Tuesday, June 23, 2020

Rebirth of a Roaster - M36 Coffee Launches

Co-owners: Ken Pargulski (L) and Lisa Tuveson (R)
Lisa Tuveson and Ken Pargulski have performed a "COVID rescue" of the coffee sort, launching new roasting company M36 Coffee Roasters out of the ashes of an old one. The owners of icon Michigan roasting company, Espresso Royale Coffee (ERC), decided to sell in the midst of multiple COVID pandemic-related business issues. Today I was allowed a brief visit (with social distancing) to check-in on the duo. It's amazing! The M36 brand is clearly displayed even though the official opening of the company was only June 1, 2020. Ken has been a roaster at ERC over 20 years, 13 of them as master roaster. "He's always been at the heart of operations here," Lisa explains. Lisa started with ERC in 1989 and eventually became VP of operations. As co-owner with Ken, she will continue to lead administration, sales, contracting, etc. There's a feeling of "coming into their own" as I speak to them. It's like owning a roasting company is the logical next step for both of them.

What happened?
Espresso Royale, established in 1988, was ahead of the game on many fronts before COVID19 hit. They were in the midst of launching a buy-ahead app to make purchasing brewed drinks simple and fast for consumers. The company had
Closed Espresso Royale store on State St, Ann Arbor
key accounts with universities, due to its ability to create synergies that saved money for the food service companies signing the coffee contracts for those institutions.

But the challenges of managing expensive retail space and dozens of employees during a global health pandemic with rising risks and increasing 'unknowns' was too much. "There was a temporary closing at the end of March," Ken told me, "which became official some weeks later, but not publicly announced until June 11." He was already working limited hours when the owners told Ken they would not continue. He thought about it for one night, and the next day came back to the owners asking if he could buy the company. Soon Lisa was attracted to the conversation also. They formed a two-person team, with Lisa taking 51% ownership to Ken's 49%.

What's happening now?
Growth! Ken and Lisa are working out of exactly the same roasting, "headquarters" space as Espresso Royale and have acquired all of the roasting equipment. Kurt Donaldson, the long-time head of machine service and account rep for universities, is on the team with them. This has enabled them to keep operations going with no interruptions. Grocery and on-line sales are growing. By being as frugal as possible, they are working on keeping current customers happy and supplied and securing new customers.

Innovation is still perking along as always. The previous company had launched a "Bourbon Barrel Aged Coffee" with lots of excitement and M36 has
Bourbon barrel-aged coffee at M36
successfully continued that label. "For consumers looking for the aroma of bourbon, this one will give you that!" exclaims Ken.

Ken says growth of on-line sales will be a focus in the future. They are keeping the look-and-feel of the M36 brand inclusive, not only in terms of gender and race, but also with conscientiousness about the age of their most loyal consumer base. The middle-age demographic has demonstrated a love of Espresso Royale's roast profile and Ken, as the master of that roast, wants to reassure them that it is not changing.

A retail coffee house in Illinois that had close ties to the former company is continuing with the M36 brand and plans to open two locations before the end of this year.
Ken, dedicated roaster, now steps to the helm of M36.

For the key university accounts, Lisa and Ken are forced to take a wait-and-see approach as to how many students return to campus and when. Announcements from university officials mostly describe a "mixed approach" to learning, combining in-person and distance learning options for students. "It's a tough problem with no easy answers," Lisa admits. While she would love to know the foot-traffic is returning to the dozens of university buildings where the university sells their coffee, she also knows a return to a full lock-down is something everyone needs to avoid.

They are talking to the Michigan DNR about options to increase sales of their "MI Parks" branded coffees. With names like "S'mores Roast" and "Paddlers Brew" it seems like there could be some natural synergies with M36 brand and its "Michigan centered" name. Purchases of these coffees help to improve recreation in Michigan state parks, trails and Waterways.

What's behind the M36 name?
Front door of the roastery for the new M36
I asked Ken and Lisa how they landed on the M36 name. It seems they were brainstorming together, coming up with many names, which they would then google and find out were already taken. They knew they needed something unique and noticed roasters with place-based names were undeniably one-of-a-kind. That's when Lisa thought of M36. Ken liked it and the new name was born! Now, just weeks later, you can see the sharp, black-and-white logo proudly displayed outside and inside their building in an industrial park off the real M36 highway in Whitmore Lake, Michigan.

What is on the M36 highway? 
M-36 is a state trunkline highway of Michigan's lower peninsula that runs for about 50 miles, west–east between the two small, rural towns of Mason (15 miles south of Lansing) to Whitmore Lake, which is 12 miles north of Ann Arbor. Like many two-lane highways in Michigan, it is known for the off-road scenery of forests and farmland, and the traffic includes a lot of pick-up trucks, semi-trucks and bikers. All things that go great with coffee, especially a re-born coffee brand named M36!

Common sight on the M36 two-lane highway.
As always, taste quality comes first at M36.