Another CEO Change Spells More Trouble for Tully's

In a city where independent coffee shops are elbow-to-elbow and Starbucks still reigns supreme (at least in size and financial backing, if not quality and general goodwill), it's tough to establish large-scale brand loyalty. Especially when you're perceived as a runner-up, or worse, a property of your biggest competitor, as Tully's often is.

The Seattle PI reported today that Seattle-based Tully's may soon reach the end of a long string of bad luck and poor performance. The company announced today that its current CEO, Carl Pennington, will be stepping down at the end of this month--adding his name to the ranks of others who have held the position, which has changed hands almost annually since 2001.

Tully's, founded in 1992 by Tom "Tully" O'Keefe, hasn't had it easy in the city's skeptical and saturated coffee market.

Often mistaken for a sub-brand of Starbucks, Tully's has been one step behind the java giant for years, rolling out similarly-named products (Bellaccino, anyone?) and seasonal promotions. Unfortunately, without strong, streamlined branding (multiple logos, mismatched signage), Tully's seems unable to establish the necessary chops to keep up--especially in light of the recent makeover of the Seattle's Best brand, which is owned by Starbucks.

In 2009, TC Global (Tully's parent company) sold its wholesale business and roasting plant to Virginia-based Green Mountain Coffee, who, just recently, partnered with Starbucks, jeopardizing one of Tully's differentiators--their retail partnership with Keurig, the wasteful and slightly-icky single-cup machine.

While the sale to Green Mountain has helped Tully's shore up some debt, it hasn't stopped it from hemorrhaging money. In the 2010 fiscal year, the PI reports, the company lost nearly $8.5 million.

Scott Peason will take the title of CEO on April 1, but the position could be short-lived; according to a securities filing, the company could be out of cash by June.