Minn. coffee chain battles rumor of terrorist link

Caribou says its sales and expansion are hurt


As chairman and chief executive of Minneapolis-based Caribou Coffee, Michael J. Coles is tackling a difficult challenge - trying to defeat a persistent 2-year-old Internet rumor that the chain of coffee shops is linked to Islamic terrorists.

"Things on the Internet don't go away," said Coles, who explained that the rumor is hurting sales at stores in communities with Jewish populations and could threaten Caribou Coffee Company Inc.'s expansion plans.

Not dealing effectively with rumors can alienate customers and hurt the bottom line.

"Once people are convinced of something, it might be very difficult to convince them otherwise," said Jean Pierre Dube, a marketing professor at the University of Chicago Graduate School of Business.

Consider what happened with consumer products giant Procter & Gamble Co. For years it has battled rumors that it is linked to Satan because some people believe they saw the number "666," said to represent the Antichrist, in the beard of its old "man in the moon" logo. Ultimately P&G dropped the logo and began suing anyone suspected of spreading the rumor, which continues to haunt the company.

Some rumors are carried along because they seem real and involve the promise of money for consumers. Gerber Products Co. wasted no time in the 1990s fighting an Internet rumor that it was giving a $500 savings bond to children born between 1985 and 1997 to settle a price-fixing case.

And last week, the Johns Hopkins University battled a rumor that it was paying as much as $1,000 for rare blue-eyed cicadas. It isn't. But that hasn't stopped the rumor, which surfaced at the same time as the 17-year cicadas.

In Caribou's case, the rumors have circulated for nearly two years but, if unchallenged, could threaten its plans to expand to 400 stores by the end of next year. The company, with about 250 stores, is dwarfed by Starbucks Corp., which has more than 7,000 stores.

While sales at Caribou stores open at least a year are growing as much as 10 percent per month, that's not been the case at stores on Chicago's North Shore or in suburban Detroit, where sales have plummeted as much as 35 percent.

Coles, who is Jewish, met recently with rabbis and Jewish leaders in Chicago and Detroit and sponsored a Jewish United Fund dinner in Chicago.

Like all rumors, there is a grain of truth imbedded in the story, which purports that Caribou is owned by an Islamic bank that employed Sheik Yusuf al-Qaradawi, an outspoken Palestinian supporter. Al-Qaradawi is a popular figure in the Middle East because of his broadcasts on Islam over Al-Jazeera, the pan-Arab television station based in Qatar.

His critics accuse him of using his power and prestige to allegedly push the cause of the Muslim Brotherhood, a group known for its religious conservatism and anti-West stance.

Coles says it is true that Caribou is 88 percent owned by Atlanta-based Crescent Capital, the investment arm of the First Islamic Bank of Bahrain. But he said Al-Qaradawi never was a bank employee. He was an adviser on Islamic law to the bank. Once the controversy broke in June 2002, the bank immediately severed its ties with the sheik.

"End of story," Coles says.

"Hopefully, by just setting the record straight people will be open-minded enough, caring about the real truth and come back to us," he said.

The Chicago Tribune is a Tribune Publishing newspaper.

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