Coffee Bars Just Keep On Spilling Across the Landscape
By Margaret Webb Pressler
Washington Post Staff Writer
Sunday, May 23, 2004; Page F05
I'd been thinking for a while that we'd pretty much reached the saturation point for coffee shops. Lately, Starbucks had been opening downtown stores that left little more than a block between locations, and it just seemed inevitable that they'd start cannibalizing each other -- and other coffee operations nearby.
Then I heard about Caribou Coffee's aggressive expansion schedule. In the Washington market alone, where Minneapolis-based Caribou already has 12 locations, it plans to open 10 more this year, with an eventual goal of between 125 and 160 locations.
Am I missing something? How could there possibly be enough demand for all those coffee bars, in addition to the smaller chains and independents that also continue to thrive and multiply? Does the latte business somehow thwart the traditional laws of supply and demand?
In fact, it does, sort of. After hearing the dynamics of the industry explained by a few experts, I understand that one way of looking at gourmet coffee is the way traffic planners see a crowded highway: If you build a fourth lane, it may ease the congestion briefly, but in the long term it will just attract more cars to the road. The trend in the specialty coffee industry remains more, more, more -- and somehow it keeps on working.
"It doesn't make sense to us either sometimes," said Mike Ferguson, a spokesman for the Specialty Coffee Association of America.
There are several reasons the industry has reached 17,400 locations -- far more than the 10,000 outlets the SCAA predicted in 1999 would be the peak. The main factor the industry cites is the touchy-feely notion that we consumers want a place to go -- a place that's not home or work or school or the park. We want a place where we can meet up with friends, have a little conversation, be protected from the elements, see other people, not spend a lot of money and -- oh, yeah -- have a cup of joe. Or not.
When people steeped in this business talk about this "sociological phenomenon," as they all like to call it, it's hard not to think about the theme song from the long-running sitcom "Cheers," which celebrated a "place where everybody knows your name." But "Cheers" was about a bar, and in the coffee world, folks are quick to tell you that people don't want to go to bars anymore, at least for the kind of informal meeting or social break that takes place day and night in the typical coffee shop.
"There are not many places that are as affordable as a coffee shop to go meet with one of your friends and really have 30 minutes or an hour where you literally come away from it feeling like it was a great experience and a great time," said Michael Coles, chief executive of Caribou Coffee. "I think that's what coffee shops provide."
So many transactions now are so impersonal: at the dry cleaner you're a number, to get a phone number you use the Internet, when you call someone you get a voice-mail tree and when your phone rings it might be a recording. It makes some sense that consumers would react by seeking out real people in real places.
What's still hard to understand is how there can be a Starbucks on practically every corner and Caribou could still want to find a spot right between them, or even right next to one of them. It just seems like business suicide.
© 2004 The Washington Post Company