The Arizona Republic is the latest paper to chronicle the plight of America’s crappiest coffee shops, as they struggle to survive when money is no longer falling out of consumers’ wallets into their tills.
For many consumers, that $4 cup of coffee is the first thing to go in a down economy.
Incorrect: an inferior $4 cup of coffee is the first thing to go; they’re still buying the good $4 cups.
Debbie Egger-Cozzetto and plenty of other independent owners of coffee shops are seeing the trend up close.
Egger-Cozzetto runs Brubakers Bakery & Coffee House at Higley Road and University Drive. When she saw sales declining three months ago, she cut raises and hours.
We did not let go of anybody,” said Cozzetto, who has 12 full-time and part-time baristas and bakers at her Mesa and Tempe stores, but she told staff that salary increases and more work hours depended on meeting sales goals.
“You’d be amazed on how that increases motivation and customer service,” she said.
Motivation or fear?
Egger-Cozzetto believes there is some good that businesses can learn from a downturn in the economy.
“It’s what you do. You review all costs. You try to think of cost-effective ways to increase revenue and look at your cost of goods,” she said.
Though Egger-Cozzetto’s business does not solely rely on drink sales, coffee houses that do are taking a hit.
Also incorrect: coffee beverages are generally among the most profitable items on any coffee shop menu. Businesses that rely on food sales have lower profit margins and a less loyal customer base than specialist coffee shops.
Essenza closed its doors three months ago at Longmore near Southern Avenue. The shop opened in 1993, and was known as the Deja Brew Coffee House before becoming Essenza Coffee House. Chris Srnka bought it in 2003, sold it, then bought it again in 2006 when she heard it was going to close.
Coffee Cabana in west Mesa at Baseline and Alma School roads closed last year, not long after a change in ownership.
When Stephen Moore, of It’s A Grind in Gilbert, saw sales dip almost 30 percent from August to September, he cut more than half his staff and began trucking in his own supplies to reduce costs.
Moore said his regular customers have cut back on daily visits to weekly to periodic visits.
Moore and his wife, Lynn, are putting in longer hours with eight workers, down from 15 employees two months ago.
And because of high food prices, Moore now buys milk from Sam’s Club and battles a 20 percent increase in coffee bean prices. He worries that he’ll lose more staff because some are requesting additional work hours that he can’t afford.
“These last couple of months are bad for us,” says Moore, who opened the franchise 19 months ago.
And though sales in specialty coffee beverages are down, coffee beans sales are up, according to media reports.
“Folks are buying more whole beans . . . and preparing it at home,” said Mike Ferguson of the Specialty Coffee Association of America.
Competing with big national chains is tough, too, Moore says, speaking of the neighboring Dunkin’ Donuts and the fast-food restaurants such as Wendy’s and McDonald’s that offer blended coffees.
Operators of specialty coffee business that are unable to compete against Dunkin’ Donuts, McDonald’s and other fast food restaurants are likely to fail regardless of the present economy. You heard reports of how Thomas Keller is struggling to compete against McDonald’s in a down economy?
But he’s hopeful business will pick up during the holidays.
“Maybe this part of the year will be different with the new Ross,” said Moore, referring to the shopping center’s latest anchor.