coffee business strategies

Remember experimenting with alcohol and changing your name? Well, it must be Starbucks’ freshman year at college because they will be launching a new “neighborhood” concept store next week under the name “15th Avenue Coffee & Tea” that adds beer and win to the menu.

As always, I had a few thoughts on the subject, which were kindly quoted by the Associated Press:

Andrew Hetzel, the founder of coffee consulting group Cafemakers, said Starbucks may also be renaming its stores to provide a testing ground for changes and, possibly, to bring in a new brand of consumer.

“It looks to me that they are testing a specialty sub-brand to see if they can capture some other segment of the market that would otherwise be disillusioned by a large corporate chain,” Hetzel said, adding that opening only one at first “gives them a live shop to test changes in menu offerings, store design and, perhaps, procedures quickly” without disrupting operating stores branded with the Starbucks name.

You can read the full story tomorrow in many newspapers that subscribe the AP feed, or find it online now on news websites, like USA Today. These syndicated articles tend to disappear after some length of time, so if reading this long after the event, you may need to search online to find a different copy. It’s unlikely that I will return to update the link.

In addition to what was quoted in the article, I have a few more thoughts:

The best of any specialty food businesses cannot exist on a large scale, so a smaller scale business will ultimately need to be spun off if Starbucks wishes to compete in the high end specialty coffee market.

Think of the situation in terms of a restaurant — the best fine dining restaurants are normally one single unit or a very small chain. Once you expand to two locations and beyond, it becomes increasingly difficult to maintain the same customer experience that could be found at the first. Chef skill, front of house training and availability of ingredients all become increasingly complex to maintain to a consistent level, so often sacrifices need to be made in the name of consistency over quality so that customers know what to expect when they walk through the door of every location. These problems multiply with 10, 100 and 1,000 units, and you can see what sacrifices Starbucks has made in order to grow beyond 16,000.

Just like a fine dining restaurant, the best of coffee shops have highly skilled baristas and often use unique coffees that may not be available in the quantities possible to serve a consistent menu at more than a handful of locations. I expect that we will be hearing more about this new concept over the next several months and possibly years.

Mega-kudos go out to talented coffee consultant, co-World Barista Championship board member and friend Fritz Storm, who was today named the latest “family member” for Le Meridien hotels LM 100 luxury design concept. Storm joins Illycaffe Chairman and CEO Andrea Illy to head up coffee effort.

“LM100 is not a club, it’s a family of international creators that are reinventing Le Méridien with the vocabulary of their challenging experience,” said Jérôme Sans. “This group will grow naturally in order to keep the dimension of dialogues, discoveries and creations.”

I have heard rumors that Kaldi, the Ethiopian goat herder fabled to have discovered coffee 1,500 years ago has also been in discussions with Le Merdien to join the consulting team, but calls were not immediately returned by his agent in Century City.

Read the full Starwood press release from Businesswire

Greg Lamm of the Puget Sound Business Journal looks at Tully’s new plan for expansion and quotes my analysis of the situation.

Franchising makes good business sense for Tully’s because it spreads the risk to the franchisee, said Andrew Hetzel, a specialty coffee industry consultant and blogger based in Hawaii.

“They become less of a coffee company and more of a quick-service restaurant,” said Hetzel, adding that coffee aficionados in Seattle and other cities have plenty of small specialty alternatives to Starbucks and Tully’s.

I’m a blogger? Interesting, no one has ever given me that title, but I suppose that I do write about topics of interest (to me) in a blog, so the title apparently fits.

Read the article Tully’s new blend: add stores

The Sydney Morning Herald takes a look at one coffee business owner that trusts his sense of taste over convention, using pure Robusta coffee in his espresso blends instead of Arabica coffees.

Paolo Dicembre, owner of the Sydney Coffee Centre and DiVi Espresso Bar “rejects the conventional wisdom of arabica-good, robusta-bad,” which is my opinion is a good thing. Whereas one may dislike the flavor profile of Robusta coffees, it is shortsighted to make such absolutes in any field as complicated as taste. It takes a coffee roaster very confident in their abilities and market position to challenge convention, which is something that I believe the industry needs much more of to advance.

Read the article A robust Apostle

I’ll admit to being a little nerdy, but it’s not always without purpose; for example, I may be one of the few people in the coffee industry that routines reads reports from my server logs. I find it to be an interesting way to learn about new trends or news stories posted on the Internet, often times involving my name or business name.

This morning’s report contained an unusual nugget, about a dozen separate sources searching for the combined keywords “It’s a Grind Gloria Jeans,” including one searcher originating from the address mail.itsagrind.com. All of them found an article on my website originally written in Nation’s Restaurant News that discusses It’s a Grind’s plans to become a major player in the US coffee market, but also makes mention of the Gloria Jeans name.

What can it all mean? I don’t yet know, as I was also unable to find a press release or other news on the subject and have no inside information. If you know of some development, please send me a message to let me know what’s happening.