The rise and rise of Starbucks is a great example of the innate economies of scale that exist in the huge
American market. However, such a large market creates opportunities for many other companies and
several Australian coffee companies have used their success outside of the US as a launching pad into
the American coffee scene. Here’s an overview of what Cafe2U and Toby’s Estates are doing in the US.
Example 1: Cafe2U Combines Food Trucks and Franchising in Four US States
The fourth Cafe2U franchise opened for business in the US this week. Cafe2U's combination of premium
coffee, gourmet food trucks, and franchising is a business model that is in the right place at the right time.
Food trucks are the current craze in the US and because it is a rapidly expanding market niche there are
opportunities to grab market share now but those opportunities won’t last long. Cafe2U has demonstrated
its commitment to the US by setting up an office and a CEO for the US market in Oregon which will inspire
confidence in its American franchisees and customers.
Example 2: Toby’s Estate Takes on New York
The well-known Sydney-based coffee company Toby’s Estate selected Brooklyn in New York City as the
location for one of its two overseas stores. Cracking the New York market is tough but Toby’s Estates
seems to be following the successful example of companies like Aesop and Crumpler who mix a subtle
amount of their Australian heritage with the hip feel of independent retailers and cafes that are found in
the major trendsetting cities like Sydney, London, Tokyo or New York. Toby's Estates is offering a
differentiated niche product that taps into the quest for individuality that defines New York, and also the
quest by a growing group of American consumers for the non-Starbucks coffee experience. That level of
interest has led to articles about Toby’s Estate in Inc Magazine and the New York Times.
Lessons for Other Australian Companies
Both Cafe2U and Toby’s Estates focus on providing premium coffee but each company is riding a different
demand wave. Cafe2U is part of the rapidly expanding food truck movement while Toby's Estates is
targeting a small but growing niche of coffee lovers in New York.
The three lessons that other Australian companies can learn from these companies are:
1. Don't be intimidated by the scale of the market. Toby's Estate started with a store in New York City, the
biggest and toughest restaurant market in America, but one that is well established and has a ready-made
2. Learn incrementally so that when you get established you can grow quickly. Cafe2U has sold four
franchises in four different cities which enables the company and its franchisees to test the product and
also build a solid foundation for future growth.
3. Realize that there is not one perfect model for US market entry. Starbucks is widely seen as the king of
the US coffee market but in a country of 300 million there are many profitable niches for coffee companies
that target their products to customers who either cannot or will not go to Starbucks.
If you are interested in learning more about entering the US market then contact me at: