only one I 'forced.' There was a neighbourhood being revitalized there and I thought it was kind of cool. But I learned my lesson.

It works when developers hand-pick their tenants because they have a vision for what they want. It becomes more of a partnership. They want you there and work with you as a partner.

What locations have you been pitched that you turned down?

Quite a few, including the Shops at Don Mills – it’s a great development, but I wasn’t feeling it. So far I think I’ve been fortunate that really interesting locations come to me, so it’s easy to say no to the ones that I find less interesting.

I turn down any location that does not have some historical or cultural significance that makes the neighborhood or community interesting to me.

Balzac's in Toronto's Distillery District. The coffee roaster transformed a circa 1895 Pump House into a two-storey Grand Parisian style café.

Have you ever thought of expanding outside of Ontario?

If we did ever expand, [Vancouver] would be a nice place for me. We’ve been wooed by a few developers in Vancouver, Calgary, Montreal and Ottawa. For now, we’re just going to work in southern Ontario where we can just grow here, and then if we did move into another territory, I think we’d have to create a new hub and roast there and have a head office there as well. But that’s a big if.

"In the beginning I learned from the school of hard knocks, and it’s served me well in the long run."
Diana Olsen, founder of Balzac's Coffee Roasters

What’s the competition like in the coffee space? How have you survived given the level of competition and saturation in the coffee market – with Starbucks, Tim’s, Second Cup, Aroma, et cetera?

It definitely feels a bit crowded for some of our locations where more and more coffee companies keep opening around us, but I am always surprised at how little it impacts our sales. We might have a temporary flat-line in sales, but it always gets back on track and keeps growing. I try not to compare ourselves to our competitors. We prefer to work in our own little creative bubble and let our customers and employees drive us in new directions.

You were on Dragon’s Den in 2011 and walked away from that with both Arlene Dickinson and Bruce Croxon investing in your company. How far do you want to take Balzac’s?

We’ll be opening a few more cafés in the next couple of years, and then who knows? Arlene and Bruce understand that Balzac’s isn’t a huge company and that its growth will be slow and steady.

For example, we serve Harmony Organic milk, which is quite expensive. Because we can’t raise the price of our drinks, it affects our bottom line. I won’t mention another Dragon’s name – but had I partnered with a certain other Dragon, that might have been looked upon as crazy. It’s a big cost. But both Arlene and Bruce, they get that and know that’s it’s important to us.

Having Fair Trade Organic coffee and locally sourced and organic milk – was that something that you always wanted to do from the get-go as part of your brand?

It’s been driven by our customers’ tastes and preferences. I prefer organic milk because I believe the quality is so much better. It’s a value that we have, but it’s not a hard-fast rule.

Balzac’s third café, opened in 2006, resides in Toronto’s Liberty Village.

As a business you have to be flexible , and we do as much as we can to make it work. At the end of the day, we want to have healthy profit, but it’s not all about profit. It’s nice having partners that understand, and not having a huge board of directors and shareholders and all that that are pushing you to make changes just to make more money.

If you could go back to 1993, what advice would you give yourself?

I like where we are. I like that we’re not super big or corporate. But I also appreicate that we’ve matured. We’re not just an independent, single cafe as well.

We’re kind of in a nice place on that spectrum because there’s not a lot of people that are the size that we are, and so I find it’s still very manageable to stick with your core values. Having very measured growth, rather than rapid expansion, has given us time to adapt – if we do change it’s more with our policies and procedures so things can run more smoothly and efficiently and there’s better communication with our employees, so that’s how we learn and change.

What is your biggest challenge ahead?

Probably knowing when and where to either slow down or speed up in our growth. I don’t worry about it because so far it’s just happened very naturally, but there may be a time where I have multiple opportunities and I want to do them all but it’s just not possible.

What advice would you give to entrepreneurs starting businesses now?

There seems to be so much more encouragement, training and support for entrepreneurs nowadays than when I started out. It’s great, but in some ways I think they might get too much hand holding and advice, which could potentially stifle what I believe to be the two main characteristics in successful entrepreneurs: creativity and intuition. In the beginning I learned from the school of hard knocks, and it’s served me well in the long run.

Interview has been edited and condensed.

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