Newhall Coffee Roasting Co.


Year Founded:

1995

Core Business:

Micro-roasted coffee

Revenues in 1995:

$85,000

Revenues in 2000:

$750,000

Revenues in 2001:

$2 million (projected)

Employees in 1995:

2

Employees in 2001:

20

Goal:

To maintain a superior quality of coffee and grow the company’s customer base of retail chains and office clients

Driving Force:

Consumer demand for premium-quality coffee supplied by a small, regional roaster

The search for a good cup of coffee led Mitch and Kyle Mcmullen to start a business that’s taking on national competition

The board of directors of the Getty Center knows a work of art when it tastes one.

For brothers Mitch and Kyle McMullen, owners of Newhall Coffee Roasting Co., being chosen by the Getty in a blind taste test for a contract to supply coffee to the museum is the latest confirmation that, if you want a good cup of coffee, you have to make it yourself.

Beating out competitors like Starbucks and Coffee Bean and Tea Leaf for the lucrative Getty contract is the latest success for the young company, which was born when the McMullens, who also own the Java ‘n Jazz coffeehouse in the Valencia Town Center, couldn’t find a satisfying cup of coffee.

“Initially, we started the business because we weren’t satisfied with the coffee beans that were being supplied to our coffee shop,” said Mitch McMullen. “We got lucky really early on because a lot of local merchants like our coffee and began placing orders.”

But building a business is like making a good cup of Joe it takes time. The brothers learned that lesson well as they hammered out a deal to have their beans carried in regional Costco stores.

“The deal to get our coffee onto store shelves at Costco took more than a year to complete,” according to 33-year-old Kyle McMullen. Newhall Blend and Columbia Supremo decaffeinated went onto Costco shelves in Southern California in December, including warehouse stores in Marina del Rey, Westlake Village and Burbank. The terms of the deal were not disclosed, but it provided a sizable boost to the upstart coffee company.

“We don’t have a $100 million advertising campaign, like Starbucks, to create an image, but we do offer a quality product,” he said. “We could never compete against Starbucks, so we have to produce a quality product and sell it at an attractive price.”

Serving up freshly roasted beans began in 1993, when the McMullens opened Java ‘n Jazz.

“We chose to use Newhall in the name because of the city’s rustic image,” said Mitch McMullen, 35. “For my brother and I, who grew up in Newhall, the city has always had this cowboy image that we thought would separate us from other coffee companies.

Millions of cups

Mitch McMullen said, early on, the company was roasting about 1,000 pounds of coffee a month. Today that figure has grown to more than 75,000 pounds per month enough to brew about 3 million cups.

Founded in 1995, Newhall Coffee is located in Building 10 of the old Lockheed “Skunk Works” facility in Valencia. For Mitch, the company’s office and warehouse is a reminder of the secret military research that took place in the Santa Clarita Valley from the 1960s through the early 1990s.

“We took the space in Building 10 because we could cut through the roof to vent our roasters,” he said. “At other (former Skunk Works) facilities, the concrete roofs were so thick we couldn’t cut through them. The buildings were built to make sure that satellites weren’t able to take photos of the secret work that was going on inside.”

The company expects to do about $2 million in sales this year, a noticeable increase from the $85,000 that Newhall Coffee generated in 1995. In response to the accelerating growth, the company is continuing to expand its facilities.

“We roast the beans in 50-pound batches that take about 18 minutes each,” he said. “We recently purchased a new roaster that will allow us to maintain our quality but roast coffee in 200-pound batches.”

In addition to the demand generated by the Costco deal, the company has also generated higher volume from sales at a number of Ralphs Grocery stores and sales to a range of corporate and government clients, including the Walt Disney Co. and the Los Angeles County Sheriff’s Department. It’s also hoping to do well enough to expand further into Orange and San Diego counties.

“We have over 200 coffee machines at Disney,” said McMullen. “We earned that account because several Santa Clarita residents who work at Disney in Burbank were familiar with our product and wanted it at work.”

Indeed, such grassroots appeal has helped to perk up sales.

Gary Lane, director of marketing at Ice Station Valencia, said the ice rink wanted to do business with a local firm.

“When we opened our doors in September, we had the opportunity to work with a larger company, like Starbucks,” he said. “But we wanted to have a business relationship with a local company. It was a logical step to work out a partnership with them.”

Seeking market share

McMullen said the plan is to keep growing the company’s sales to retailers and office clients alike.

“Los Angeles is such a large coffee market we opened our business at just the right time,” he said. “If we can capture 10 percent of the market, we will be more successful than we ever expected.”

The company purchases its beans through M.P. Mountanos in Sunland, which import the beans from Brazil, Costa Rica and Colombia. “A great cup of coffee starts with a great raw bean,” he said. “Our importer treats coffee just like it was a fine wine.”

Newhall Coffee gets its beans to market within a few days of roasting, compared to other premium brands, which can take as long as 60 to 90 days after roasting to reach store shelves. Canned coffee takes far longer, Mitch said.

Kyle acknowledged that selling into Costco, where a two-pound bag of Newhall coffee sells for $8.99, as compared to $18.99 at Ralphs and other retail locations, runs the risk of being perceived as “cheap or lesser quality.” But he added that Costco required the bargain pricing, and that the volume and brand recognition that Newhall Coffee has been able to generate there made it an offer they couldn’t refuse.