Housing Complex

Coffeeshoponomics

Coffee culture, as understood in bean-crazed locales like Seattle and Portland, has yet to take root in the District. A Starbucks or Caribou can usually be found churning out syrupy concoctions, but the classic independent shop—where espresso is an art and the food comes second—is still very hard to come by.

There are lots of reasons for that. Rent is outrageous in busy neighborhoods, putting the sprawling spaces where people like to camp out for hours beyond the well-crafted latte’s profit margin. Commercial landlords would much rather lease to proven concepts, not idealistic entrepreneurs. Primarily, though, the problem is taste: Unlike high-end beer and cocktails, which have filtered their way into happy hour conversation in recent years, coffee isn’t seen as a connoisseur’s kind of beverage. The District isn’t a coffee town as much as it’s a caffeine town; we live on the stuff, but don’t have time to wait around for the perfect pour.

Finally, Washington just doesn’t attract people willing to sink their lives into something that won’t either change the world or make them rich. Ask coffee shop owners whether they’re making money, and they’ll usually blanch before answering, “Sort of.”

“Nobody gets into coffee for the money, because there’s absolutely no money in it,” says Jonathan Riethmaier, who chronicles the District’s nascent coffee scene at a blog called the District Bean. “Here, the risk is very high. There’s lots of pressure to succeed, and quickly.”

Nonetheless, the number of independent shops has steadily risen in recent years, with new spots opening from Capitol Hill to Columbia Heights. If they do things right, they’re usually packed, with freelancers, students, and others who just need someplace other than their living room to hang out. At the same time, a few have fizzled, sounding notes of caution to would-be entrepreneurs.

So: You want to open a coffee shop that you don’t wind up closing a few months later? Here’s how.

1. Target the right demographic.

Foot traffic matters in coffee shop locations, but it has to be the right kind of foot traffic.

Pound Coffee first opened in NoMa in 2008, and one of the first places to get a decent croissant and a latte around there. But soon after, the rest of the neighborhood leased up with chain lunch places optimized for efficiency, and Pound’s sales dropped off a cliff. “Food quality is not really the concern when it comes to that environment,” says owner Karl Johnson. He closed that spot, and has been doing better with a new place on Pennsylvania Avenue SE, which is close enough to Capitol Hill to catch lunch traffic as well as the daytime crowd.

Foggy Bottom, with its international population, is perfect: Shops focused on the farms where their beans came from, like Filter, Bourbon, and Juan Valdez, all found homes around the International Monetary Fund and the State Department.

But even dense, wealthy neighborhoods aren’t automatically better for an independent coffee place. Georgetown has relatively low coffee density, in part because it’s full of tourists, who tend to opt for chains. “Those are the kind of people who’ve been drinking Starbucks their whole lives, and want skinny iced caramel macchiato whatever,” says Michael Visser, who managed Baked & Wired in Georgetown before opening his own shop, Flying Fish, in Mount Pleasant, which he chose for the kind of educated foodie types who understand that espresso shouldn’t be served in 20-ounce cups.

2. Roast your own beans.

Joel Finkelstein,who started Qualia Coffee on Georgia Avenue in Petworth three years ago, doesn’t have much in the way of casual passerby, and weekdays can be deathly slow. But he’s got another revenue generator in the back: A roasting operation that goes through 1,000 pounds of raw beans per month, the majority of which Finkelstein sells in bags rather than cups. Roasting coffee on-site means his coffee is as fresh as it gets, and the retail space serves as an advertisement for the whole-bean product. “They come in expecting a cup of coffee, and it’s a totally different experience, and they realize they’ve been drinking schlock the whole time,” Finkelstein says. “A lot of what this is built around is education.”

3. Don’t be afraid of Starbucks.

“If you’re going into an area where Starbucks is, you know it’s a good location,” says Cait Lowry, a barista at Pound The Hill who’s shopping around for her own space. She seriously considered one location kitty-corner from a Starbucks that served 500 people in three hours, figuring they’d go elsewhere if they could. “A lot of Starbucks customers go there because it’s their only option.”

4. Cater to your baristas.

In some cities, making coffee is a standard side job, and skilled baristas are a dime a dozen. In the District, where many people still come to work in or around the federal government, they don’t exist: Almost every shop trains their own people, and tries to keep them around for as long as possible. Ryan Jensen, who worked a machine for six years before starting Peregine Espresso in Eastern Market—and recently opened second location on 14th Street NW—says he even chooses locations based on where his employees felt most comfortable.

