Tuesday, November 18, 2008

Retail Memo: Canada's 'Coffee Culture Cafe & Eatery' Plans to Open First Stores in the U.S. in Early 2009 - Recession or Not

Neighborhood Retailing -- Foodservice Style

Natural~Specialty Foods Memo is familiar with, and rather impressed by, the Canadian coffee house/cafe/food service chain Coffee Culture Cafe & Eatery (a store in Canada pictured above), which is based in Mississauga. That's why when we heard today the Canadian retailer of coffee drinks, meals, deserts and related food and beverages is planning to set up shop in the United States we became very interested. And, of course, decided to write about it here.

The development interests us for two reasons. First, as mentioned above, we are familiar with the chain, having visited a couple of its cafes in Canada. Second, we think it's a vote of confidence both for the chain and the long term "fundamentals" of the U.S. economy that Coffee Culture would dare prepare to open its first U.S. store in the village of Williamsville near Buffalo, New York during what is a very bad economic recession, and likely to get worse before it gets better, in the U.S.

Coffee Culture Cafe & Eatery told us today it's planning to open its first store at 5590 Main Street in Williamsville, New York in March or April of 2009.

But that's not all. Peter Karamountzos, the president of Coffee Culture, says the company also is in negotiations for a second location in downtown Buffalo, New York.

Karamountas says Coffee Culture Cafe & Eatery has been researching and planning to launch its first stores in the U.S. for about 18 months to two years. The company decided to pick New York for its launch across the Canadian border rather than the other border state of Michigan because it felt at this time New York offered better opportunities.

"We’d like to open 10 to 12 location in and around Buffalo," Karamountzos says. "We like to be in village settings or downtowns, where there's strong neighborhood foot traffic. We also like being on corners where we can have a physical presence."

According to Coffee Culture, it's also considering sites for its cafe/restaurants in the Buffalo, New York region cities and towns of Orchard Park, East Aurora, Hamburg, Ellicottville, Batavia, and Rochester, along with planning to open stores in the next door Ontario, Canada cities of Niagara Falls and Niagara-on-the-Lake.

Despite the fact Starbucks is closing hundreds of its cafes in the U.S., Coffee Culture Cafe & Eatery thinks it can offer consumers something Starbucks isn't -- primarily a more restaurant experience within what is still a cafe setting and experience.

Coffee Culture, which currently has 45 cafe/coffee houses/restaurants in Canada, was founded just two years ago in 2006 in Woodstock, Ontario, Canada. The company operates mostly company-owned cafes but also offers franchise opportunities.

Coffee Culture stores average about 2,000 square feet. They are of an upscale but not ultra-fancy European-design style. The interior features lots of wood fixtures, soft colors, warm design elements and leather chairs. The retailer also customizes each store to the local neighborhood it is located in, resulting in all 45 of its current units in Canada looking similar but not alike.

The European-style cafes feature a complete selection of coffee drinks and other beverages, regular and panini sandwiches, breakfast items, breakfast, lunch and dinner crepes and other related foods. Natural and premium ingredients are used. However the stores are not high-price-positioned. You can view the menu here.

Coffee Culture's focus is to get people to come inside and spend time in the cafes, which is how Starbucks began under founder Howard Schultz and now is trying to get back to under the founder, who once again is CEO of the struggling chain as well as its chairman.

For example, Coffee Culture stores don't have drive-up or drive-through windows. Customers have to come inside the stores even if they want food and drinks to go.

"Our theme is 'Come for a taste, Stay for a visit,'" Karamountzos says. "We know people are in a hurry, but that doesn't mean they have to settle for a sterile fast-food experience."

Another interesting aspect of the Coffee Culture cafe/restaurants is they don't use disposable (paper or plastic) plates or eating utensils. Instead, all of the food offered in the stores is served on real china plates and bowls, and the utensils used are real silverware. Not only does this add a quality and homey touch, it's also "green" because reuse is far more environmentally sound than even 100% recycling is.

And since the U.S. is a "coffee culture" just like its North American cousin Canada is, we suspect the cafe and eatery's name should resonate well with U.S. consumers in the Buffalo, New York region when the first stores open early next year.

It isn't going to be easy to be a success in the current recessionary economy, which is hitting Canada like it is in the U.S. But the good news is, if Coffee Culture can make it through its first year in the U.S., 2009 -- and we hope the economy turns around at least starting in early 2010 for all of our sake -- then the cafe and eatery chain's first U.S. stores should be well positioned to do even better when times get better.

We like the company's spirit of being willing to enter a new market in what are the worst of times. It shows entrepreneurial optimism at its best.

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