Real Success with Nate Kaeding: Tara Cronbaugh, founder of Java House Coffee Roasters

Tara Cronbaugh
Tara Cronbaugh

Tara Cronbaugh is the founder of Java House Coffee Roasters, a local coffee staple in the Iowa City community for nearly 30 years.

Tara shares how she researched over 50 coffee houses in California before launching Java House in Iowa City, how partnerships were the cornerstone of her company’s success, and how big chain coffee shops have actually helped her business grow. Additionally, Tara explores the importance for people to have a third space to retreat to, her mentality around money as an obstacle to growth, and what real success means to her.

Sponsored by MidWestOne Bank, this is the latest edition of the CBJ’s new podcast feature with Nate Kaeding and notable Iowa business and cultural leaders, available first to CBJ members. Listen to this episode below, and subscribe on SpotifyiTunesGoogle PlayStitcher.


NATE KAEDING: Your business has included a lot of high-profile partnerships. How does that all work?

TARA CRONBAUGH: Yeah, a lot of relationships like the University of Iowa, which really helped us establish our roots here in Iowa City, or the hospitals… The airport was a wonderful opportunity. I think that’s probably the part we love the best about being in businesses — all of the different experiences that we are confronted with, right? You’re suddenly like, “Oh, a global company? OK, what? I’m just an Iowa City girl.” The thing that we appreciate the most is a new challenge, because after we do this every day, we want something new, something to research, and to fall on our face just a tad and pick ourselves back up.

How did you get started working with coffee as a business?

In 1993, it started with no internet and virtually no computers. My brother went to Berkeley and Dad lived in Santa Cruz, and that’s really where it started. I had a dream of drinking hot chocolate in a wool sweater with Birkenstocks in a warehouse. That was my vision. I didn’t drink coffee. Dad drank the coffee. 

I was 20 years old. I lived in a sorority house here at the University of Iowa. I looked in the course guide (back then, it was in paper format), looked for the word entrepreneurship, and I showed up to the class. It just so happened to be the first entrepreneurship class at Iowa. There were 12 of us in the class. I still maintain contact with one or two of the individuals in that class today.

Coffee shops are much more common now, but take us to Iowa City in 1992. There were almost no coffee shops here in a college town.

You’re right. There were a lot of people who had coffee but didn’t have it as the experience. So I was trying to capture the experience, trying to capture that second home, trying to capture an exceptional cup of coffee. So that was my selling feature when I went to the bank.

You took a trip to visit your brother in California and used the trip as an opportunity to research other coffee shops, correct?

For sure. Again, there was no internet. I had a Mac classic to type out my business plan. I went to California with my dad and legitimately visited all of the coffee houses from Santa Monica up to San Francisco with a camera. I would get chased out of these coffee houses by taking photos. They’re like, “Who is this random little girl?” I think the real business term might be that I did sort of the “gap analysis” of what was the best of the best in every one of these little places I looked at. 

It was the little things, the little touches, the details. I didn’t drink coffee. My dad did the coffee drinking, and he’s like, “You have to have this, you have to have that.” I took all the photos and just kind of went through, said, “I like this, I like this. That’s awesome. I like this.” I formed the concept and the vision. That’s how it came to life.

What did it cost to start the Java House in 1994? 

$40,000. I had a $15,000 grant. I used the university for all of the resources that I possibly could. The small business development center (SBDC) really gave me my boost. They gave me the opportunity to take my business plan and share it to get a grant that was part of my down payment. I had a 1986 5.0 Mustang and I had some college debt, but I walked in at 21 and said, “Would you give me a loan?” I had an amazing family member who helped me co-sign the loan. That’s where it started.

What was going through your head that morning when you opened for the first time?

All I remember is that we were putting a sign up and my dad taking a knife and literally slicing a six-foot gash into the floor. But I will tell you — we were bringing real strong coffee to Iowa City. I remember my first thought was, “Will they drink all the coffee?” I remember looking in the bus tub and going, “Is there any waste?” Because we were really kind of bringing the dark California roast. If there was any one memory that I do remember the most, it’s “Did they drink it? Are they going to be receptive to dark, real coffee?”

What was the process like to source your beans and figure out that side of your coffee operations?

Let me take you back. The bank legitimately thought I was opening up a coffee house and a truck stop. That’s all they knew, right? They’re just a small town farmer bank. They mostly do agriculture. That was a question: “How are you going to charge $3 for a cup of coffee?” Nowadays, it’s six or seven, but back then it was three. I had to convince them what a café latte was. They’re just kind of used to that diner coffee and, of course, back then it was free refills. So it was a whole new concept. 

Yeah, there’s been multiple waves in the coffee industry and, like any company, we’ve gone through multiple stages of growth to where now we roast all of our own coffee. We do source all of our own coffee. We buy our coffee six to eight months in advance on contract. I mean, we have to source everything. It’s a very, very long process to learn the back end of the business. I didn’t know that I would ever do that.

When did you start to realize that you had a success on your hands?

