Economy buzz hits coffee shops

With gasoline prices pushing toward $4 a gallon, are consumers trying to save money by cutting down on nonessential expenses such as espresso?

A random check with baristas across the Spokane area indicates that some are and some aren’t.

Starbucks may have seen a 28 percent decrease in profits during the first quarter this year, but espresso huts are coming up with ways to keep their businesses hot.

“For some of our regulars, it’s either gas or coffee,” said Shannon Bruner at the Java Hut Co. on North Division Street.

She said they may be having three lattes or other coffee drinks each week compared with five prior to the big jump in the price of gasoline.

She said her business perked things up by offering $2 latte specials. “I can definitely tell people are scrounging for deals,” Bruner said. “I don’t blame them.”

She said the specials will continue off and on through the summer.

By comparison, baristas at two South Side coffee stops said things are buzzing like normal.

“It’s actually gotten busier around here,” said Becky Varela at Time Out on 57th at 2921 E. 57th Ave.

The afternoon barista at the Grande Latte at 3101 S. Grand Blvd. reported the same. “Things are going great,” the coffee maestro there said.

The chief executive of Starbucks is blaming the mortgage crisis and the related economic slowdown for a smaller quarterly profit of $108 million from January through March. California and Florida, where the numbers of home loan defaults are high, account for about a third of Starbucks’ profits, according to the Associated Press. At the same time, the coffee giant has seen an increase in customer traffic in areas less affected by the economic woes.

The higher cost of food and other commodities associated with worldwide economic expansion has forced many businesses to raise prices.

Joanne Greer, owner of Classic Cafe in Deer Park, said her customer traffic hasn’t been affected yet, though some of her prices have gone up. “I can’t say it’s real significant,” she said of the economy’s affect on her business.

But even if the economy has yet to show up on the bottom line at the Classic Cafe, Greer said, “It’s on everyone’s mind.”

One solution may be to downsize the order, said Shasta Tesch at Walnut Street Perk at Third Avenue and Walnut Street.

“People are getting, like, a cheaper drink,” she said.

A blog posting a few months ago on the Web site coffeegeek.com summed up the situation.

“Starbucks is feeling pressure in an over-saturated market to reduce prices in competition with McDonalds. People are starting to reconsider the $4 cup of coffee as discretionary income dwindles,” one blogger said. “The larger economic question is what effect will a weak dollar have on imported whole coffee prices?”

The blogger put things in this perspective:

“Good coffee is not rocket science. It’s WAY more complicated than that!”