INSIDE THE COFFEE EMPIRE THAT DEAN MERLO DIDN'T EXPECT TO CREATE
Written on the 28 November 2017 by Paris Faint
It was only 25 years ago that Dean Merlo's biggest goal in life was to own a small coffee roasting joint in the suburbs of Brisbane, with maybe one or two cafés on the side.
It's now safe to say that Dean got more than he bargained for, as national giant Merlo Coffee celebrates its quarter century in business.
In the early days, Merlo would sell around 200 cups of coffee per day. Now the company he runs alongside James Wilkinson roasts up to 18 tonnes of beans per week which are brewed at more than 2,000 coffee shops around the country.
Merlo Coffee also runs 16 of its own branded outlets, as well as ten Terrafaziones (roasting houses) and six espresso bars.
Business News Australia caught up with Dean to talk about his journey creating one of Australia's most recognisable coffee brands.
So, 25 years in business. How does it feel?
It seems like just yesterday. I know it's a bit of a cliché, but I was in the shop yesterday for our 25th birthday celebrations and it was incredible to see so many of our customers from who have been with us since day one. It's amazing how young we all looked... just kidding!
But in seriousness it was just fun to catch up with them and chat while I was standing there, behind in the bar, in the same position I started 25 years ago.
When you first launched the company, did you expect it would get as far as it has?
Absolutely not. When we started that little café at the end of Queen Street, in my wildest dreams I thought we'd just have a little roaster somewhere in the suburbs and maybe two other stores. That was my great ambition.
It took me about three years of working every day from 5:00am until 7:00pm at night, writing all the systems and the checklists for another store in mind, until we opened at George Street. I still wonder how I had the energy to go out on a Friday night after all that, but I managed.
At the same time, we bought a little building in the Valley when that pocket of Brisbane was just dead, and we put a little roaster in there.
I look back at that time and failure didn't occur to me, I just knew it was going to work. And it did. The business turned, and we started to get more customers coming in, George Street started to make money, and then we opened another store and another - and it just started to grow.
I look back at that time and failure didn't occur to me, I just knew it was going to work. And it did.
When was the point when you first realised you were on to a real winner with Merlo?
The first day. I've tried other businesses in my life; I was involved with Driza-Bone coats in London, I had a mobile billboard business in Los Angeles. I tried l all of these different crazy schemes, but at the end of the day I liked the coffee business.
When I was in Los Angeles I had seen these coffee businesses at the bottom of city buildings which had never been done in Brisbane, and I thought you know what - that is the location, and this is the time. So, I opened up Bar Merlo in Queen Street and honestly from day one of opening the doors it was packed. From minute one, day one, it has been a wonderful story.
Following day one, what have been some of your other proudest milestones?
I think the day we opened the roaster was great, it was fantastic to be producing our own coffee. Also, the day we opened our second store. It was a challenge, because it's hard to be in two places at once and you need good systems. From then on, we just seemed to grow each year. When we moved into our current Bowen Hills roasting headquarters about 10 years ago, I thought to myself 'this is just ridiculously big, we'll never fill it.'
Now a few years later, it has become too small for us. We are moving to Eagle Farm sometime next year. But of course, turning 25, that's been a real milestone for all of us. It's been a great team effort.
Last time we spoke was in 2016 and you had just launched a roasting house in Melbourne, how has that helped drive growth?
It's been great. In fact, that was another milestone because it was the first time we had gone outside of a 100km radius. We had stores on the Sunshine Coast and on the Gold Coast, but for us to go to Melbourne was something special.
We needed a great shop to do that, and we did put a wonderful little roaster there in the Queen Victoria Market - it's a shop I love, and it's going very well.
In Melbourne, and of course in Australia in general, coffee has always been such a growing market. So, what have been your biggest strategies for staying ahead of the competition?
It's all about service. Honestly, quality is important - we've taken a lot of steps to make sure our coffee is top quality, we have a colour sorter which photographs every single bean.
Can you imagine? Every bean we roast gets photographed and the machine rejects the ones that aren't the right colour, density or size. We want everyone who works for us to understand it's about quality, but once you have that quality bean you need to provide good service to back it up.
Being in business for 25 years certainly isn't a walk in the park, what have been some of the biggest challenges for you to overcome?
Deviating away from our core was tough. I went into the catering business at one stage and it was very, very hard. I didn't realise how hard the catering business was. You have to be fully committed to it, and I wasn't, I was committed to the coffee business.
It was tough to find the right economy for scale and efficiencies, so I got out of catering.
So in the end it was all about coming back to your strengths, and pushing them?
Correct. I think it's important to stick with your core product and quality service and that's what we've really focused on.
What do you think the next 25 years will look like for Merlo?
You know what, I just love the business so much. I'm proud of it and I enjoy work every day. We have made a commitment that we're not going to sell, or at least not look at any offers, in the next five years.
We are looking to the United States, we've got some exciting things happening on the horizon in New York City and we are looking very strongly in that. We certainly want to be in Sydney and we have already made moves that way. We really just want to grow, it's exciting.
Looking at New York City, hypothetically, would that be your first international foray?
Pretty much. I look at the market and I see so many good things for us over there. I love it, New York City is amazing.
Reflecting on 25 years, is there anything else you want to add about the journey?
I just want to mention my business partner James Wilkinson, he has been with me for 18 years and he is the CEO of the company. We make a good team and it has been a fun business to share with him. We each have our strengths and we work towards them.
Business News Australia
Author: Paris Faint