Retail Traffic

Enjoying the Finer Pleasures

Java and chocolate lovers can indulge their cravings at Kelly's Coffee & Fudge Factory, where "catering to all people at all times" is the motto, says company president Shlomi Michaels.

The Beverly Hills, Calif.-based restaurant combines two American favorites - coffee and candy - into one winning concept that even appeals to families with children. "Whether you are 5 years old or 70 years old, you can go into a Kelly's and walk out with something you really enjoy," Michaels says.

The family theme is what sets Kelly's apart from other gourmet coffee bars. After purchasing the company two years ago and analyzing the industry, Michaels made the family his niche market.

"I knew that competing head to head with other gourmet coffee chains would be a formula for failure," he says, adding that in comparing other coffee chains, he found very little difference in the flavor of the coffee. As a result, families and children became Kelly's target clientele.

In most Kelly's locations, a large marble fudge table is visible to customers and 20 varieties of fudge are prepared daily. The fudge-making display, along with the sweet aroma of freshly made confections, creates a show-like atmosphere, says Kim Pollard, director of marketing and sales.

The smell of success is also evident in the company's rapid expansion. Two years ago, there were 15 stores; today, that number has more than doubled. Kelly's consists of a single company-owned store in Brentwood, Calif., and 35 independent franchises in Southern California and Arizona. Another 16 locations are currently under construction and are slated to open by year's end.

Michaels predicts that another 15 to 20 franchises will be sold by the end of 1999. In addition, site commitments have been made on 24 locations, which are expected to be operating by the end of next year.

The independently owned Kelly's outlets appeal to entrepreneurs because they offer little down time. The restaurant is open for breakfast, lunch and dinner.

"I created a menu for my franchisees that keep them busy from 6 a.m. until midnight," Michaels says. "At lunchtime we bake our own bread and make sandwiches. My read on the market is that the days of the single-dimension retailer is over."

Although Kelly's specializes in hot, cold and frozen coffee cocktails, it also offers non-coffee specialty items such as chai, a caffeine-free drink served hot or cold. Customers with appetites that go beyond coffee and fudge can select from a variety of goods, baked daily on the premises, including muffins, bagels, croissants, and an array of sweets such as caramel apples and homemade candies.

"Everything is fresh out of the oven," Michaels says. "We also cook our own caramel."

Kelly's restaurants, like its sweet desserts, come in different shapes and designs. There are three sizes: the full Kelly's, Kelly's express, and Kelly's kiosks. The full Kelly's averages 1,100 sq. ft., while Kelly's express is roughly 700 sq. ft. and the kiosks occupy about 500 sq. ft. Depending on the location, store designs vary from traditional to contemporary with a predominant - and apt - Kelly green color scheme and wood accents. "We adapt the architecture and interior design to the area," Michaels says.

Although Kelly's locations are primarily in power centers, Michaels is looking at sites in neighborhood shopping centers.

Michaels wants to create places where families can congregate and enjoy quality time together. "And that's what I'm trying to do throughout the country," he says.

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