Tully's Coffee
| Company type | Brand |
|---|---|
| Industry | Coffee |
| Founded | September 1, 1992 in Kent, Washington, United States |
| Founder | Tom "Tully" O'Keefe |
| Defunct | September 2018 (U.S. retail operations) |
| Fate | U.S. retail operations closed; brand and wholesale acquired by Keurig Dr Pepper |
| Successor | Keurig Dr Pepper (brand and wholesale operations) |
| Headquarters | Seattle, Washington , United States |
Area served | United States, Japan, South Korea, Singapore, Metro Manila, Beijing, Stockholm |
Key people | Tom "Tully" O'Keefe (founder and former chairman) |
| Products | Specialty coffee beverages, espresso, pastries, K-Cup pods, packaged ground coffee |
| Owner | Keurig Dr Pepper |
| Parent | Keurig Dr Pepper (since 2009) |
Tully's Coffee is a specialty coffee brand from the United States, currently owned by Keurig Dr Pepper, which acquired both the brand and its wholesale operations in 2009. Keurig continues to offer Tully's coffee products in K-Cup pods and packaged ground coffee formats.
Established in 1992 by Tom "Tully" O'Keefe in Seattle, Washington, the company initially operated retail outlets providing specialty coffee beverages, espresso, pastries, and related items. The original U.S.-based chain ceased operations permanently in September 2018. On an international scale, Tully's maintains licensing agreements in Japan, where Ito En, Inc. operates more than 760 Tully's coffee shops as of April 2022.
At one point, Tully's adopted an assertive growth approach by situating new stores near those of its larger Seattle-based rival, Starbucks.
Founding
The inaugural Tully's Coffee location launched in Kent, Washington, in September 1992. Tom "Tully" O'Keefe founded the company with the intention to challenge the rapidly expanding Starbucks brand. Over time, it developed into a prominent regional specialty coffee retailer focused primarily on the Puget Sound region, an area known for strong coffee consumer loyalty. By 2006, Tully's achieved its first net profit and shifted its strategy from direct competition with Starbucks toward highlighting artisanal coffee offerings within local outlets. Its operational model incorporated franchise partnerships as well as collaborations with grocery chains across the United States and Asia.
Tully's retail presence was concentrated mainly in Washington state, California, Idaho, Arizona, and Colorado. The brand also held licensed operations in South Korea and Japan and extended its footprint to Singapore, Metro Manila, Beijing, and Stockholm.
The brand’s first Japanese store debuted in Ginza, Tokyo, in 1997 following entrepreneur Kota Matsuda’s successful efforts to persuade O'Keefe to enter the Japanese market. Matsuda assumed the role of CEO for Tully's Coffee Japan, a joint venture backed by external investors. Unlike Starbucks’ direct ownership model in Japan, Tully’s pursued expansion through franchising agreements. In 2005, Tully’s transferred intellectual property rights to this Japanese joint venture for over $13 million; subsequently, tea producer Ito En acquired the venture in 2006.
In August 2007, due to unstable market conditions and declining share prices, Tully’s postponed plans for an initial public offering (IPO). Following a $9.7 million loss reported for fiscal year 2006, the company explored alternative funding options including strategic investments or potential sale opportunities.
Divestiture of wholesale distribution business, brand rights, and roasting facilities
In 2009, Tully’s divested its North American wholesale coffee-bean distribution business along with its brand—licensed back indefinitely at $1 per year—and roasting operations to Green Mountain Coffee Roasters for $40.3 million. This deal allowed Tully’s to eliminate outstanding debt obligations, distribute cash dividends to shareholders, and retain reserves aimed at retail expansion efforts. The company preserved all North American retail rights as well as wholesale and retail rights outside North America except for Japan.
In 2010, Tully’s Coffee International entered into a Master Licensing Agreement with DK Retail Co., Ltd., targeting development of up to 100 retail locations throughout South Korea.
Founder and Chairman Tom T. O’Keefe retired from his leadership position in 2010.
Closure of US coffee shops
Confronted with limited cash flow and difficulties renegotiating leases, Tully's board initiated Chapter 11 bankruptcy proceedings in October 2012 after deciding to shut down or plan the closure of 17 underperforming outlets. In January 2013, Global Baristas, an investment group led by actor Patrick Dempsey, secured the bankruptcy auction with a $9.15 million bid. Although Starbucks and other parties raised objections, the U.S. Bankruptcy Court approved the sale. The transaction was completed on June 30, preserving jobs and providing employee bonuses. Subsequently, Dempsey withdrew from the partnership amid legal conflicts involving his former associate Michael Avenatti.
In September 2017, Tully's ended its collaboration with Boeing by closing 12 coffee shops located within Boeing facilities across the Puget Sound area—a partnership that had begun in 2006.
On March 8, 2018, Tully's temporarily ceased operations at its remaining locations due to shortages in coffee supply. Numerous stores remained closed afterward, with landlords issuing eviction notices over unpaid rent. Additionally, in April 2018, Daytona International Speedway filed a lawsuit against Tully's citing contractual disputes.
By September 2018, Tully's US coffeehouse business came to a close when Keurig and Global Baristas agreed to a permanent injunction barring Global Baristas from running any food or beverage establishments under the Tully's brand name. However, Keurig continues to market coffee products under the Tully's label.
An involuntary Chapter 7 bankruptcy petition was brought against Global Baristas in October 2018.
Despite shutting down its US outlets, Tully's continues international operations through franchising, with around 760 stores operating in Japan as of April 2022.