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This Coffee Is Hot!

This Coffee is HOT! One sip by a Dreamworks executive who lived nearby propelled a Valencia coffee roaster into a new market beyond the confines of the Santa Clarita Valley By CARLOS MARTINEZ Staff Reporter When the Newhall Coffee Roasting Co. closed out its first year in business with a grand total of $6,000 in sales, founder and CEO Mitch McMullen and his brother Kyle knew they’d have to move beyond the small group of local shops and restaurants they could call customers if there was even going to be a second year. “We were just selling to a few people around town, but we wanted to take it to the next level,” said company president Kyle McMullen, noting that back in 1993 they had neither the big name accounts they needed to survive nor the reputation for roasting good coffee they had to have to land those accounts. The family-owned company did take it to the next level too. Today, Valencia-based Newhall Coffee has expanded from the Santa Clarita Valley into the San Fernando Valley and beyond, with clients as far away as the Deep South. After hitting the $2 million revenue mark last year, the McMullens say their six-year-old company is on track to make $3.5 million this year, having landed customers like Commerce-based Smart & Final, with 162 stores throughout the West, and South Carolina-based Bi-Lo LLC, which operates 306 Bi-Lo supermarkets in the South. The brothers, who started out with no formal business education and little intention of every owning their own company, said they owe what success they’ve experienced to the quality of their product not their business acumen. Kyle started out in marketing with their father’s product placement firm; Mitch played professional basketball in France. But when Mitch was diagnosed with a career-ending heart ailment in 1993, he returned home and opened the Java n’ Jazz coffeehouse in Newhall (which they still own). Kyle joined his brother in the enterprise shortly thereafter and they bought their own coffee roaster. When roasting beans for their Java n’ Jazz customers didn’t seem like enough, they established Newhall Coffee and started selling to local shops and restaurants. But it wasn’t until 1997 when an executive at Dreamworks SKG studios who lived nearby tasted their coffee that the brothers’ fortunes turned. “That’s how we got the Dreamworks account,” Kyle said. Before long, Newhall Coffee was the only kind anybody at Dreamworks was drinking. The McMullens were able to leverage their exclusive relationship with the studio into other important accounts like Warner Brothers Studios, the Getty Museum and Costco, the latter of which helped propel the company to the $2 million range last year. Then, the visibility that came with getting its Newhall Blend and Colombia Supremo decaffeinated coffee onto Costco’s store shelves helped land other important accounts like Ralphs Grocery Co. and the Walt Disney Co. “It took us two years to get into Costco, but it paid off,” Mitch said. Companies like Newhall may be benefiting from being the “un-Starbucks” brand. Patrick Bock, owner of Moorpark-based California Coffee Roasters, said so-called “micro-roasters” like himself and Newhall Coffee are tapping into a market with potential. “People really want quality that the big companies just can’t give,” Bock said. “More expensive beans are not worthwhile for them because of cost and lack of availability in high volume.” Taking on the Starbucks of the world without the resources of the big players, the McMullens felt success would have to depend on their coffee’s quality and not on high-priced advertising campaigns. “We knew nobody could beat our product as far as quality and taste,” Mitch said. “We roast to order and we deliver the next day. Nobody can beat that. They just can’t.” It wasn’t just the corporate clients that helped spur sales, but local clients like Ice Station Valencia, an ice rink that began working with the brothers last year. Gary Lane, the rink’s marketing director, said he preferred working with a company with local roots, instead of a larger firm like Starbucks. “When it comes to coffee, people want quality and that’s what we provide,” Mitch said. The brothers import several kinds of premium coffee beans from South America to be roasted in their 70-year-old, German-built cast iron and brass Probat roaster. The beans go in the roaster’s rotating drum in 200-pound batches, heated at between 390 and 450 degrees, depending on the kind of roast, for about 15 minutes. Then the beans are cooled in another rotating drum and readied for packaging. Located in Building 10 of the former Lockheed Skunk Works complex in Valencia, the company is at home in the 10,000-square-foot structure they leased two years ago. “Ultimately, our goal is to purchase our own building, but that’s down the road still,” Kyle said. Meanwhile, the McMullens say they hope to continue to grow the company, relying on the cash flow they generate. “We’ve had people approach us, offering to invest, but we’ve decided against it,” Kyle said. “We want to see how much we can get done on our own.” SPOTLIGHT: Newhall Coffee Roasting Co. Core Business: Wholesale and retail coffee sales Revenue in 1995: $6,000 Revenue in 2001: $2 million Employees in 1995: 3 Employees in 2001: 20 Goal: To offer high quality coffee and grow its customer base with both retail store chains and large corporate operations Driving Force: Consumer demand for high quality coffee

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