From the January 1998 issue of Entrepreneur

With starbucks on nearly every corner of nearly every city in America, the once-percolating coffeehouse trend has simmered down and become a staple of American culture. But savvy entrepreneurs have found a way to add a new ingredient to the industry: drive-thru coffeehouses.

In an effort to speed up the daily grind for caffeine-dependent consumers, drive-thru stands are popping up all over the country. Jeff Titterington and Mike Rippey, both 50, own 27 drive-thru Caffino outlets in California and Chicago, the first of which opened in 1993 in Napa, California. "No one else was doing it back then," says Titterington, who came up with the Caffino concept after seeing a number of coffee carts on a trip to the Pacific Northwest. "I thought we could do the same thing but on a more professional level."

Northern California residents took to the drive-thru concept immediately, and soon, some 500 customers a day were whizzing through the Caffino location to get their daily jolt. Within a year, the Caffino team had opened another store and have averaged six new stores each year since. Caffino's 27 shops brought in $13 million last year--an average of a little less than $500,000 per store.


Frances Huffman, a freelance writer in Pacific Palisades, California, is a former senior editor for Entrepreneur.

Heating Up

Titterington and Rippey aren't the only ones who have caught on to the latest coffee craze. Ken Woods, 41, and Mark Garrett, 42, opened Gotta Java in Pasadena, California, last April--and they've already noticed potential competitors lurking around. "I've caught people outside at 8 p.m. taking photos and using a tape measure to get the dimensions of the structure," Woods says. "But I can't get too mad because that's exactly what I did three years ago. Only I waited until 11 p.m. when nobody was there."

What's luring potential competitors is the notion that a tiny structure and simple menu must mean low overhead and big profit margins. In reality, the recipe isn't quite that simple.

"It's a heck of a lot of work," says Woods. "It's really hands-on. I'm [at the business] all the time." And Woods isn't just talking about the daily duties, which he and Garrett share with eight employees. He's also referring to the three years of research he conducted before taking the plunge. Gotta Java's pre-opening checklist included investigating everything from where to purchase coffee beans to designing a logo, creating a menu and coming up with a building design.

Start-up costs for the initial site, located just a few miles from Pasadena's famed Rose Bowl, came to more than $100,000. According to other operators, this is a modest investment for a start-up drive-thru.

Just ask Caffino's Titterington. His sites run up to $280,000 each before the doors--or windows--are even opened.

How can opening costs for a compact drive-thru location with a limited menu equal the cost of opening a full-service restaurant? Tit-terington explains that in California, as in many other states, drive-thru coffeehouses must meet all restaurant codes, which pushes up costs.

To keep costs in check, many drive-thru owners are setting up shop in parking lots at shopping malls and strip centers. (Leasing space in a parking lot is typically cheaper than leasing commercial property.) Other
location hot spots are on major thoroughfares. A high-visibility locale that's easy to get to and teeming with traffic is crucial to drive-thru success.

Husband-and-wife team Meg Evans, 43, and Peter Lazare, 44, positioned their Grab-a-Java drive-thru on a main street leading into downtown Springfield, Illinois, a site that attracts morning rush-hour traffic. "It's jammed in the morning," says Evans, adding that traffic at the 21-foot-by-15-foot shop peaks at about 7:30 a.m. and then simmers into a steady flow of java junkies throughout the remainder of the day.

And lest would-be drive-thru coffeehouse owners think all coffee consumers are trendy professionals who like their lattes half-caf and low-fat, this trend actually appears to have gone mainstream. Evans, who oversees daily operations at Grab-a-Java, says she and Lazare, who still holds a full-time job as an economist, expected the store to attract mainly young corporate types. To their surprise, that hasn't been the case. "We get doctors, government workers, housewives with children, students, carpenters, nurses, everyone," says Evans. That mix of customers is expected to boost first full-year sales to $150,000.

Talking Snack

Caffino, like most drive-thru coffeehouses, offers a pint-sized menu of coffee drinks and baked goods. At most drive-thrus, the selection resembles the upscale brews at more traditional coffeehouses: cappuccino, cafe latte, cafe mocha, espresso, iced coffee and, of course, standard drip coffee. Prices also fall into the same range as those at coffeehouses such as Starbucks and The Coffee Bean & Tea Leaf, with drip coffees going for about $1 to $1.50 and specialty coffees commanding $2 to $3. Some drive-thrus tack on a premium for the benefit of convenience.

Because of limited space and cooking facilities, many drive-thrus limit food items to pastries and other baked goods such as bagels, muffins, scones, cookies and biscotti. Grab-a-Java's Evans tested a lunch menu but admits it didn't fly with customers and was too time-intensive. She has since restricted the food portion of the menu to bakery items.

Limited menus cut down on costs and on inventory, and considering that drive-thru structures sometimes measure little more than 100 square feet, inventory space is at a premium. In fact, space for everything--including employees--is in demand.

At Gotta Java, eight employees split shifts, with three workers on morning duty and two serving up the afternoon brew, while at Grab-a-Java, only two employees assist Evans. Caffino averages 12 employees in addition to a manager and an assistant manager at each location, bringing the company's total number of employees to more than 300.

In the world of drive-thru coffee, space, a restricted menu and quality coffee are all part of a winning blend, but the pièce de résistance is speed. "In a drive-thru situation, speed is paramount," says Titterington. "Our goal is to service a customer in 60 seconds or less."

For many drive-thru operators, location speaks louder than advertising. Aside from some local couponing, most coffeepreneurs let their visibility do the talking. Like many local businesses, drive-thrus typically rely heavily on word-of-mouth marketing. This doesn't mean you can ignore other forms of marketing. What's needed is a creative approach--distribute fliers in your community announcing your grand opening, give customers a "buy one, get one free" offer or create a "latte Tuesday," when all lattes are reduced-price. While this may not seem like traditional marketing, it doesn't require a big outlay of cash, and it can encourage customers to buy more or try a more expensive menu item.

Picking Up Steam

Drive-thru coffeehouses are just beginning to percolate. The nation's coffee associations have yet to compile any statistics on this new industry segment, and the Specialty Coffee Association of America lists just 10 drive-thrus on its roster of more than 2,200 members nationwide.

However, the drive-thru trend is picking up speed, and even giants like Starbucks are taking notice: The crown prince of coffee has added drive-thru windows at a select few of its locations. The real growth jolt, however, is expected to come from the independent sector, not the established coffee chains. That means enterprising java junkies who can serve up a quality cup of joe in a jiffy could be on the fast track to coffeepreneurship.

What's The Brew-Ha-Ha?

Expected retail sales of specialty coffee beverages during the 1990s: $1.5 billion

Number of U.S. coffee cafes expected to be operating by 1999: 2,500 plus

Number of U.S. espresso bars expected to be operating by 1999: 3,000 plus

Number of U.S. coffee carts expected to be operating by 1999: 4,500 plus

Want To Know More?

  • The Specialty Coffee Association of America offers coffee-related educational seminars, workshops and training materials and publishes In Good Taste, an industry newsletter. Write to 1 World Trade Ctr., Long Beach, CA 90831 or call (562) 624-4100.
  • The National Coffee Association provides members with studies and information on the coffee industry. Write to 110 Wall St., New York, NY 10005-3893 or call (212) 344-5596.

Contact Sources

Gotta Java, 735 S. Arroyo Pkwy., Pasadena, CA 91105, (626) 356-2138

Grab-a-Java, 1702 S. Sixth St., Springfield, IL 62703, (217) 523-5282.