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Originally published Friday, January 4, 2013 at 1:15 PM

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Dempsey group’s winning Tully’s bid may face challenge

Starbucks, which also participated in the bidding, says it’s considering its options. Meanwhile, the “Grey’s Anatomy” star visits Tully’s stores.

Seattle Times business reporter

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The battle for Tully’s Coffee may not be over.

While actor Patrick Dempsey greeted star-struck fans and baristas at Tully’s stores Friday morning, just hours after his investment group won a bankruptcy-driven bid for the chain, Starbucks officials said the competition for Tully’s isn’t over.

Starbucks said it and another bidder offered $10.56 million for the financially struggling chain, more than Dempsey group’s $9.15 million. It declined to say who the other bidder was, but a source who didn’t want to be identified said it was AgriNurture, a Tully’s franchisee in the Philippines.

Dempsey’s group, which includes an undisclosed number of silent partners, won the auction for all 47 Tully’s locations after 13 hours of negotiations among seven bidders on Thursday. The final decision was made by a group of Tully’s executives, creditors and lawyers.

The deal, which is expected to close late this month, will not affect Tully’s wholesale business, which was sold to Green Mountain Coffee Roasters in 2009.

A bankruptcy court judge is set to review Thursday’s decision Jan. 11. Typically, any party that wants to oppose such a decision must file an objection before the court date.

It is unclear whether Starbucks will formally oppose Dempsey’s victory. “We’re evaluating our options,” said Starbucks spokesman Zack Hutson.

Starbucks said it made an offer for 25 Tully’s locations, including 12 at Boeing sites. A source said it offered to pay about $6 million for those stores.

“They wanted to disband the company, and they lost, and they’re upset by that,” said Dempsey, who added he does not think Starbucks will succeed in changing the decision.

The actor, who plays a character best known as ”McDreamy” on TV’s “Grey’s Anatomy,” set in Seattle, said Thursday’s bidding involved long, endurance-test negotiations.

“Usually, it’s pretend, but this was reality,” he said. “There was no one saying, ‘Cut!,’ and no one saying, ‘Move this along.’ ”

Dempsey lives in Malibu, Calif., but plans to be in Seattle a couple of times a month, which he said shouldn’t be difficult. “I love it up here, seeing the rain and the ferries,” he said.

Although Dempsey said he has ideas about what Tully’s needs to become a profitable company — it has turned a profit in just two of its 20 fiscal years — Dempsey said he will not be the CEO.

Among other things, he wants to “spruce up“ Tully’s stores, energize its 500 employees, including possibly giving them raises, and update the company’s bookkeeping system.

Dempsey’s first stop Friday morning was a Tully’s shop just north of Pike Place Market, where dozens of fans applauded when he entered and later posed for pictures with him.

Among them were five Lufthansa flight attendants who were headed to the Market when they saw him through Tully’s window. “I was thinking, is that him? OK, we’re in Seattle, so it could be him,” said Anna Lea Gerschefski.

Another flight attendant, Chris Bowman, eventually approached Dempsey for a photo. “Normally, I’m not that guy going after these people, but I thought, that is cool,” he said.

John Lowe, of Seattle, was less impressed. A Tully’s regular, he sat reading his newspaper while dozens of people were craning their necks to see Dempsey.

“I was going to move, but there was no place to move to,” Lowe said of the packed store.

Melissa Allison: 206-464-3312 or

Twitter @AllisonSeattle.

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