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Roast of the Town

Can the ordinary Joe find coffeehouse success in a Starbucks world?
March 1, 2003
URL: http://www.entrepreneur.com/article/59828

One of the most common entrepreneurial fantasies is to start a coffeehouse, to brew the best java while the cast of Friends sips and chats for hours on plush sofas. But with Starbucks on practically every corner, is it still possible for smaller outfits to be successful?

Absolutely, claims Bruce Milletto, president of Bellissimo Coffee Info-Group, a coffee business consulting firm in Eugene, Oregon. According to Milletto, the keys to success in the coffee business lie in stellar customer service and great ambience, in addition to a high-quality product. "It's not about the coffee; it's about the break," he explains. "That's why so many [coffeehouses] exist--they're social meeting places."

Creating a community meeting place was one motivating factor for Ellen Heller-Leo, 48, who launched Mother Earth Coffee Co. in Park Ridge, Illinois, in June 2002. Complete with mahogany d�cor and a piano, Heller-Leo's shop attracts the Chicago elite (mayor Richard Daley is a regular customer) and local college students alike.

What sets Mother Earth apart from other coffeehouses is Heller-Leo's commitment to give 10 percent of profits to charity. "You're helping people through your business. If everybody did this, then everyone would be taken care of," she says. With sales at about $1 million and agreements in place with investors and local officials, Heller-Leo envisions opening upwards of 200 locations in the next three years.

A unique element is needed to ensure success for coffeehouse entrepreneurs. Case in point: Jack Kelly, founder, and Bob Ohly, vice president, of Caffe Ladro in Seattle. With seven stores operating in the Seattle area, Kelly and Ohly, both 38, built their concept with a special focus on bakeries located in each store to create the myriad pastries, cinnamon rolls and muffins that complement the coffee.

Then there's the Fair Trade coffee that Caffe Ladro uses exclusively in its coffee blends. Fair Trade coffee is inspected by a third party to ensure that the coffee farmers and roasters are paid a fair price for their coffee beans and that the laborers have sustainable farms. "If a farmer is getting ripped off," says Kelly, "it's not cool that we're making money off of that." Though it's a bit more expensive, Fair Trade coffee has brewed Caffe Ladro's sales to a robust $3 million in 2002.

Martin Mayorga actually started on the roasting side of the coffee business, with Mayorga Coffee Roasters Inc. in Rockville, Maryland. Mayorga and his wife, Kerry Allen Mayorga, both 29, founded the company in 1998. With a family background in the coffee industry, Martin grew up in Latin America and experienced the coffee-growing process firsthand. Focusing on specialty imported coffee beans, Martin notes, "You have to educate your customers about shade-grown coffee, specialty coffees, etc., before you can sell them anything."

The Mayorgas are getting ready to open a 6,200-square-foot lounge for roasting and drinking coffee. Martin likens it to a microbrewery--it will be a place where people can relax and drink specialty coffees while they watch the entire roasting process.

With sales of $1.4 million, Martin says he hopes to open three to five stores in the near future and have them all be family-run. To other aspiring entrepreneurs, he offers this advice: "It's a competitive business. To have a long-term future, you have to offer something a cut above everything else [that's out there]."