potrero view

December 2008

Coffee Loyalty: More than Just Beans

By Kerry Fleisher

When it comes to cafés the best brew doesn’t necessarily ensure customer loyalty.  A cup of coffee may go for $2 and change, but in the age of free wireless internet and economically-priced laptops, many customers demand more than just a full-bodied brew from their local caffeine stations.  Lining up for a cup of drip coffee has morphed into an experience, not a product-chase.

“I come to Sundance because it’s located close to work and has a good ambiance,” said Sam Diesen, who appreciates how Sundance on Third and 20th streets allows coffee sippers to lounge long after their last sip.  Lisa Giglio, who’s lived on Potrero Hill off-and-on since 1972, is faithful to Farley’s on 18th Street.  “The staff, owner, product, and attitude is fabulous,” she said, adding “there’s no cramping one’s style or forcing you to spend money.  It’s very European in that sense.”

Many coffee drinkers insist that their caffeine kick is accompanied by good company, albeit of the most anonymous sort.   “The crowd is important.  There’s nothing worse than an annoying crowd at a coffee shop,” said CBS employee Peter Saiers, who frequents Peet’s Coffee on Market Street.  For a large dollop of coffee slurping clientele, high-speed wi-fi is paramount.  “I come to this Starbucks because there’s easy access to wi-fi,” said David Spector, an engineer, who was found sipping a latte at one of the ubiquitous chains’ South-of-Market outlets.  “It has everything I need.”

For chain stores such as Starbucks, Peet’s, and Tully’s, customer satisfaction tends to center on consistency of both products and place. “The staff is nice at Starbucks,” said taxi driver Kasar, taking his caffeine at a Starbucks near Union Square.  Terry Hall, who frequents a Mill Valley Starbucks agreed,  “The one thing that gets me back is the staff.  They make me feel good.”  Hall also favors Peet’s on Market Street, which he visits regularly.  “There’s a social environ at hand,” he said.  “Whether you talk to someone or not.”

In addition to social ambiance and reliable wi-fi, convenient location is a key factor behind café-goers caffeine joint of choice.  “I choose this Starbucks [at Powell and Sutter] because it’s central,” said Spector.  “With Starbucks, it’s convenient because they’re everywhere, otherwise, I’d probably go somewhere else,” said Tim Kahler, who works in retail.

While some people, like Hall, consider Starbucks “a fungus,” the company’s executives rely on the 10,000 stores in the United States as advertising in themselves.  Starbucks’ advertising model depends on word-of-mouth appeal and location as opposed to large-scale advertising campaigns to sell their products.  Though Starbucks ranks sixth in Top Restaurant Chains, behind Wendy’s and McDonald’s, the company only spends roughly $38 million a year on advertising, compared to McDonald’s $782 million.  Starbucks began advertising on television last year, the first time the chain has done so since it was founded in 1985.

Peet’s Coffee, a coffee chain with more than 165 shops in California, increased its net revenue by almost 20 percent in 2007, despite reducing its advertising expenditures from $1 million to $.7 million.  A portion of Peet’s marketing dollars went to social networking hubs like Facebook, which caters to a young, tech-savvy, demographic.

Starbucks has similarly evolved beyond traditional advertising avenues.  After experiencing one of its most significant declines in average store sales last year, the company launched its first ever rewards program in 2008, promising two hours of free wi-fi, complimentary syrup, and a free cup of coffee with a purchase of a pound of beans to returning customers.

It’s unclear whether advertising is key to building café brand loyalty, or whether brand loyalty is created by other factors.  For many consumers – in particular espresso fiends and self-described coffee snobs – the quality of the coffee bean is paramount.  “I come here because the coffee is strong,” said Ron, a lawyer who frequents a Starbucks near Union Square. “I go to Peet’s because they sell high-end coffee beans,” said Donnelly Gillen, an attorney.

Peet’s sells more than 20 specialty blends in approximately 7,000 grocery stores, and offers a free cup of coffee with each coffee bean purchase.  Peet’s will open roughly 30 new stores this year, many of them in prime real estate locations, such as Telegraph Avenue and Dwight Way in Berkeley.  However, particularly in San Francisco, home to a bevy of eco-conscious consumers, location can be a secondary factor when it comes to where to pluck down six bits or more.

“I actually live close to Starbucks, but I go out my way to come here,” said Sanjin Agic, a full-time student who frequents Cup of Joe, an independent Nob Hill coffee shop that offers beer, gelato, and two iMac computers for internet use.  Down the road, photographer Charles Merida is a regular at Café Bean, an independent coffee shop that serves a “Daniel’s Omelette” amongst other veggie options, and features collage-art tables with clippings from Bayview Opera House press releases.   “You can put a face to it [Café Bean].  It’s one and the only, and there’s an aesthetic beauty,” said Merida.

If there’s something endearing about an independent coffee shop with a Ma’ and Pa’ pedigree, there’s also a down-with-the-man incentive that inspires many.  “I like to support smaller companies,” said Keith Johnson, a software engineer, as he sipped a coffee at Organic Coffee, located a half a block away from a South-of-Market Starbucks.  Carpenter Bill Egan only frequents chain coffee shops under extenuating circumstances.  “The independent coffee store would have to have a significantly worse cup of coffee for me to purchase at a chain store,” he said.

And still for others, there is no foreseeable circumstance that could result in the purchase of a Starbucks latte over its equivalent at an indy outlet. “I would even buy bad coffee to avoid Starbucks,” said Allison Guyton, a waitress, who prefers to throw down her $2 plus tip at Caffé Trieste in North Beach and Tazzo D’Amore in the Castro.

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