An Unlikely Beginning
While Blue Bottle Coffee made waves this past June by securing $70 million in venture capital funding, the origin of the company was decidedly more humble. In 2002, James Freeman, a struggling freelance clarinet player who had always loved coffee, started roasting his own coffee and soon opened up a pour-over coffee stand at the Oakland Farmer’s Market. Wanting to share with others the type of coffee he wished to drink, Freeman dedicated himself to the principles that still guide Blue Bottle today: to “only sell coffee less than 48 hours out of the roaster to my customers, so they may enjoy coffee at its peak of flavor…[and] only use the finest, most delicious and responsibly sourced beans.” Blue Bottle’s total commitment to the quality of its product and the overall customer experience has been the primary driver for the company’s success as it has expanded beyond the San Francisco Bay Area.
Blue Bottle currently operates 20 retail cafes – 18 in the U.S. spread across the SF Bay Area, Los Angeles, and New York City and 2 recently opened Tokyo outposts. In addition, it has two other business lines – Blue Bottle at Home, its direct-to-consumer coffee bean subscription service and a new ready-to-drink offering. Through these three services, Blue Bottle is focused on providing the best possible product quality and experience for its customers. In fact, Blue Bottle made the difficult decisions to discontinue its wholesale business (which represented 20% of its revenues) and halt a proposed merger with the San Francisco bakery Tartine, sacrificing short-term growth in order to fully manage the customer’s end-to-end coffee experience. 
To deliver on its customer promise, Freeman has distilled his original commitment into three key themes Blue Bottle uses to successfully align its operations and business model to create value for its customers: “deliciousness, hospitality, and sustainability.”
Operating Model – Bringing Deliciousness, Hospitality, and Sustainability to the Customer
Supply Chain Operations:
Blue Bottle’s expansion strategy first requires investing in building a roastery near the cafe locations it opens instead of shipping roasted beans over long distances. This allows the company to lightly roast beans to specification while also maintaining utmost freshness of the product. Meanwhile, jointly coordinating the planning and purchasing of new roastery and cafe locations minimizes Blue Bottle’s environmental footprint. 
Moreover, Blue Bottle has developed close relationships with local suppliers and works closely with them to constantly test and improve its products. For the ready-to-drink iced coffee line, Blue Bottle collaborated with its dairy supplier Clover to find the most effective way to pasteurize the raw milk that went into the coffee. Instead of building out its own operations, Blue Bottle worked with Clover to use excess capacity at a nearby brewing plant to combine coffee and raw milk to be pasteurized and delivered to retailers. The strength of Blue Bottle’s partnerships with suppliers has enabled them to effectively scale with minimal capital investments. 
Product Quality and Technology:
Blue Bottle employs a rigorous quality control process to not just maintain the quality of its coffee but to constantly improve upon it. Blue Bottle constantly measures the quality of its coffee through a metric called “cupping.” This metric is used throughout the organization to measure how effective the company has been all the way from sourcing, purchasing and roasting its coffee to how well the coffee is prepared by baristas in the store.
Blue Bottle has also invested in bringing some of the most sophisticated coffee-making technology from abroad into its stores. Freeman has worked with Japanese manufacturers to import Japanese siphon coffee makers, machines that require much skill and precision, to create unique drinks and build a product mix that no other coffee retailer in the U.S. offers, such as Kyoto-style iced coffee.
Human Capital and Company Culture:
Blue Bottle employees receive extensive training and education to not just make excellent coffee but to develop a passion for the product. Baristas typically receive over 30 hours of training even before pulling an espresso shot for a customer. 
Beyond training and education, Blue Bottle strives to keep employees happy and engaged by focusing on people operations, often asking for employee feedback on what benefits and perks they most value, in particular health benefits for themselves and their dependents.  Blue Bottle locations generally adhere to a no wifi, no computer rule to encourage genuine face-to-face interaction between customers and baristas, especially questions about the coffee making process.
Blue Bottle differentiates itself from other coffee chains through the quality of its retail locations and cafes. Instead of embracing a standardized model, Blue Bottle cafes are often chic and modern but reflect the unique characteristics of the neighborhood they inhabit. This creates an atmosphere where one not only enjoys a great cup of coffee, but feels great at the same time. The open, inviting atmosphere of the store completes the end-to-end experience Freeman aspires to achieve with each new Blue Bottle. 
Blue Bottle has successfully grown slowly and steadily by carefully aligning its business and operating models. However, the key challenge for Blue Bottle will be to maintain these standards while also satisfying its new investors’ desires for substantial growth.