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    CHS Sells Mountain Mudd to Café International

    New owner reveals plans to dramatically expand the business both domestically and abroad.

    By Brian Berk, Convenience Store News

    INVER GROVE HEIGHTS, Minn. -- CHS Inc., operator of the Cenex convenience store chain, sold Mountain Mudd to Café International LLC. Terms of the deal were not disclosed.

    "We got [Mountain Mudd] in 2006, in a joint venture with the two individuals who originally formed the company, and we became sole owners in 2008," CHS spokeswoman Lani Jordan told TwinCities.com. "As time passed, we decided that Mountain Mudd and coffee kiosks were no longer part of the strategic direction of our energy business."

    Boise, Idaho-based Café International is a holdings company that was formulated specifically to own and operate the Mountain Mudd coffee drive-thru chain. The sole owner of the business is Betty Hawkins, who immediately named coffee industry veteran John Adams CEO of the newly formed company. Hawkins was named chief financial officer.

    Adams, who also is the co-owner of coffee roaster White Cloud Coffee, granted Convenience Store News Online a lengthy interview and said purchasing the 32 Mountain Mudd kiosks was a no-brainer because he saw a brand that was intriguing. "To start, I thought the name of the brand was utter brilliance," he said. "I also loved the idea of mass producing a beverage kiosk that could appear in parking lots throughout the U.S. and internationally."

    Adams is familiar with cafes because he formerly served a company that formulated 70 of them. However, those sites are all brick-and-mortar locations. Adams was especially intrigued by the 8-foot by 8-foot Mountain Mudd kiosks, mostly located in the Northwestern U.S., because they are mobile. If the location selected for a kiosk -- perhaps a convenience store or supermarket parking lot -- fails to generate enough business, the kiosk can be moved to another location via a forklift and semi truck to a different location.

    Mountain Mudd locations are all operated by individual franchisees. Each kiosk owner is required to have an interconnected computer reporting system. Gross earnings are reported to Café International each week and the franchisee pays a royalty, based on gross sales, each week.

    Franchisees also purchase coffees, flavorings and all other products from Café International. "So we're also a distributor," said Adams.

    "This model ensures that we maintain top quality control and maintain a close relationship with our franchisees."

    Although Mountain Mudd offers teas and other beverages, coffee is the heart of the business. All locations operate under a "90-second rule." Once customers enter the drive-thru kiosks and place their orders with a barista, the beverages are made, finished and handed to the customer within 90 seconds. "When customers pull up in their cars, they know they will get quality coffee that is consistently good quickly," Adams said.

    Café International plans to expand the business dramatically. According to Adams, the company currently has commitments for 177 additional kiosks. He expects all of the new Mountain Mudd locations will be fully operational within three years. "My goal is to have 300 kiosks operating within three to five years," Adams said. "Most of that expansion is in the eastern U.S. But we will also expand internationally as quickly as we can."

    Adams added that expansion will only take place within the limitations of Café International's capability to deliver successful kiosks in every location. "I'm very comfortable with our expansion plans," he said. "But I'm aware that any promise made always has to be kept. We have to be careful we don't overextend ourselves. I don't think we will."

    To ensure expansion runs smoothly, potential franchisees are thoroughly screened. For example, they need to have sufficient net worth to make sure they can be successful.

    By Brian Berk, Convenience Store News
    • About Brian Berk Brian Berk is managing editor of Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner, where he specializes in covering motor fuels, technology and financial news. He has served the magazine industry for 14 years and has also worked in the radio and newspaper fields. Berk holds a bachelor's degree in communications from the State University of New York at Cortland and a master's degree in journalism from Quinnipiac University in Hamden, Conn.

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