Why are small coffeehouses struggling to compete with Starbucks?

[BobG]

I used to work at a coffee house. Almost all of the nonchain coffeehouses in the area have gone under or changed hands about once a year for most of the last decade. Even when I worked at the coffee house I had people that would come in and order in starbucks lingo or ask for starbucks specialty drinks. Occasionally I had people come in just to ask me where the nearest starbucks was. Kinda irked me so I just said "Drive down the street, any direction, and you'll find one eventually."

Border's and B&N all have coffee houses in them now. Seattle's Best at Borders I think and Starbucks at B&N. B&N especially have become hangouts with book club meetings, chess clubs, go clubs, and even just certain groups of friends that hang out there. When I was in high school, even though we had a coffee house right across the street from the school that quite a few of us hung out at, the students as a whole voted the B&N starbucks a few blocks away as most popular hangout.

An article about why Starbucks actually helps mom and pop coffeehouses. Mind you, that's not the whole story. Starbucks wipes out competing coffee houses in other ways, such as buying the lease from the building owner so the competing coffee house has no place to do business from.

All in all, Starbucks has improved conditions for coffee houses in general. Twenty years ago, how many people would have paid Starbucks kind of prices for coffee drinks? The profit margin on coffee drinks is incredible, although you still obviously need to sell enough coffee to pay the rent (i.e. - having customers spend a lot of time browsing books hurts your coffee profits even though it increases your book profits).

There is a new push at Starbucks where they're trying out dropping the Starbucks name on some of their shops; going for a more local flavor instead. I think that suggests the locals aren't doing so bad in their competition against Starbucks (provided they can keep their lease).

In any event, a book store/coffee shop is more like the Borders/B&N model. You could put a Starbucks, a Borders, and a used book store/coffee shop all right next to each other and none would be drawing quite the same customers. The quick grab a coffee and go customers would hit the Starbucks while customers with a little more time could hit one of the book shops (and the Starbucks would still pull in the biggest profits). I don't think a customer would linger in a Borders and a used book store in the same trip, but I wonder if it would create an environment where some of the trips would be to the used book store instead. It could even create a strange partnership where a pseudo-Starbucks under a different name would be glad to share adjacent space with a local independent book store.

 

[physics girl phd]

All in all, Starbucks has improved conditions for coffee houses in general. Twenty years ago, how many people would have paid Starbucks kind of prices for coffee drinks? The profit margin on coffee drinks is incredible, although you still obviously need to sell enough coffee to pay the rent (i.e. - having customers spend a lot of time browsing books hurts your coffee profits even though it increases your book profits).

You should also offer PIE. The profit margin on a nice slice of pie can be huge... and my perfect bookstore coffee shop of all time offered PIE. Best of all, BLACKBERRY PIE... with loads of whipped cream. Locate this bookstore in my neck of the woods, and I'll go there at least once every weekend... and make such on orgasmic fuss over the pie when I order it that all the customers in line after me will buy the pie.

In any event, a book store/coffee shop is more like the Borders/B&N model. It could even create a strange partnership where a pseudo-Starbucks under a different name would be glad to share adjacent space with a local independent book store.

This was the case in Boulder, where I got the above pie at the "Bookends Cafe" next to the "Boulder Bookstore"... and note there was a doorway between the coffee shop and bookstore, as well as separate entrances for both). Free wireless and outlets at the cafe also helped bring people in... particularly local writers (and yes, at the time I liked to think my pie orgasms inspired some "when Harry met Sally" type of scenes).

 

[BobG]

(and yes, at the time I liked to think my pie orgasms inspired some "when Harry met Sally" type of scenes).

Your pie orgasms inspired the scene where Harry and Sally are saying "paprika" in funny voices? :uhh:

 

[TheStatutoryApe]

An article about why Starbucks actually helps mom and pop coffeehouses. Mind you, that's not the whole story. Starbucks wipes out competing coffee houses in other ways, such as buying the lease from the building owner so the competing coffee house has no place to do business from.

Diedrich's, mentioned in the article, has been a family business in the coffee industry for the last century (serious) and opened their first store in '72. They had a chain here before Starbucks even got here.

https://coffeebean.com/index.aspx , also mentioned, has been around since '63 and is a major chain in this area as well having even been spot lighted in tv shows, being that it is an LA staple. They are currently international, located in 20 or more countries.

These aren't the mom and pop stores that article makes them out to be. They've been around longer than starbucks. They just haven't had the same push to expand until Starbucks showed them the way and they have been relatively conservative about it.

I was a coffee house rat for years. They were very popular around here. Almost all of the small single shop coffee houses in the area are dead and gone now with at least two starbucks somewhere in the vicinity. Of the dozens that used to be around here only about ten years ago I know of only two or three single shop stores that are still in business. One is both a coffee house and restaurant now, one has a library for customer use (never been there my self and not sure if it still exists), and one sells surfboards (in addition to coffee that is). All three of them are local staples and host live entertainment and local art. None of them would have likely survived as just plain coffee houses.