The economic downturn is beginning to get to folks’ bottom line — their coffee money.
Java junkies looking to pinch pennies are sipping less expensive coffee drinks, brewing at home or going cold turkey altogether. The shift is hurting both small-time coffee shops and giants of joe such as Starbucks, which said Wednesday that it expected lower second-quarter profit and full-year earnings than it originally projected because in-store sales and traffic had declined.
Historically, coffee is one of the last things to go from consumer budgets… but that history of spending doesn’t necessarily account for a more modern affectation: the five-buck-a-cup über café latte.
Those who haven’t given up the coffee-shop routine are buying less expensive drinks: drip coffee rather than a caramel macchiato, or an iced coffee instead of a frappuccino.
“Fancy coffee has had its run,” said Dean Trucco, owner of Stir Crazy, a boutique coffee shop on Melrose Avenue.
While brewed coffee — both at home and in the coffee house — should be poised to make a come-back, what might that mean for the five-buck-a-cup Clover-brewed single origin? We’ll see.
April 29, 2008 at 12:56 am
I don’t think we’re so much as seeing an economic effect on coffee, as we are seeing Starbucks dealing with their own internal problems. And when Starbucks sneezes, the coffee world catches a cold.
Nice site btw, I’ll just stumbled across. . .
April 29, 2008 at 1:10 pm
Thanks, Ray.
I think you’re angling the right direction in terms of Starbucks having their own issues these days, but I’m not yet ruling out the role of the larger economy.
The latest figures on foreclosures, tumbling home prices, and the skyrocketing prices of some food staples has the potential to create a reflexive customer action — a collective flinch — in terms of wallet-minding in the near term. I think that’s further exacerbated by the value of the dollar and its impact on coffee prices… it’s going to continue to cost more for roasters and retailers to buy the same amount of coffee. I expect those prices will trickle down to the price per cup as there’s just only so much that retailers can absorb.
‘Course, I’m no economist. I get as far a “guns and butter” and start to get sleepy…
May 29, 2008 at 12:09 pm
The article is almost spot-on; a lot of my regular latte folk switching to drip, citing rising gas prices and mortgage rates. We’ve been paying at least a dollar more per pound for months now and are going to raise all our prices by about 25 cents come the first of June. Traffic and volume has increased, but daily sales are hovering around the same numbers. But they’re almost always back on the double shot of crack in a week.
I’m feeling it in the tip jar as well… volume is the only saving grace for both sales and tips.