“The first thing I asked myself was, ‘Would I want to work here, as a barista? Are these people going to annoy the heck out of me?‘” Jensen says, explaining why he wouldn’t fit in around Gallery Place, or even Columbia Heights. “If we’re sitting by Potbelly, and other vanilla chain places, I’m not interested in that. Those aren’t places where I want to go eat on my break.” So far, it’s worked: Jensen’s managers have stayed with him since the shops opened, and his staffers routinely bring home awards from national barista competitions.

5. Hold events.

Phelicia Harris, who just opened Coffy Café in Columbia Heights, is applying her background as a librarian to running a coffee shop and creperie: You need to give people a reason, besides curiosity, to visit. “You can’t just wait for people to come by,” she says. The spacious, ’60s modern-themed café is doing well so far with a standard coffee program and menu of crepes, but Harris wants to start programming tea times for teachers, spoken word performances, game nights, and art exhibits to keep customers coming back.

6. Don’t make it a side gig.

For a fewnotable coffee shops in recent years, the problem was in the owners’ dedication, not market demand.

Rockville-based Mayorga Coffee should have been successful in Columbia Heights and in Takoma, where it had shops in highly visible locations. The first, says owner Martin Mayorga, folded in 2009 because he had licensed the brand to an independent group that tried to sell sushi and run a club in the back (according to the agreement, he had no control over how they operated). Since then, he’s decided to focus on sourcing and selling beans to places like Costco and Giant, and just license the concept to operators in airports and hospitals. Other than a flagship store at National Harbor, the rest—including the one in Takoma—have been shuttered or sold. “I learned that you have to have your discipline,” Mayorga says.

The same is basically true of Warren Brown, who opened Love Café on U Street in 2003 to give people a place to have coffee with sweets from his first Cakelove bakery across the street. Cakelove has since opened five more locations in Maryland and Virginia, but the coffee shop ended up $80,000 behind on rent, and closed earlier this year. Brown’s heart wasn’t really in the coffee shop business—he doesn’t even drink the stuff. “While coffee is nice and wonderful, there’s lot of things involved in it,” Brown says. “It’s not my area of expertise.”

7. Own your space.

Sure, not everybodyhas a few hundred thousand dollars to spend on an actual building. But owning your own real estate is a huge advantage. The people behind Big Bear Café in Bloomingdale, Chinatown Coffee downtown, and the newer Lot 38 Espresso in the Navy Yard area enjoy the stability of paying a mortgage instead of rent, and aren’t at the mercy of a landlord who might decide a gym could make more money than a coffee shop. MidCity Caffe, whose closing last fall resulted in howls of dismay, did not have that luxury.

8. Don’t fuck around with the w-fi.

Eventually, popular coffee shops confront the study-hall quandary: people who buy one thing and sit for six hours. It’s best to set your wireless policy at the outset, rather than restricting or cutting it off a few months in, which can elicit indignant reactions from laptop potatoes.

9. Serve booze.

“There are two types of coffee shops,” the saying goes. “The ones who sell alcohol, and the ones who lose money.” Most coffee is sold in the morning, so D.C. shops nearly always serve at least some beer and wine, which has much higher profit margins and lets them extend their hours into the evening—if they can put up with the hassle of getting a liquor license. Sova on H Street NE, Big Bear, Soho in Dupont, and Chinatown Coffee are just a few examples.

10. Have a $2 cup of coffee.

Even if youserve the fairest-trade, most sustainably-grown and delicately roasted exotic varietals, somebody should be able to walk in and buy a cup of coffee for about two bucks. That way, Visser says, “you let everybody in.” Maybe later, they’ll buy a muffin to go with it. After all, you’re still selling coffee—the stuff your customers might be able to get free in their offices, or for 59 cents at the gas station. The other rules don’t matter much if you don’t get people in the shop in the first place.

Photo by Darrow Montgomery

Got a real-estate tip? Send suggestions to ldepillis@washingtoncitypaper.com. Or call (202) 650-6928.

  • http://blog.robpitingolo.org Rob

    Are there are any shops in DC where you can buy a cup for $2 anymore? Peregrine just raised their base price from $2.00 to $2.30 in April. That was the last true $2 cup that I knew about.

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  • Alycia

    @Rob

    Modern Times Coffee in the basement of Politics and Prose has coffee for less than $2.

