Reflections on Starbucks and the Kansas City Coffee scene
The other day I had the gleeful task of going to 3 local coffee shops to review them for quality, ambiance, etc. for Kansas City’s Tastebud Magazine. I’ll be honest, it was good to get out and stretch my coffee legs as it’s been a little while since I did it last. It fully reminded me that I need to get out more. It occurred to me that when I first started working in coffee for Starbucks in April of 1999, none of these places existed. When I got home, I happened across this story from the Washington Post by a friend of mine out East and it got me thinking.
When my wife Crystal and I were first dating, we were living in this crappy little town in southern Missouri and for my 22nd birthday, she surprised me by driving the 2.5 hours to Kansas City just to get a good cup of coffee at Starbucks. This would have been in 1997 and I would have been much more recently removed from Seattle where Starbucks was still thought of locally as a “local boy strikes it rich” company, not yet the multi-national behemoth that it is today although by 1997 they were more than well on their way, despite hometown perceptions.
It’s funny now to think about my definition of quality coffee has evolved since then. I had grown up with Starbucks and the Seattle coffee culture was still a few years away from reaching the coffee universe epicenter status that many think of even today. Actually, the current “epicenter” keeps sliding south. It could be argued that it was in Portland for awhile, but now it is firmly entrenched somewhere between San Francisco and Los Angeles, California. Maybe not in terms of total volume, but in terms of quality, Cali is the has been the new “It girl” for a little while now. Just check the results from the last couple of US Barista Competitions! But in 1997, most of the specialty coffee industry was still racing to try to catch up with the Starbucks quality standards. To be sure, there were some lone bright lights here and there, but across the public spectrum, Starbucks was stealing customers left and right because their quality was so much higher than most coffee shops. This put more than just a few less-than-quality minded cafes out of business and while the comment probably seems a little harsh, it was probably for the best in terms of being healthy for the overall industry. In both the animal kingdom and the business world, it’s nearly always good to kill off the small, the sick and the weak.
Anyway, they rode that train for quite awhile and then little by little, you started hearing about coffee shops actually flourishing with a Starbucks nearby. In fact, many good cafés felt that the closer, the better. Locally, the Starbucks vs. Broadway Café matchup gained national attention, especially when it was announced that Starbucks opted not to renew their lease at the location that was literally next door to Broadway. While I most certainly doff my cap to John Cates and the Broadway crew and credit them for ever showing me Latte Art to begin with (My affiliation with PT’s Coffee came a bit lat, when I needed to know how to DO it!), I worked quite often at that Starbucks location next to Broadway and I have a little different perspective on why they closed. To be sure, Starbucks thought they were going to push Broadway out just like they had with so many others nationally, but Broadway correctly took Starbucks to task in a place that they could not compete…in the cup. To talk about this while actually in the Westport neighborhood is to draw scorn upon yourself as the David vs. Goliath tale is relived and relished every time people walk south on Broadway Street from the new Broadway Café roasting works right in front of the still empty former Starbucks storefront to get to the actual Broadway Café. It’s a good story and I give them all of their props and kudos. Broadway Café’s quality and neighborhood appeal certainly did not help Starbucks, but if you read deep into this New York Times article from January of 2008, you see the following statements:
- In the nearly 10 years since the Starbucks opened next door, three more opened within a mile or so.
- “The more stores Starbucks opened, the slower” the chain’s business became, [Broadway Café co-owner Sarah Honan] said. “It has not worked out the way they said it would — more stores, more business.”
And then there was this MSNBC story that followed the Broadway / Starbucks conflict directly:
The Starbucks location in Westport was the second store to open in the Kansas City market and during the 10 years since the initial market entrance, they opened at least 30 additional company-owned stores, not counting the licensed concepts like Barnes & Nobles and grocery outlets, etc.
Basically, they self-cannibalized that second location, opening a large one on the Country Club Plaza in late 1999 about a mile and a half away, another in 2001? about a mile to the west and when the location went in with a drive through in 2007, it only compounded the fact that Broadway kicking their tails from both a quality and total volume standpoint and it was literally lights out for that location. To my knowledge, the location was profitable to the end, but not profitable like what Starbucks is used to seeing.
