Opportunity Available! Third Wave Cafe in Seattle.

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Apr 04, 2008

Are you opening a cafe or planning to in the near future?  if you are, then I may have the perfect location for you:  right next door to Starbucks! 

Pictured here is a location that is actually available right now.  It offers the opportunity to go head-to-head with the industry’s Goliath–and your new store is smack in the heart of Seattle.  The Dragon’s lair, if you will!

At first this may seem utterly counter-intuitive.  Who in their right mind would open a competing cafe next to the biggest, most successful specialty coffee retailer in the world? A company identified as one of the most powerful brands on the planet by Brandz.  

The answer of course is You!  And especially if you plan to open a Third Wave Cafe–with a focus on quality products and training, and a hands-on approach to preparing coffee and serving customers.

LEARNING FROM OUR BETTERS 

Locating your store right next to Starbucks takes a page right out of Big Green’s own playbook.  Even more important it offers you the potential to shine like a gem against a black background–and right now Starbucks provides a very dark background indeed on which to highlight your cafes special differences.  Start with these:  careful professional preparation of espresso beverages by hand, showing a true focus on coffee with no music compilations or traveler mugs to distract from the basic purpose of specialty coffee; and, truly “free” wifi in contrast to Starbucks gimmicky revenue generating AT&T service (you might even want to name your wireless gateway, something like “the great cafe next door”).  

Additionally, you can surprise and delight your customers with coffee varieties from around the world in unblended form.  These are the coffees that are not plentiful enough to even make it to the “limited edition” short list of large international chain operators, if awareness like this even exists at large chains.  Most important it offers you the perfect backdrop to contrast how great product and service can be, when staff is trained properly and allowed to exercise skill and judgement in preparing the customer’s beverage. 

These features are so powerful that Starbucks dreams of the days when it to was small enough to do these things too.  But today it can really only watch as your store diverts its customers to a truly authentic experience based on the best that coffee can be–handcrafted from the finest beans available. 

Not only is there real value and payoff in doing this, there is much much more beyond.  For example, there is fulfillment for a job well done. This is something that is really mostly a cliche these days.  But how many people or businesses do you know where there is ACTUALLY a sense of a “job well done” by those performing the job?  It is pretty rare.  But you probably also know how satisfying it is to do a truly excellent job.  

There is also the benefit of creating extremely satisfied customers. People whose lives are enriched to some degree by what you offer. There is the possibility of experiencing the joy of seeing the right thing prevail in the face of powerful conventional thinking, thinking that quite frankly makes most coffee operations such a drag.

Down the road, there may also come the opportunity to spearhead business innovation as your success impels you to expand or do even more with the cafe, even though you know certain directions could compromise the quality and integrity of your original vision– a locally owned human-scaled Third Wave cafe.  This is an exciting place to be, and you will find excellent examples in this industry and beyond for moving your business forward in a sustainable and satisfactory way. 

If all this seems farfetched, read on! 

SMALL IS BEAUTIFUL– AND BIG IS BIG

Along with the advantages that size brings to mega-corporations–like purchasing power, and product & process standardization–come some significant disadvantages.  For Starbucks, one of these is the straight-jacketed inflexibility that is the outcome of having to deliver ever greater same-store sales results to satisfy investors. 

Absurdly, the requirement to grow and grow occupies virtually every thought of the management of a publicly traded company, with rare exception.  At the corporate offices of Starbucks, it motivates every consideration around what to do next:  How many new stores can be opened?  How can costs be cut?  Will the brand stretch to cover other possibilities besides coffee, without snapping?   It is very easy to lose sight of the chief purpose, the “core business” under these conditions.

Maintaining growth to meet earnings projections is the only real pressure the strategic thinkers and planners, the executive committee members and upper level managers, feel or respond to, because these results are the ones that translate the most quickly to share price.  

GROWTH FOR GROWTH’S SAKE 

Share price and same store sales results are reported quarterly–and executive jobs depend on both these numbers going no where but up.  In the environment described here there is no love, no time, no patience–there is only growth, pure and simple.  

