Joe To Go Drive-thru coffeehouses are hyping sales in the java industry.

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

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

Northern California residents took to the drive-thru conceptimmediately, and soon, some 500 customers a day were whizzingthrough the Caffino location to get their daily jolt. Within ayear, the Caffino team had opened another store and have averagedsix new stores each year since. Caffino's 27 shops brought in$13 million last year--an average of a little less than $500,000per 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 caughton to the latest coffee craze. Ken Woods, 41, and Mark Garrett, 42,opened Gotta Java in Pasadena, California, last April--andthey've already noticed potential competitors lurking around."I've caught people outside at 8 p.m. taking photos andusing a tape measure to get the dimensions of the structure,"Woods says. "But I can't get too mad because that'sexactly 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 atiny structure and simple menu must mean low overhead and bigprofit margins. In reality, the recipe isn't quite thatsimple.

"It's a heck of a lot of work," says Woods."It's really hands-on. I'm [at the business] all thetime." And Woods isn't just talking about the dailyduties, which he and Garrett share with eight employees. He'salso referring to the three years of research he conducted beforetaking the plunge. Gotta Java's pre-opening checklist includedinvestigating everything from where to purchase coffee beans todesigning a logo, creating a menu and coming up with a buildingdesign.

Start-up costs for the initial site, located just a few milesfrom Pasadena's famed Rose Bowl, came to more than $100,000.According to other operators, this is a modest investment for astart-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 alimited 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, whichpushes up costs.

To keep costs in check, many drive-thru owners are setting upshop in parking lots at shopping malls and strip centers. (Leasingspace in a parking lot is typically cheaper than leasing commercialproperty.) Other
location hot spots are on major thoroughfares. A high-visibilitylocale that's easy to get to and teeming with traffic iscrucial 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 leadinginto downtown Springfield, Illinois, a site that attracts morningrush-hour traffic. "It's jammed in the morning," saysEvans, adding that traffic at the 21-foot-by-15-foot shop peaks atabout 7:30 a.m. and then simmers into a steady flow of javajunkies throughout the remainder of the day.

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

Talking Snack

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

Because of limited space and cooking facilities, manydrive-thrus limit food items to pastries and other baked goods suchas bagels, muffins, scones, cookies and biscotti. Grab-a-Java'sEvans tested a lunch menu but admits it didn't fly withcustomers and was too time-intensive. She has since restricted thefood portion of the menu to bakery items.

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

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

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

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

Picking Up Steam

Drive-thru coffeehouses are just beginning to percolate. Thenation's coffee associations have yet to compile any statisticson this new industry segment, and the Specialty Coffee Associationof America lists just 10 drive-thrus on its roster of more than2,200 members nationwide.

However, the drive-thru trend is picking up speed, and evengiants like Starbucks are taking notice: The crown prince of coffeehas added drive-thru windows at a select few of its locations. Thereal growth jolt, however, is expected to come from the independentsector, not the established coffee chains. That means enterprisingjava junkies who can serve up a quality cup of joe in a jiffy couldbe on the fast track to coffeepreneurship.

What's The Brew-Ha-Ha?

Expected retail sales of specialty coffee beverages during the1990s: $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 offerscoffee-related educational seminars, workshops and trainingmaterials and publishes In Good Taste, an industrynewsletter. Write to 1 World Trade Ctr., Long Beach, CA 90831 orcall (562) 624-4100.

• The National Coffee Association provides members with studiesand information on the coffee industry. Write to 110 Wall St., NewYork, 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.