Company wide, they can’t go back and reverse their business model for their existing Starbucks cafés. While sales are declining company-wide, the model has been wildly popular, not to mention profitable for Starbucks over the long term. If they start shaking things up too much with the core revenue stream, investors and stockholders will start bailing out very quickly. However, they have long flirted with the idea of a spin-off brand and in April of 2003, bought one (several, actually) with the purchase of Seattle’s Best Coffee and a few smaller brands. I don’t think that with the hyper-aggressive growth strategy that Starbucks was positioning themselves for, that these brands were ever seriously considered to be anything other than a continuation of the same Starbucks models under different names. In 2003, Starbucks was on top of the world, why should they change anything? Sales can hide a lot of problems if you’re not paying attention.
Stories like the one with Broadway Café actually posing a threat started to become more frequent as cafes and baristas around the country stopped trying to “out-Starbucks” Starbucks and started beating them handily with quality. Obviously, this was on a single-unit basis. Until McDonald’s Corp. and Dunkin Brands really started turning up the heat, Starbucks had regional competition at best (think Peet’s or Caribou) and even that was limited to larger cites/markets, but rarely with the region-wide density / saturation that Starbucks had built up.
Locally, I remember when Espresso dell’Anatra had Saturday Barista Jams that were open to whoever showed up. It was usually just a few people (mainly Sandy Hon and Kim Lovelady!), but we tried all kinds of stuff. Actually, we were testing out different milks one day, which is how I found out about the Shatto Milk Company. Man, that’s some good stuff. Pricey, but worth it. You absolutely get what you pay for. I spent nearly a year on their corporate waiting list and we were proud to mix their milk with PT’s Coffee. Mmmm!
The Roasterie did a lot of Barista Jams back then. They still do them, but not as frequently. I think that everyone who has been a barista in Kansas City more than 5 years attended at least one of these. If you were even remotely plugged in to the local coffee scene, you were there a time or two. The Barista Guild of America had a few jams that were all done up with sponsors and the whole nine yards. Actually, I wrote up a review of that event. Never mind the article publish date, it was held in October of 2006 and can be seen on coffeegeek.com.
It seems like forever ago, but it’s not been three years. Wow.
Let me wrap this up by saying that Starbucks has a new concept café out. They’re calling it “15th Street Coffee and Tea, Inspired by Starbucks”. It’s still being kept under some kind of wraps, although the secret is pretty much out. There’s a thread going on over at coffeed.com if you really want to know what the specialty coffee industry industry thinks of the new concept. Mixed reviews, really. Lots of speculation and old prejudices. Someone made a comment about Starbucks trying to “Fake the funk”. Personally, I think it’s great that they are at least trying to go the quality route, whatever their true motives. 15th St. will feature Latte Art on milk based espresso beverages, Clover coffee brewers and (I have heard reports of) possibly lever espresso machines, and a renewed focus on the coffee itself. Public cuppings will happen near daily and the whole place will be generally free of Starbucks nearly oppressive branding. From a has-been insider perspective, I think that their success will be determined by how they operate in the back of the house. Currently, the regular Starbucks stores are forced to be a slave to something called “Variance to Ideal”. Sounds innocuous enough, but it is a quick-n-dirty operational efficiency number that factors in several numbers (gross sales, labor dollars, labor % of sales. etc.). When I worked for them, I think we had to stay within 3% variance which was do-able, but I understand that now it is expected to be at zero, or 100% operational efficiency, however you want to look at it. If they can’t help themselves and enforce BOH rules like that, they’re dead. If they ease up a bit, they have a shot. I’m sure I’ll be posting on this new concept of theirs soon, but in the mean time, take a look for yourself.
All this to say that it was awesome to get out to see some of the local cafes. I was greatly encouraged to see how far the quality piece of retail coffee has come since I first got in a little over 10 years ago. Man. Where does the time go?
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