Arion Paylo spent nearly a decade working on product design at Apple, before recently trying his hand at coffee. Paylo is now head of retail development at Blue Bottle, the Oakland, Calif-based coffee roaster that has more than 30 locations from New York City to Tokyo. Since its inception in 2002, Blue Bottle has fast-become the go-to watering hole for Silicon Valley's elite.

On a recent summer Thursday, Paylo helped lead a tour through the company's newest location in Bushwick, Brooklyn. This is where, in addition to selling drips and lattes as a cafe, Blue Bottle actually produces the coffee it supplies to each of its nine East Coast stores. (That only encompasses New York City at present, though the company will soon launch in Miami, Boston, and Washington, D.C.)

Blue Bottle's CEO, Bryan Meehan, explains that setting up a commissary was necessary for maintaining the quality of the product as the company expands. Here, it processes as much as 2,000 pounds of coffee per week, though it has the capacity to do even more. The company spent a total of $6 million to build out the plant.

"We don't want our signature espresso to taste differently here [in Brooklyn] than it does in San Francisco," Meehan told Inc. over freshly baked scones and pour-overs in the cupping room. "Obviously the water and milk changes by region, but the coffee more or less tastes the same. That's because of how we produce it, and how we train the baristas," he adds. (Pro tip: When pouring over grounds, be sure to start in the middle and spiral outwards. That way, you spread water over the folds of the filter, so no grounds are left behind.)

The roasting process

Perhaps most integral to the success of the company--and what has helped it to attract more than $100 million from investors such as Chris Sacca and Ev Williams--has been the method by which the coffee is roasted. In Brooklyn, new beans sourced from countries such as Colombia and Brazil are received daily and stored in sacks. The beans are then processed in a special machine, which comes equipped with a 10.4-inch touch-screen. This lets roasters control the precise bean temperature, or change heat levels inside the machine's roasting chamber. It takes around 15 minutes to produce one batch.

Next, the roasted beans are sent to a separate room for packaging. A machine vacuums and weighs the beans, which are then portioned into individual bags. On a slow day, says one staffer, she'll package around 500 pounds of coffee.

An industry heats up

To be sure, Blue Bottle is not the only specialty coffee roaster gaining traction in the U.S.; it's competing for market share with companies such as La Colombe, based in Philadelphia, as well as Intelligentsia and Stumptown, both of which were acquired by Peet's Coffee in 2015. Since 2010, more than $300 million has been invested into coffee companies, according to CB Insights data. Consumers are increasingly interested in high-quality and ethically sourced products--even if it means paying more. (Consider that an individual cup of coffee from Blue Bottle can cost as much as $16.)

Still, the sheer cost of production can be a barrier to growth, as startups go to great and expensive lengths to preserve and enhance taste. A single roasting machine can cost as much as $200,000--depending on the desired make and model.

inlineimage

Taken in broader context, then, bringing in Paylo, Blue Bottle's retail chief, seems smart. "We see ourselves as the Apple of coffee," Meehan said, explaining that everything from processing to store design is meant to appear basic on the outside--though it requires a significant amount of time, money and effort. In the Bushwick cafe, for instance, Paylo decided to decorate using sound-absorbent materials such as felt and perforated wood. This makes for a quieter atmosphere that's more conducive to conversation, he explains.

Yet to what extent the company can generate sustainable profits over time--given these costly methods--does remain to be seen. While Meehan refused to disclose revenue, he notes that the company is on track to grow by 75 percent in 2017.

Published on: Jun 6, 2017