Small Cafes Doing Well Despite Downturn

Cup of competition: small cafes holding their own
By RAMIT PLUSHNICK-MASTI
The Associated Press
Friday, February 13, 2009; 3:48 PM
http://www.washingtonpost.com/wp-dyn/content/article/2009/02/13/AR2009021302304_pf.html

CRANBERRY, Pa. -- Steam releases in a long psssssssssss. Coffee drips and glasses clink. Coffee lovers in the hotel lobby closely watch baristas prepare their crafts: espressos and cappuccinos that can win them the title of best coffee maker on the East Coast.
While business owners large and small lay off workers, cut costs and freeze expansions in a bid to survive the worst recession in decades, many small cafes are enjoying double-digit profits, opening new shops and spending time and money to boost their images in competitions like this one recently held outside of Pittsburgh.
Economists are baffled by the phenomenon. They say it could be part of a backlash against large corporations _ such as Starbucks _ and a move by consumers to carefully choose where to spend each dollar and opt for what they perceive to be a high-quality cup of coffee made by a well-trained barista.
Starbucks turned a luxury into a necessity and everybody needs their coffee, said Constantine Stavropoulos, owner of Tryst coffee shop in Washington, D.C.
"Now they're saying if I still need it why would I go to Starbucks when I have this alternative," he added. "People are really beginning to re-recognize the neighborhood coffee shop," he added.
Small coffee shop owners are doing everything to maintain their loyal clientele and attract new customers, especially those disillusioned by Starbucks and other chain coffee shops.
Cafe owners are pulling out the stops: They're blogging; diligently selecting roasters; upgrading and changing menus frequently; chatting with customers in an effort to foster relationships; training baristas for months; and ultimately trying to provide a unique atmosphere.
Tryst has a message board on its Web site where people who exchanged smiles or sly glances over a latte can try to reconnect in a 21st-century forum. Stavropoulos calls Tryst calls the sought after "third place," not home and not work, and says it stands "in stark contrast to the suburban culture and coffee chains that proliferate the country."
Starbucks, meanwhile, has reported a 10-percent drop in same-store sales, is closing nearly 1,000 shops and cutting at least 7,000 jobs. The chain's profits in its most recent quarter were down 69 percent.
On the other hand, Stavropoulos said his coffee shop enjoyed a 4 percent increase in sales in 2008, although he did see it slowdown a bit in the last three months of the year. Still, he said, he is plowing ahead with plans to open another cafe later this year.
Ken Zeff, owner of Crazy Mocha, a 9-year-old chain of coffee shops in Pittsburgh, says his comparative sales were up 12 percent year-over-year in 2008 and he is planning to open his 21st shop in the first quarter of this year. He is also looking at three or four other potential sites to launch later in the year.
Kiva Han Coffee, a gourmet roaster that supplies coffee to retailers in western Pennsylvania, eastern Ohio and parts of West Virginia, grew 40 percent in 2008, and about 90 percent of its business comes from small coffee shops, president and owner Ed Wethli said.
All told, Wethli said he helped 30 new cafes open their doors in 2008, supplying them with everything from cups and equipment to the syrup used in the drinks.
"There's a real local initiative with people to buy from people in their community and ... coffee bars represent one area where you can definitely walk with your feet and support somebody local," Wethli said. "All of us feel a little betrayed by the big corporations that have really put us in a tailspin here."
Economists say the trend contradicts expectations in a slow economy. Typically the weakest competitors _ often the smallest business owners _ are weeded out, failing first and fast.
But Esther Gal-Or, a professor in the University of Pittsburgh's Katz Graduate School of Business, said it may be small cafes are succeeding because they have the flexibility to adapt to a failing economy.
Jeffrey Inman, a marketing professor at the University of Pittsburgh, said part of the shift away from Starbucks could be "a backlash against some of the corporate greed we've seen."
"If I have a relationship with the baristas and they know who I am and they know what I usually get that drives it too," Inman said. "And the small guys tend to be better at doing that then the big guys. I would call that the 'Cheers' effect, where everybody knows your name."
At the recent Northeast, Mid-Atlantic Region Barista Competition, Luke Shaffer was moved to tears to see some of his regulars at the 21st Street Coffee and Tea drove 30 minutes from Pittsburgh to see him perform.
For cafe owners like Shaffer, the competition was an opportunity to learn as well as a chance to market themselves _ key to businesses that do little to no advertising.
"Customers are kind of callous toward advertising," Shaffer said, noting that even without it he enjoyed monthly sales growth in 2008 of 20 percent to 50 percent. "I would rather focus my resources and my time on just improving our product and word of mouth has brought us a lot of wonderful press."
On his lunch break at the Crazy Mocha in downtown Pittsburgh, Nathan Eber, a 32-year-old ombudsman with Allegheny Health Choices, is reading a book and listening to his iPod while sipping coffee. The earth-tone orange walls, the comfy chair and the relaxing music all play into his decision to buy his coffee every day at this local coffee shop rather than at the Starbucks down the block.
Even when he goes home, he chooses to frequent the local coffee shops in his neighborhood, and has been doing this for quite some time.
"I do work hard for my money," Eber said, "and I choose to put money in businesses where I know it's going to come right back into the community."

