Coffee climate A mixed barometer

Some people call it “lattenomics” – using coffee sales at specialty coffee shops and drive-throughs to measure the overall economic climate.

No one considers the coffee-sales barometer close to scientific. Even so, a quick survey of area coffee retailers shows consumers are cutting back on lattes, mochas and Americanos during the Wall Street credit scare.

Tom Hayes, owner of Chicago Joe’s latte stand and drive-through on Appleway in Coeur d’Alene, has seen a clear connection between bad national news and declining sales.

“When times get bad, the first thing that goes is people stop buying the coffee drinks that cost from $3 to $5,” Hayes said. “After that the next thing to go is paying for a golf club membership.”

Other coffee retailers say the clearer instance of reduced coffee purchases occurred this summer when gas went above $4 a gallon.

Simon Thompson, president of Spokane-based Craven’s Coffee, said sales slowed at retail stores this summer. They’ve perked back up with the start of school, he added.

He’s seeing no sign of jitters because of the Wall Street shakedown. If anything, he’s seeing people continue buying their specialty coffee as a way to cope.

Soon after gas hit $4 a gallon this summer, consumers settled in and decided they would bite the bullet, driving less but still having their daily indulgence of fine coffee, Thompson said.

“True specialty coffee is a physiological and psychological comfort,” he added. People now rely on it for dealing with bad days, or for celebrating good ones.

An informal survey of area coffee retailers found mixed results, with some shops saying coffee sales dipped with gas prices and recent economic bad news. Others said sales were steady or slightly up from last year.

Economists also sometimes use grocery store sales as a business indicator. Economy.com recently noted that sales of groceries has increased in the past month. It said people generally are choosing to save money by dining out less.

At the Dutch Bros. Coffee shop on West Second in downtown Spokane, manager Rhonda Hill has no doubt people are spending less on lattes and cappuccinos. She isn’t sure what is driving that change. “But people who might have come in four or five times (per week) come in now about three times,” Hill said.

Worldwide java giant Starbucks Coffee Co. declined to give specific answers on how its Spokane or North Idaho stores are doing this year. It recently added a new coffee blend (Pike’s Place Roast) and breakfast items to offset declining sales in coffee, according to company announcements.

Another shop seeing a dip in sales is the Service Station, 9315 N. Nevada St. Shop manager Thea Sherman last week noticed a gradual downturn that could be due either to consumers cutting back or street construction nearby. “It could be either or both,” she said.

Spokane-based Rocket Bakery, with nine food and coffee shops in the area, also is seeing a slight drop in coffee sales, co-owner Julia Postlewait said.

“Whenever things are disrupted, some people fall out of their usual routines, and coffee is definitely a routine matter for most people,” she said.

Whatever the reason, Postlewait said the sales dip comes to no more than 3 percent compared with sales from the same nine stores one year ago.

Adding to the problem, she said, is the increasing cost of making coffee – beans, milk and flavors.

“Our profit margins are shrinking,” she said, “and we can’t compensate by raising our coffee (drink) prices.”