Monday, March 24, 2008; D02

You'd think that the ubiquitous Starbucks coffee chain would have been the death knell for the Bean Bag, a mom-and-pop coffee shop in Bethesda. If anything, Starbucks put more kick in the caffeine purveyor, which is celebrating its 30th year in business.

"It's the best thing that happened to us," said owner Mitchell Wool, whose parents founded the Bean Bag near the intersection of Democracy Boulevard and Old Georgetown Road. "Starbucks single-handedly created a national industry. It created greater demand for coffee. We rode it."

Last year, the store grossed more than $1 million. Not bad for a 1,000-square-foot shop, though Wool is quick to credit his proximity to the Giant grocery store next door. The Bean Bag makes chicken salad sandwiches, along with espressos, cappuccinos, pastries and other coffeehouse staples.

His big idea was expanding into catering.

"It's our biggest in revenue and profit," said Wool, 43. "We cater everything from a corporate breakfast to weddings. Every time we cater a special event, I serve 500 potential new customers."

He owes a lot to Starbucks, but he also knows business discipline. Wool is on the premises at 4 a.m. nearly every day and works weekends making smoothies at bar mitzvahs or serving lattes at business conventions. He can run the Bean Bag's cookie cart when called.

The store has five full-time employees and a bunch of part-timers. Wool makes a decent salary but has been known to pass on a paycheck when business slows.

In addition to $1 million in sales, 2007 had lots of capital costs. An $8,000 espresso machine here, a $10,000 truck there, another espresso machine for $3,000.

That's the price of playing in the shadow of Starbucks's success.

-- Thomas Heath