We were super lucky. A really good mentor helped me find my way. We opened at Prairie Lights in April of 1994 and we opened what most of y’all are familiar with as the downtown location in October of 1994. When you’re 21, you have a lot of energy just sitting there ready to go. I don’t know if I could do that now. So I was super lucky to have the bank’s support and have good networking. The university was there to help me if I needed any questions answered.

How did the idea of the Third Space, or a place that isn’t your home or your office, play into how you executed on your vision?

It certainly has changed a little bit, but I think ultimately we are selling the product and the experience. You know, in any company, you’re going to sell your service, you’re going to sell your product, and you’re going to sell your price. You have to do one of them really, really well to be successful. At the time, I knew I wasn’t going to be the lowest price. So we knew that we were providing that experience with the quality product.

What were some of the challenges you ran into?

Whenever you start a company on a shoestring, that’s always difficult. There are three rules of business. Never run out of cash. Never run out of cash. Never run out of cash. That was certainly a challenge because I didn’t have the financial backing of a normal business or a partner. To this day, I still don’t have a partner. 

I think my eye-opening experience for me was when I went to Europe when I was 25. You get wrapped up in the day to day, and any business owner can do that. But I went to Europe and I definitely realized I don’t want to do this every day. I had to figure out how to develop and create processes. It was time to dial it in and figure out how to walk away. 

So you learn really quickly that you have to create handbooks and create operational procedures so that when you walk away, the process runs. Then, at that point, as we’ve learned, your third location is generally the location that will make or break you. You have to figure out the processes quickly, and that’s probably what we do well.

How have coffee drinkers changed over the last 20 years?

Obviously, we started without any of the big chains. Big chains did a really good thing for our industry, which was that they taught people how to drink coffee. They helped them decipher the difference between convenience, store coffee, and good coffee. So that was a really helpful thing. We have to give them a lot of credit for that. However, moving forward then, we start competing with drive-thrus and you start competing with time. Convenience. 

We had to really sit back and go, “Is that what we want to be?” And it goes back to exactly what we just revisited, which was that we wanted to provide that experience. We can’t do it all. We’ll never be the best drive-through. We’ll never have the best pre-order app. However, we need to make sure that what we do well is our product, our experience, and staying focused on what being local can offer us. 

I think, especially during COVID-19, we looked at all these people that were really, really interested in that convenience and that drive-thru. Now we’re looking at a lot of people that are coming back to “Wait a second, I don’t want to be stuck at home. I need to go back in.” Whether it’s your place of business or my place of business, they need that separate place from home to feel comfortable or have a meeting.

What have you learned about growth and how do you analyze growth opportunities?

They say we’re supposed to create a business plan, run numbers, do cash flows, and all of that kind of stuff. Right? But I have to say that sometimes it really is your gut instinct. It just sort of happens where you’re presented with an opportunity and you sit there and you go, “you’re crazy.” Then you go home at night and you’re like, “wait, maybe …” I think one thing, when it comes to growth, is that I try not to ever think that money could be an obstacle. I try to look at more of the passion and the wants and the desires and is it something that the brand and the concept can sustain? Then, if I really can prove it to myself, then we’ll go to step two. 

Don’t let money be the obstacle to drive that passion. You’ll figure it out if you want it bad enough, and that was important to me. I think that’s how we’ve always managed the growth. For us, our big thing was in 2016. We added a 12,000-square-foot roaster in North Liberty. That was a huge jump and a lot of work, and a lot of consultants coming in from the West Coast. I didn’t know what I was diving into.

This is going to seem really awkward, but I think it might have been that I got a little bored. When you do something for a really long time, you love it, but you also need something to stimulate us crazy people in the entrepreneur world. Certainly there was a price factor. I always say we’re a little big company in Iowa City. We operate very local but, behind the scenes, we’re kind of big. People don’t really get that. They just think it kind of magically appears.

I have two children who are 22 and 25, and when they went to West High, they would be asked, “What does your mom do?” And they would say, “she owns the Java House.” Their first response was, “Which one?” My kids would be like, “What do you mean?” They’ve been raised in these stores. All she does is make us sit in the car. She says she’ll be back in one minute and an hour later she comes strolling out. That’s what they know. 

As we do this longer and longer, now what I’m running into is that we can push more behind the scenes, but now even our team members are like, “Well, we don’t know where this stuff comes from.” They don’t even realize how much we do behind the scenes to keep this brand going. It stinks when people say you’re a franchise when they weren’t raised in it. We’ve lost that generation because they didn’t see us open in the 90’s. So that’s a little weird for me.

What does success look like for you 20 years from now?

You know, we’ve been doing this for 29 years, but it seems like we started yesterday. It really does. We’ve had so many bumps, so many challenges, and we’ve had so many rewards. But truly, in the end, I need our legacy to also be the brand, the beverage, and the experience. For me, we have to carry it forward and teach our younger generation. This is important to continue a local brand. 

How do you define success?

Success is being willing to take risks, fall on your face, and pick yourself back up. But, more importantly, you have to have integrity along the way. If you do not do what you say you’re going to do in business, you’re doomed.