Why has indie coffee (apparently) stagnated over the past 8 years?

Cafe Society
1

Basically since the economic troubles of 2008. At that point Starbucks (obviously not indie), close about 10% of its stores nationwide. Here in Indianapolis, several were shut down, probably about par for the shutdowns in major cities. A couple have been opened since then. That’s just an interesting fact to get us started on talking about indie coffee and its progress or lack thereof. Another fact is that no major chain has arisen in most places to take on Starbucks. I got to know Biggby Coffee in Michigan when I dated someone up there in 2013. I think that chain has potential elsewhere (it’s gotten as far south in Indiana as South Bend), but it’s four years later, and it seems that chain has stalled a bit too in terms of growth.

But indie has really failed to fulfill what seemed like big potential. In Indy, virtually nothing has appeared since 2008, and some places have gone away. On the Southside, the only indie place, the Bean Cup, died in 2010 or so. They used to have live music, art on the walls, all that fun stuff.

Even tony markets like Zionsville and Carmel to the north have trouble sustaining a single shop. Eagle Creek died in Zionsville, even though it used to be packed. The former owner (he sold it, then it died) still roasts and seems successful (roasters seem to be doing OK, just not actual shops). A couple places have come and gone in the same location. Soho in Carmel used to have a lot of live music and other events, and they’ve eliminated almost everything but at least still exist. Local chain Hubbard & Cravens is good but hasn’t grown overall (some stuff has closed, some has opened).

I got a chance to check out the coffee scene in NYC when I dated someone in Chelsea in 2009-2010. It was OK, you know? Not really booming. My best friend lived near Times Square, and there was basically nothing in his neighborhood.

So, Starbucks hasn’t seemed to grow much, at least in terms of locations, new major chains haven’t arisen, and indie has seemed to struggle. Why is that? My speculations:

• It’s hard to make coffee exciting via quality or drink variety. I.e., be different in a way that beats Starbucks. The old “friends don’t let friends drink Starbucks” enthusiasm has died. At the end of the day, Starbucks is pretty good, and it’s hard to beat them in either straight coffee or “candy drinks.” Now, you may be a coffee snob and screaming that Starbucks sucks. I can respect that opinion (though I think Starbucks has improved a lot), but it’s hard to establish the same level of difference that exists between, say, a good IPA and Budweiser. Starbucks originally took off because it was miles above Folgers and diner swill, and most people in the early 90s hadn’t even experienced espresso at all. Trying to position oneself above Starbucks as premium is difficult because…

• There aren’t really that many coffee enthusiasts. I talked to a barista at Starbucks once who told me that, at least in her experience, someone ordering a straight, unflavored espresso drink is really rare. Most people go for the “candy drinks,” as I call them. You can pull perfect espresso shots with that great crema and everything, but most people just aren’t going to care. Or order straight espresso in the first place.

• It doesn’t pay. What I’ve read online about running a quality coffee shop is that supply and demand just don’t match up very well, even in a seemingly ripe market like NYC. It’s expensive to run the shop, and people kinda just don’t give a shit for the above-mentioned reason.

Those are my thoughts. I think the future of indie coffee is actually pretty grim at this point. That makes me sad.

2

Right around 2010/11 there was a crazy jump in coffee prices. Was probably hard for an indy place to weather that storm. Looking at the prices for the last 10 years shows some crazy price changes year to year.

3

Wow, yeah, quite the roller coaster. Good fact, thanks!

4

Coffee is 99c at McDonald’s. Compete with that.

5

IMO, cities with more of a tourist bent tend to have more of a café market. Compare Indianapolis and Nashville: about the same population and demographics, but one is a tourist town. Tourists do like to have alternatives to bars. The coffee scene here hasn’t really exploded here, but is still fairly vibrant.

Another point is that some kiosks, carts and drive thrus pay attention to a quality cuppa but aren’t gathering spots unto themselves.

And as Channing Idaho Banks pointed out, MickeyD’s sells a drinkable cup for a buck. They’re even somewhat competent at the candy coffee. That’s competition in already established numbers and markets.

6

Good points, and I hadn’t really thought about McD’s. It’s true, they’ve made an effort to do coffee at a lower price point, which would further take away possible share from prospective indies.

7

You have not heard of the Philz and the so-called third wave of coffee? All the rage out here on the left coast.

8

Independent mid/high-end coffee shops seem to be doing pretty good here in Cleveland, OH.

9

If you make anything fashionable it runs the risk of becoming unfashionable.

When I visit Italy coffee is not a fashionable item, it is merely a commodity that is taken seriously with an expectation that it it will be high quality. Buggering around with it is not really an option.

10

You get a different picture if you look at actual statistics instead of viewing with a likely confirmation bias. The coffee industry is doing fine. It’s a mature industry so you won’t see explosive growth, but the industry has been growing since the 2008 dip. Here are some scattered links and quotes:

First, your contention that there are no major chains rising isn’t true. The last five years have seen good growth in several like Stumptown, Intelligentsia, Blue Bottle, etc. Indie shops that started post-2008 aren’t big enough to be known chains yet, but it doesn’t mean none of them will be. Here are some of the fastest growing chains today. They have all added stores since 2008.

Starbucks plans to add 12,000 stores globally over the next five years. Their revenue has been growing an average of 12.76 percent over the past five years.

In a chart here, you can see a drop in coffee/snack shops from 2008 to 2009 and a steady increase since then.

Coffee consumption continues to grow in the U.S., and over half the retailers are independent.

More growth stats here.

11

Yet there are places to buy coffee besides McDonald’s. Clearly those places are competing!

(I mean no disrespect towards McDonald’s coffee - to each his own when it comes to food is my rule of thumb. Occasionally - shark-fin soup, say - I get judgy, but not for reasons of taste [meaning flavor].)

12

Thanks for the stats. It is hard, however, to break out the success of indie coffee shops from them. The stats support what I believed, that people are buying more good coffee than in the past, but they are not necessarily going to indie coffee shops for drinks more than they used to.

13

I’m not sure what stats you are reading. Your OP argued for the demise of the independent coffee shop, and I simply don’t see anything that can lead to that conclusion. From my links above, over half the coffee shops in the U.S. are categorized as independent. Here are more stats for NYC specifically. You can easily find articles talking about the upward growth trend in independent shops.

Moving outside of the U.S., indies dominate the market in Australia.

14

I never said “demise”; I said “stagnation.” The stat from New York is excellent, thanks. The quote from Peter Giuliano, however, makes it seem as though even experts are not entirely sure what’s going on.

I really only know my own town well.

15

Yeah, it’s tough to read too much into what you see only locally. There are a lot of factors beyond the overall trend in coffee, like local economy, tourism, demographics, etc. Living in Portland, I have the opposite problem as you and I have to be careful not to read too much into seeing multiple independent coffee shops on every block.

That said, I don’t think the industry is in much danger. It’s a mature industry now, so a healthy growth might appear to be stagnation when compared to the rapid growth of the 90s.