  • Mark

    I think the definition of "coffee" has been completely bastardized. All these so called coffee experts are more milk and syrup pushers that over-romanticize espresso. What happened to a good, straight cup of expertly roasted, freshly-ground and brewed cup of drip coffee? I think that's what people in DC want. Acutally, that's what people all over the world--except Italy and Seattle--want.

  • Josh

    Mark, that (freshly roasted, freshly ground, black coffee) is pretty much exactly what Qualia sells. They will also make espresso drinks, but really their raison d'etre is the freshness of the roast and (therefore) flavor of the "regular" coffee.

    I think that Lydia DePillis is correct that to a fairly large extent, folks in DC are looking more for a jolt of caffeine than a wonderful flavor; Qualia, Peregrine, Chinatown Coffee, and others like that are sort of aimed at a niche market because of that. At least IMO. It's my niche, but it's still not what everyone is looking for. (Personally I do think that a lot more people would probably appreciate the kind of flavor you can get with that approach to coffeemaking, but they may not go out of their way to find it.)

  • Cap City Records Panhandler

    @Rob... Dunkin Donuts, McDonald's, 7-11... right? I don't drink coffee so I don' know.

  • John

    I am surprised at the lack of journalistic investigation by the City paper. How is there no mention of the Blind Dog Cafe. This cafe sells a premier cup of coffee from PTs for $2. You all should check it out, its awesome!

  • trulee_pist

    There is no mention here of threatening to punch customers in the dick.

    http://current.com/1e1m24c

  • Lydia DePillis
  • http://blog.robpitingolo.org Rob

    I should have specified non-megachain coffee shops with coffee under $2. DD, McDonald's, 7-11 might have it? I don't know because I don't buy coffee at those places.

    I find it to be sometimes difficult to classify coffee shops in DC because many of them also want to be bars, Sunday brunch places, etc.

    Sidamo on H Street NE deserves a mention. They roast in-house (at least they have a roaster right at the front of the store). I think Sidamo and Qualia may be the only two in the city that roast on site?

  • anon

    Some of these places are just a little too precious and involved. As much as I can enjoy a superior cup of black coffee made to order at Perrigrine or the like, I'm usually fine with an ok cup from Starbucks or by myself at home made faster and cheaper if admittedly not better (but seriously not THAT much worse either).

    There are too many afficianados. Ultimately we're all just consumers.

  • Mike Madden

    @ Rob -- Java House, by 17th and Q NW, also roasts on site.

  • http://facebook.com/heymarkuson Lisa

    Hey, interesting article. Washington is weird in that we seem to look at the whole service industry as something for unpaid interns to survive off of until they can run for office, or disinterested and lackluster dropouts to make ends meet indefinitely. In many other big cities it is a respected field where people take pride in their work (at least moreso)and seek to improve and become experts.

    PS

    @Rob and @Mark - Blind Dog's hand poured, chemex house coffee is $2, woohoo!

  • deedle

    Death to Laptop Potatoes!

  • http://blog.robpitingolo.org Rob

    @Lisa thanks - I look forward to checking them out.

  • http://westnorth.com Payton

    Nice counterpoint to this dour Slate piece on how to open a coffee shop that you DO wind up closing a few months later. It's great to know that people like Ms. Lowry are hoping to add to the local selection!

    I admit that I'm not as much of a coffee snob as I am a beer snob, but I do appreciate a fine cuppa and will go appreciably out of my way for the few shops here that offer one. What I really look for is atmosphere: my personal favorite coffee houses elsewhere usually offer a variety of spaces, some loud and some quiet. Sova, Pound, and Northside Social (in Arlington) are the only ones around here which seem to have that, but generally high rents may make that unaffordable at most locations.

  • John

    @Lydia- Your job as a journalist is to investigate and relay that information to its readership, not editorialize it with subjective criteria (i.e. the amount of press an establishment has received). If that place is in the Washington Post for being a start-up coffee shop in DC, I would think it is relevant and worthy enough for the City Paper. This just makes me question the professional integrity of the entire paper. If you as a journalist are not including it and the editors are not questioning the decision to exclude the cafe. I hope you all strive to do better in the future.

  • Mike Madden

    @ John --

    Lydia's job includes plenty of subjectivity, and there were quite a few coffee shops that didn't make it into this piece -- which is about the economics of coffee shops, not a comprehensive listing of every coffee establishment in the District.

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