Francorp Client Success in 2009

Francorp Client Success in 2009.

Francorp Clients continue with great success through difficult economic times! Recently in the past months Entreprenuer has again released the coveted Franchise 500 list, which is a documented list of the fastest growing 500 franchise systems in the U.S. Each year companies and professionals in the franchise industry wait anxciously to see who has made the list, which industries are growing quickly and how all the top franchise companies are doing currently.

Francorp is acknowledged as the industry leader in franchise development and consulting work in launching and developing new and existing franchise concepts and organizations. Francorp has been in business for over 33 years with almost 20 offices around the world. Clients have included McDonald's, Kentucky Fried Chicken, Auntie Anne's, Omni Hotels, Jimmy Johns, 800-Flowers and many others. This year on the Franchise 500 list, Francorp has 112 clients with whom the firm has worked with at some point, or continues to work with.

112 of the top 500 fastest growing franchise systems have worked with Francorp Consulting.

Francorp works with companies of all sizes and years in the franchise business. Here are some of Francorp's more recent clients who are experienceing success right now in 2009. These are franchise systems that will in the years to come gain more and more exposure, but for right now are just getting a foothold in the market.

Patrice and Associates, www.PatriceandAssociates.com - 3 franchises sold in 2009 Hot Box Pizza, www.gethotboxpizza.com – first franchise soldPlay Party, www.playparty.net – first franchiseAdvanced Maintenance, www.advancedmaint.com – 7th locationSofi’s Crepes, www.sofiscrepes.com – 3rd location -1st franchise in 2009Al’s Beef and Nancy’s Pizza, www.alsbeef.com - 6 Franchises sold in 2009

For more information on other great franchise concepts and on how to franchise a business, visit Francorp's corporate site, www.francorp.com.

Francorp Client J.D. Byrider

CARMEL, IN - J D Byrider, one of the most successful franchises systems, is expanding, even after its founder and CEO, James F. DeVoe, was lost in a March plane crash. Already this year J.D. Byrider Systems has opened five franchises in Blacksburg, VA; Nashville, TN; Pittsburgh, PA; Salt Lake City, UT; and San Antonio, TX. Still to open are Belleville and Springfield in IL; Clarksburg, WV; Kernersville, NC; Pinellas Park, FL; Fort Worth, TX; Kansas City, MO; and Pittsburgh, PA.
“These new dealerships, opened by existing and new franchisees, are a sure sign that the Byrider business model for selling used cars continues to be healthy and lucrative,” said William E. Ackermann, the corporation’s vice president of franchise operations. “This is the strongest possible endorsement of our product. Our franchise owners are smart enough to know a good thing when they see it—and own it.”
“From an increased focus on customer care, to attracting more franchisees who are socially responsible, the Byrider brand keeps getting better,” said Chris Hadley, co-owner of three stores and a Byrider franchisee since 1995. “That’s why we didn’t hesitate to open a new store in Nashville.” The store opened in February and employs 30 people, selling nearly 50 cars per month. He is also a part owner of stores in Kentucky and Indiana.
“After selling my sightseeing-by-plane business in Hawaii, I spent a year investigating other business opportunities, and landed on J.D. Byrider,” said Blake Johnson, whose brother Drew is also an owner. “It beat out 10 other business models I studied because with Byrider you don’t have to reinvent the wheel—you get assistance every step of the way.”
With dealerships in 28 states and 25 years of experience, J.D. Byrider is the nation’s largest and oldest used-car franchise. Byrider enjoys significantly high levels of customer satisfaction—94 percent, higher than most new car dealers.