As has been frequently noted in the press:  At Starbucks, mistakes were made.  Store count grew so fast that it diluted the brand itself.  Stores underperformed, chewing into the sales of other Starbucks stores.  Product quality and focus became muddled. (Just ask yourselves why Starbucks makes better candy bars than specialty chocolatiers, like Theo’s, who have total focus on this one particular food?)

Even the initial humor expressed by the media at the funny green logos popping up everywhere, has long since morphed into horror as many people in communities around the country see the apparently unstoppable march of Starbucks as a freakish cultural cancer.  

Meanwhile the cache of products offered under the Starbucks label has declined.  Packaged food offerings and generic merchandise harmed the brand.  Dilution of quality, even around the whole bean coffee offering, hurt too.  Customer perception of Starbucks has shifted.  

BRAND EROSION 

The notion of Starbucks as a purveyor of  “super-premium” coffee in-store or for home is rapidly evaporating.   This has opened the door to low cost alternatives from McDonald’s and others.  These Starbucks substitutes, brewed on the same super-automatic one step machines, requiring little training or skill to operate, are now being offered at deep discounts in what is bound to develop into an all out race to the bottom.  

In case you haven’t been watching,  Starbucks share price slipped from $41 to just over $15 during the course of a single year. . . and it continues to fall.  There are many worried executives at Starbucks SODO center these days.  What should they do?  What should you do?

THE GOOD NEWS

The answer to both these questions is the same.   It is to make coffee central to your purpose above all others and build from there.  Below I have listed five ideas that may help guide your new store.   

1) It really is about the coffee!

Yes, I know our industry is supposed to be serving people, not coffee. But if you serve dreck when people are expecting (and paying for) the best coffee in the world, then you are failing the coffee and your customers and your staff.  So start with the coffee. Coffee is the most important thing–it all flows from that. 

2) Trust in Training 

If you believe in the importance of coffee you will train your staff to make it perfectly, regardless of the technique they use.  You will empower them to recognize when it is good and when it is not.  Provide the tools that give them the flexibility to do this, based on their training and judgement.  Smart businesses optimize the potential of their staff–they do not try to reduce people to button-pushers for fear of “inconsistency” or individuality.  Make people the smart, thoughtful interface between the coffee, the preparation, and your customer. 

3) Quality Depends on Focus

The best cafes in Seattle have menus that are simple and pure.  One roaster-cafe in Seattle that epitomizes this is Stumptown. These cafes consistently serve excellent beverages, because everyone preparing them is focused on excellence and well-trained to recognize it in the cup.  This goes far beyond the ownership. My experience shows that it includes virtually every employee you meet, everyone who prepares and serves a coffee, as well as the support staff in roasting and sales.  This level of quality is remarkable, but Duane and his team prove it is not impossible, even at a very lively cafe.   

4) Make the Products Meaningful

I believe it is important to make an effort to appreciate and share the details around the provenance of the coffee you use.  Starbucks is right to say that “Coffee is Geography” but it is much more than this.  Again, the best cafes and roasters recognize that coffee sourcing and buying intersect the call for social responsibility in the developing world.  This represents a powerful opportunity to do good. 

One of the most beautiful expressions of this is the Bikes for Rwanda program. Stumptown spearheaded this program to deliver cheap bicycles to help transport coffee from the coffee trees to the processing station.   The lives of the individual workers involved has improved by getting their very own purpose-built bike, and so has the quality of their coffee–which benefited from swifter delivery, and less fermenting en route. 

5) Try to make the world better through what you do. 

Take a stand in the way you select your coffee, so you help create opportunity in origin countries.  Select a roaster that speaks this language and lives by these ideals.  Think of ways to do this for the environment as well. Is there an intersection between your operations and these important goals?  Find these if you can. 

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Finally, I have one last suggestion for Starbucks–please consider a freeze on new store openings.  Instead start paying dividends–or use the extra cash for something other than excess expansion, which has diminishing returns in so many ways as alluded to above.  

Eric Perkunder