Local developer buys anti-Starbucks Saxbys

Joseph Grasso, the Philadelphia real estate and business developer, is jumping into the red-hot gourmet-coffee boom with a milder, homier alternative to Starbucks.

His firm, Walnut Street Capital, completed the purchase last week of Atlanta-based Saxbys Coffee Worldwide L.L.C. for an undisclosed price.

Saxbys headquarters is moving to the Curtis Center, across from Independence Hall. Grasso and partners own the former headquarters of the Curtis magazine empire. He is building a mock-up coffee shop there, where dozens of managers and potential franchise owners will soon be trained each month.

Saxbys' move to Philadelphia gives the city its second gourmet-coffee headquarters. In May, Massimo Taurisano, another veteran of the Philadelphia-area real estate and construction industries, and his wife, Carrie Lapp, bought the Philadelphia Coffee Co.

Their firm distributes Hausbrandt, the high-end Italian coffee they own the right to sell in the United States.

Grasso met Nick Bayer, founder and chief executive officer of Saxbys, when Bayer put a franchise in Grasso's shopping center in Lansdale.

"I was impressed with Nick, a young guy," Grasso said. "He went to Cornell, the premier university for the hospitality industry. He is very well-spoken, very methodical."

Although he didn't drink coffee until a few years ago and is "no coffee expert," Grasso says that the business "has tremendous potential" and that he was impressed that, "with very little resources," Bayer had been able to open 20 stores from coast to coast.

Grasso and Bayer said in interviews last week that their market research has found 21,000 independent gourmet-coffee shops in the United States, and chains like McDonald's and Wawa are selling premium coffee.

Saxbys franchises, they say, are more like small neighborhood shops than Starbucks. They will have comfortable furniture and free WiFi Internet access, Bayer said. A flat-screen television presents news at some hours; at other times, cartoons keep children amused while their mothers chat with friends over coffee.

The stores also sell one-cup-at-a-time coffeemakers for office and home use.

Grasso has deep roots in real estate. His father, Michael, and brother David are also active developers, each with his own enterprise. That experience, Grasso said, will help Saxbys grow even faster.

And it plans to grow - to 150 stores in the Philadelphia area alone, where it now has two, with a third to open later this month. They plan to have 750 stores nationally within seven years.

By contrast, Starbucks has grown since 1971 from a mom-and-pop store in Seattle to nearly 10,000 U.S. locations and shops in 39 countries overseas.

Grasso plans to experiment with co-branding Saxbys with other food stores in ways that he says would preserve the distinctive aromas of each brand.

Saxbys coffee is roasted in Denver, where the first store opened. It also serves gourmet teas from San Francisco and locally made pastries and sandwiches that vary from market to market, according to what's popular there.

The flavor, Bayer said, is between Starbucks' strong European blends and Dunkin' Donuts, which is light.

.