THE COLLEGE HILL INDEPENDENT


GOOD TO THE LAST DROP?

by by Katie Lindstedt

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In the wake of Rhode Island's significant economic woes, independent coffee shops have managed to retain a loyal--if more prudent--clientele.

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At one o'clock on a Friday, meticulous typing, casual conversations and electronic instrumentals fill the air at Blue State Coffee on Thayer Street. The aesthetics underscore the philosophy and history of Blue State, an independently owned, mildly trendy, philanthropic business, the breed of coffeehouse frequently depicted as fair trade-serving prey for a predatory Starbucks. But as customers scour the tables, armchairs and barstools for an empty seat, it seems that Blue State is alive and thriving. Rhode Island's Starbucks locations, in fact, are the ones struggling to stay above water.
In an open letter dated January 28, 2009, Starbucks CEO Howard Schultz addressed the difficulties the company has faced in the wake of "a deteriorating global economy." Starbucks' first-quarter earnings report a six percent decrease in revenues, which Schultz attributes mainly to a "nine percent decline in same-store sales."
Schultz's letter also described the company's various measures to cope with the financial crisis, including a new cost structure, revisions of Starbucks' paid time-off policy, layoffs and store closings. 200 US­-based stores will close this year and 6000 Starbucks employees worldwide will lose their jobs, according to Schultz.
While the exact details remain to be seen, Rhode Island's 23 Starbucks locations will almost certainly be affected by the cuts. In a January 29 article, Providence Business News referenced a statement from Starbucks: "Though we do know our Rhode Island market will be impacted, we do not at this time have specific details about numbers of partners or stores that will be impacted by these announcements."
Thayer Street Blues
Only a year and a half old, Blue State does not have a bank of statistics with which to compare recent sales numbers. Still, revenue has remained stable as Blue State continues to grow.
Indeed, recent weeks have been characterized by Blue State's expansion. Students and professors can now travel three blocks down Thayer and unwind in the "College Hill Café," a Blue State-operated café in the Brown University Bookstore. Similarly, on January 28, Blue State officially opened a second location in New Haven, Connecticut.
Blue State's success could be due in part to its underlying ethos of sustainability. The company donates five percent of every purchase to progressive causes, including eight local Rhode Island organizations and "four to five national causes," according to owner and general manager Alex Payson. The company's union of profit and philanthropy rids customers of the difficult choice between a material good and the act of donating, a choice all the more difficult in today's economy.
Payson referred to the 100 percent organic Blue State as a "model for how 21 century businesses can succeed." "We would like to make money," Payson told the Independent, "[but] the goal is bigger than us." While Blue State has certainly succeeded in both endeavors, it is not immune to the ills of an ailing economy. "The most interesting piece of data we have is that customers are buying medium drinks as opposed to large," Payson said.
Making the Exchange
Other local coffee companies have seen similar trends. Helen Parmentier, one of the managers of Coffee Exchange, told the Independent, "We have so many regulars who are totally dependent on this place. People still come in but I think they tend to spend less. People take less. There's definitely a change."
The loyalty of Coffee Exchange's regulars has led to a successful year with more customers per week than the year before, a feat all the more impressive in light of the economy--and climate. Owner Charlie Fishbein described the season as a "double whammy" with both a "real winter and a recession."
At nine a.m. on a Wednesday, some forty customers fill the various nooks of Coffee Exchange. Fishbein estimates 35 of them to be regulars. While the consistent presence of customers has not diminished, their spending has. Whole bean sales have increased while service is down, according to Fishbein. Even service trends have changed; customers purchase less expensive drinks - a cup of coffee as opposed to a cappuccino. Though the average beverage check is down, Fishbein noted that website business and whole bean sales have compensated.
On the Edge
Located in Wayland Square, The Edge has faced changes over the past year. Owner Susan Gill estimates that the average number of daily transactions is somewhere between 250 and 275, as opposed to last spring's average of 300. Additionally, as the cost of goods, including paper goods, dried goods, and produce, has increased in the last year, Gill has had to raise food prices. She has increased prices by a smaller percentage than her providers. "I'm trying to be fair to everybody but also keep my head above water," Gill said.
A drop in the cup
The ability of smaller businesses like Blue State and Coffee Exchange to thrive - even as Starbucks faces trouble across the nation - may be due in part to their locations. Thayer and Wickenden are both insulated commercial districts with the practically guaranteed patronage of college students.
"You might see some small stores expanding, but something like Starbucks everywhere will reflect the overall economy much more. But that doesn't mean that Starbucks on Thayer will go away if that is a place where there is a big demand for coffee," Economics Professor Ross Levine told the Independent. "This overall crisis that's hitting the economy doesn't hit everywhere the same, but if you have a store that is everywhere it is going to get hit.
Despite the relative success of Starbucks on Thayer, the personalized experience of independent coffee shops seems to inform caffeine addicts' consuming habits. Stores that are everywhere may "get hit," but Blue State customer and Brown student Hieu Nguyen hopes the store that isn't everywhere will remain safe. As Nguyen told the Indepdent, "I really don't care if a Starbucks closes, but I would be sad if there wasn't a Coffee Exchange."

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