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tullys.jpg

Tully's Coffee founder says it's a 'sad day'

BY Linda Thomas  on October 10, 2012 @ 5:56 pm (Updated: 1:05 pm - 10/11/12 )

After struggling with cash flow and dealing with changes in leadership over the years, Seattle-based Tully's Coffee has filed for Chapter 11 bankruptcy protection.

The bankruptcy papers were filed in federal court in Seattle Wednesday. There will be a court hearing Friday. The bankruptcy filing listed $5.9 million in personal property as the company's only assets and $3.7 million in total liabilities, including $2.6 million in unsecured credit.

Tom "Tully" O'Keefe started the coffee chain in 1992, proclaiming its coffee didn't have the dark, bitter taste of a Starbucks cup of coffee. Since then the coffee chain had cash-flow issues and management changes that prevented the company from distinguishing itself.

O'Keefe's response, in an emailed statement:

"It is a sad day in the history of Tully's; for its shareholders, employees and customers. Suffice it to say that the most important aspect of managing a business, or serving on its board of directors, is to protect the owners of the business, its shareholders, and make decisions in their best interest. Once I have had a chance to review the filing with my advisors I will be in a better position to comment."

In an April 2011 one-on-one interview with O'Keefe, he didn't add any sugar to the company's history.

O'Keefe says Tully's burned through cash as it tried to expand, and he admits they made some bad hiring decisions after he stepped down as CEO.

"We've had a few leaders in the past that, God I'd love to meet their kids because I can't imagine these people were ever compassionate towards their kids needs because they just beat the hell out of our employees," he says.

In 2010, O'Keefe took himself out of his own company, although he remains the largest shareholder.

"In one way, leaving was one of the most difficult decisions I've ever made, in another way it was the easiest thing because I was going to kill someone," he half jokes. "The problem was I was concerned it was going to be me."

When I talked with O'Keefe a year ago he was optimistic about Scott Pearson as a new leader.

O'Keefe describes Pearson as someone who is "refreshing" with "great ethics" who cares about employees and shareholders. Pearson has a background with Coca Cola and IBM, and most recently was executive vice president at Advanced H2O, a local bottled water company. Pearson started his new job April 1, 2011 with a lot of work to do.

Now Tully's, which has been closing stores around the country, will close stores in Wallingford, Madison Park, Columbia Tower, Fourth Avenue and Union Street in Seattle Sunday. They'll also close the doors on stores in Redmond and Kirkland.

Podcast: Tom Tully O'Keefe discussing why he stepped down from the company he started, and what he's been doing since.

By LINDA THOMAS, I don't drink coffee but I liked the Tully's in Ballard that closed a while ago.

Linda Thomas, KIRO Radio Morning News Anchor
Linda is the morning news anchor and features reporter for KIRO Radio and one of the most followed local journalists on social media.
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Comments (19)


  • Add A Comment

  • maplefish wrote...
    One More Reason
    October 10, 2012 5:17 pm
    To HATE Starbucks!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • DavidB wrote...
    This makes me sick!
    October 10, 2012 7:06 pm
    I like Tully's coffee, and it was always a good alternative to Starbucks. Definitely a sad day. It takes away another choice we have as consumers, so Starbucks can continue to tell us what we want, take it or leave it. I am not a Starbucks hater; I like Starbucks coffee. But we all lose when a good company like Tully's evaporates in the face of uncompromising worldwide domination.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • jcc_engr1 wrote...
    Nothing sad about it...
    October 10, 2012 7:26 pm
    Free market at work. Poorly run companies die and go away as they should. Good riddance. Sadly too many small business owners drink the corporate kool aid and hire the next red hot mucky muck from coca cola who is really only interested in a hot secretary and a nice corner office with a view instead of the kid off the street with the fire and the drive and watch their company go down the tubes.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • El Duderino wrote...
    jcc_engr1 nailed it
    October 10, 2012 9:01 pm
    There are a lot of smaller companies that "make it" against huge competitors. Take Dicks for instance, or McLendons. Tully's decided to go for those Level 4 leaders with the fancy suits and corporate buzzwords and paid the price.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Saltchucker wrote...
    If my local Tully's closes.......
    October 10, 2012 7:45 pm
    .....I guess I'll switch to the nearest "bikini barrista" stand. I'd rather pay for coffee than breasts, but Starbucks doesn't provide a quality job on either commodity!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Rangerhawk wrote...
    It's carma for taking down the "R"!
    October 10, 2012 8:51 pm
    It would be cool to see any local brewery take over that spot and return it to its brew-collar glory again.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • uralnutjobs wrote...
    emerald city beer company is already there
    October 11, 2012 3:29 pm
    obviously you havent by the old building in a long time. http://emeraldcitybeer.com/
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • GetReal4me wrote...
    This is how the free enterprise works -- Hey Obama are you listening
    October 11, 2012 12:11 am
    Sorry to get political here, but this is exactly how capitalism known as our free enterprise system that we should appreciate here in America, is supposed to work. Some businesses make it and some businesses fail. The consumer gets to choose which ones succeed and which ones fail - no business is too big to fail. You see, that is how we evolve and change -- when some businesses become no longer needed because of changing technology or changing fads or desires or needs -- the consumer reflects that in where they shop. This is how we change and evolve with the times. It is counterproductive for the Government to get involved because America is a free enterprise and even if the Goverment gets involved and starts giving money to these business that they decide should succeed, the business can still fail because it's the people who decide what they want and need -- not the Government. President Obama, this is Economics 101. Please take notes. On another note, I would like to thank Tullys for good coffee and for having the courage to try to stand against some pretty tough competition. I wish Mr. O'Keefe all the best in any future endeavors.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Pat_riot wrote...
    Bummer..
    October 11, 2012 6:44 am
    Now the only big coffee company is Starbucks, and their coffee doesn't taste very good so.... lame. Although, I prefer many smaller outfits to either so I guess I'm still covered!
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • hnuh wrote...
    10-11-2012 Tully's Coffee founder says...
    October 11, 2012 8:13 am
    First, chapter 11 is reorganization not liquidation. Second, fad products have a short half life and $4.00 coffee is surely a fad. Third, the affordable luxury for the middle and lower income person often gets cut out in poor economic times. Fourth, the energy of the founder, his drive and desire, are very difficult to hire because they are innate. That energy and drive, the inspiration to do something are what makes the economy work, and allows the uninspired majority to find work. That is a good reason to quit demonizing business, profit, success, and the American way.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • smpaul wrote...
    You didn't see this coming?
    October 11, 2012 8:26 am
    I’m a fan of Tully’s, but if they saw fit to hire dbag managers, then too bad, they have no one to blame but themselves! I’m so tired of hearing of great managers being brought into companies, to save them with their super power business skills, only to be discovered to be total incompetent A-holes! Are these people ever vetted?
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • qgcandrey wrote...
    Free market
    October 11, 2012 8:42 am
    Tully's coffe was not so good at all. You can hate Starbuks, but quality of servise says for itself. People chose better quality and servise. Someone should loose, someone who has worst.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • Lillyrose125 wrote...
    Lose not Loose
    October 11, 2012 3:25 pm
    Learn how to spell.
    { "Thumbs Up":"1","Thumbs Down":"-1" }
  • { "Thumbs Up":"1","Thumbs Down":"-1" }