Independent Coffee Houses Thrive in Starbucks' Shadow

Starbucks is reporting another quarter of strong profits. Despite the success of the ubiquitous Seattle-based company, independent coffee houses are thriving. That is, if they make good coffee and know how to run a business.

Copyright © 2006 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

JOHN YDSTIE, host:

And now, a quiz. How many Starbucks stores are there in the United States? Need a clue? Well, several thousand fewer than the number of McDonalds, but more than KFC, and roughly the same number as Burger King.

Yesterday, Starbucks, with its 7,800 stores, posted a 27 percent gain in quarterly profits. With such continued success for Starbucks, we wondered how the independent coffee houses are faring.

From coffee central in Seattle, NPR's Wendy Kaufman reports.

WENDY KAUFMAN reporting:

Passionate is how Sarah Dooley might describe her feelings about coffee and cappuccino.

Ms. SARAH DOOLEY (Manager, Caffé D'arte, Seattle): The classic cappuccino is the best excuse for dessert at six in the morning I've ever had. If you steam milk correctly, to the right temperature, you activate lactose to be at its sweetest. If you get the bubbles tiny enough, without too much air, and you get the smooth, sweet introduction of silky bliss.

KAUFMAN: As the manager of Caffé D'arte's downtown retail store and a trainer for owners and baristas who use D'arte's whole beans, Dooley takes preparation and presentation seriously.

Ms. DOOLEY: …and I want as dry air as possible. And steam's not hot, the liquid is.

KAUFMAN: At a training session for a young café owner, Dooley goes over every imaginable detail for making perfect espresso drinks: testing the temperature of the milk; reheating the cup; cleaning the grinder; even adjusting the grind several times a day to respond to environmental conditions.

Ms. DOOLEY: You know, espresso is affected by humidity just like baking, so over time, you know, with the door opening and closing in the last half-hour we've changed the level of the humidity in the room. So it might be time to make the grind a little bit coarser to allow a little more water flow to happen.

KAUFMAN: It is this attention to quality that has allowed thousands of small chains and independent coffee houses to thrive, even though Starbucks' market share has grown dramatically in the past five years.

Angela Morefield(ph), who just finished the training session, says many of her customers pass several Starbucks' on their way to her place, Casa de Café(ph).

Ms. ANGELA MOREFIELD (Owner, Casa de Café): The people that are coming into our café are coming there for a reason. And it's because they realize that its more of a specialty from, you know, the littler guys.

KAUFMAN: Morefield owns one of about 13,000 independent coffee outlets. That's up from about 9,000 five years ago.

Ms. SUZANNA LACAGNINA (Co-Owner, Emerald City Espresso): Starbucks is the one that rally make the espresso craze start. It kind of started in Seattle and then kind of blossomed out.

KAUFFMAN: That's Suzanna Lacagnina, a co-owner of Emerald City Espresso, a firm that sells equipment to coffee houses and others.

Ms. LACAGNINA: I don't know if the whole espresso culture would have started and been what it is now if it wasn't for Starbucks, so we have to give them credit for that.

KAUFMAN: A typical independent coffee house might bring in about a quarter of a million dollars in sales, far less than a typical Starbucks, but respectable, nonetheless.

Mike Ferguson, of the Specialty Coffee Association of America, says the big industry shakeout took place in the late 1990s.

Mr. MIKE FERGUSON (Chief Communications Officer, Specialty Coffee Association of America): Starbucks did take a big chunk of the independent pie. What we were seeing were independent's who might have been great coffee people, but not necessarily great business people. Those folks were going out of business.

KAUFMAN: But Ferguson suggests that today, most of the independents have the financial acumen to compete. Still, Starbucks is so big and so good at what it does, that it makes many independents nervous.

Mr. JOE MANCUSO (General Manager, Caffe D'arte, Seattle): I still field calls every day, saying, oh no, Joe, I've got a Starbucks coming in, you know, half a mile down the street.

KAUFMAN: Joe is Joe Mancuso, of Caffe D'arte, a specialty roaster who sells beans to about 2,000 cafes, restaurants, and small hotels. He tells his nervous customers that some of their patrons will try Starbucks, but if they're doing everything right and making really good coffee, their customers will come back. He adds that some cafes gain business simply from Starbucks' overflow.

Still, there's no question that independents face significant challenges, and not just from Starbucks. McDonalds and Burger King have recently improved the quality of their coffee. Dunkin Donuts is also aggressively trying to lure coffee drinkers. And, in some parts of the country, you can get a latte at a gas station convenience store.

In short, competition for the independents is everywhere.

Wendy Kaufman, NPR News, Seattle.

Unidentified Woman: Try the dolce.

Ms. DOOLEY: Dolce, yeah.

Unidentified Woman: (Unintelligible) Yeah.

Ms. DOOLEY: So it's dolce finis. It means sweet finish in Italian. And basically it starts as cream. It goes through the espresso--the dark robust flavors of espresso, and then finishes sweet. So you have to drink the whole thing, you can't quit. So bottoms up.

JOHN YDSTIE, host:

This is MORNING EDITION from NPR News. I'm John Ydstie.

MONTAGNE: And I'm Renee Montagne.

Copyright © 2006 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.