Small shop perks
Even in tough times, Americans crave a caffeine fix, which helps keep business flowing at independent coffeehouses
Michael Tallon and his wife, Rosaleen, opened TC's Coffeehouse in Hyde Park this fall, about the time the nation's economic slump turned into a global financial crisis.
So far, they say, they are encouraged by sales at the small restaurant, which serves specialty coffee and sandwiches and is patterned after the Irish coffeehouses of their homeland.
"It's been OK, not lights out," said Michael Tallon. "I'm hopeful. I really am. People learn about us by word of mouth. It's a slower build and a slower burn."
For many independent coffeehouses, these are unsettled times. The giant of the specialty-coffee industry, Starbucks Coffee Co., this year reported its first quarterly loss and said it would close about 600 stores. With a sense of austerity gripping the nation, many are wondering if a $4 latte is something people can live without, even if it's made at an independent shop. "Certainly it's a greater challenge today, but coffee is something people crave, and fine coffee is something they really crave," said Jeff Chatlos, co-owner of Flat Black Coffee Co., which has three Boston shops, as well as a wholesale bean business.
For more than a decade, gourmet coffee shops, both independent and chain-owned, have enjoyed boom times. As caffeine-craving Americans discovered the pleasures of fine coffee and specialty drinks, the number of coffee shops nationally exploded, from 1,650 in 1991 to 25,700 in 2007, according to the Specialty Coffee Association of America. Last year, Americans spent $13.5 billion on specialty coffee, up more than 60 percent from 2001.
While the trade association does not have data yet for 2008, there are signs of a shift in the business, according to spokesman Mike Ferguson. The association surveys members regularly, and before this year, the main problem coffee shops cited was growth and how to manage and plan for it. This year, the primary concern was costs.
"Retailers have told us that while they are seeing some decline in beverage sales, they have seen an increase in bean sales as people brew more coffee at home," said Ferguson. "Specialty coffee consumers seem reluctant to compromise quality while decreasing how often they pay someone else to make their coffee."
Starbucks' national closing list includes seven stores in Massachusetts, including outlets in Newton, Sharon, Stoughton, and Burlington. So far, there has been no similar wave of closings of independent Boston area coffee shops, although some owners report reducing employee hours and curtailing expansion plans.
Chatlos said he has scaled back hiring plans for his stores, which are in Boston's Financial District, Dorchester Lower Mills, and Ashmont Station in Dorchester.
But Vance Welch, owner of Java Jo's coffeehouse in Jamaica Plain, said the deepening economic woes have had no discernible effect on his business.
"We've seen a little growth actually," said Welch. "People who come to us like the coffeehouse atmosphere. They like the kind of coffee we serve."
Mark Anderson, owner of Kiskadee Coffee Co., said sales remain strong at his main store in downtown Plymouth.
"We're doing great," said Anderson. "I keep thinking the other shoe is going to drop, but it hasn't."
In 2006, Anderson opened a second store in Hanover at Merchants Row, a small shopping plaza. Business is not as good there, according to Anderson, which he attributes to the store's location in a retail complex. People are shopping less these days, so coffeehouses in shopping centers are more likely to suffer, he said.
Shop owners say they are succeeding by being community-based institutions that know and understand their customers.
"You have to find out what people in the neighborhood want," said Tallon. "You can't just open up."
For instance, TC's Coffeehouse offers free Wi-Fi and has a mix of tables and cozy chairs. Tallon hopes eventually to have live acoustic music in the evenings. Kiskadee in Plymouth regularly features live music.
Restaurant analyst Darren Tristano, executive vice president at Technomic Inc. in Chicago, said independent coffee shops have important advantages over chains. They tend to know their communities better, have lower overhead, and don't have to pay franchise fees, Tristano said.
Coffee shops, as well as taverns, can also ride out a recession better than some businesses, according to Mike Donohue, spokesman for the National Restaurant Association.
"Despite the economy - or maybe because of it - people are looking at their coffee or their cocktail as an affordable luxury and a means of socialization and entertainment," Donohue said.
Anderson said he believes his Plymouth store functions as a refuge for people troubled by the economy. "People sit down and talk about their problems. It's therapeutic," he said.
Jonathan Clark, a Jamaica Plain resident who works at Forest Hills Cemetery, is a regular at Java Jo's. He worked there for awhile and knows most of the employees and many of the customers.
Clark settled into a table one recent afternoon with a tall mug of coffee and a bagel. He said he has not given any thought to trimming his coffee budget.
"I include coffee as a necessity," Clark said. "If I had a certain amount of money to spend, I would subtract the amount for coffee first, and then decide how I was going to spend the rest."
Robert Preer can be reached at preer@globe.com. 