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Local cafes face the giant: established coffee shop owners don't fear arrival of you-know-who.

ROGER CHEUVRONT HAS always managed to be in the middle of black gold.

For several years he was an Amoco Oil Co. executive. Now he deals in the other dark liquid that plays a vital role in the U.S. economy: coffee.

"We're still cutting our teeth," Cheuvront said of Java Roasting Co., which he opened at 12800 Chenal Parkway five months ago. "It was always in the back of my mind that I wanted a little restaurant, then we looked around and realized there weren't any good coffee shops in west Little Rock."

John Lloyd, who co-owns the Coffee Beanery franchise three miles further west at 17200 Chenal Parkway, might disagree with Cheuvront's characterization. But they are part of a small army of small-business owners who brought the percolating specialty coffee industry to Arkansans long before Starbucks discovered the state earlier this month.

And the local owners expect to be able to compete against the Seattle java giant that burned the prefix "frap" into our coffee lexicon--partially because they don't think Starbucks knows what kind of coffees folks around here prefer to drink.

"Coffee shops have been in Little Rock for 10 years, but what upsets me is that it takes a Starbucks for people to get in line for coffee," said Chris King, owner of a Churchill's Coffee franchise in Pine Bluff.

Lloyd--who, along with his parents, opened the first of three Little Rock Coffee Beanery locations in 1990--goes even further: "Arkansas isn't behind the times. Coffees have been traded since the 1600s, and coffee shops were around then, too."

The specialty coffee industry generated $8.4 billion in revenue nationally last year. Not even the Specialty Coffee Association of America knows how much of that was brewed in Arkansas by coffee shops with descriptive names like Java Joe's, Andina Cafe and Coffee Roastery, Cafe Latte, Espress Yourself and Something Brewing.

About 3,500 gallons of coffee are brewed annually and about 32,400 espresso drinks are made at Sufficient Grounds' 722 N. Palm St. location in Little Rock's Heights neighborhood, said founder and co-owner John Newbern.

Somewhat similar numbers are reported across the state in anecdotal form by shop owners.

Montine McNulty, executive director of the Arkansas Hospitality Association, said many restaurants have also shifted to gourmet and specialty coffees as demand for high-concept coffees is in "full force in Arkansas."

Still, the perception of gourmet coffee's late arrival to Arkansas lingers.

"My general observation is that new coffee trends start on the West Coast, spring to the East Coast, and are slow to trickle down to the central part of the country," said Ted Lingle, SCAA's executive director. "It's not surprising to me if Arkansas is going through a specialty coffee boom that was going on elsewhere five .years ago. Even Little Rock is on Starbucks' radar now

"Historically, people down South are slower to adapt and change."

Caffeinated

Depending on the city, startup coffeehouse owners have vastly different degrees of struggle to gain a foothold in a niche industry. Many jumped from jobs in other industries into coffee just to do something they thought they might enjoy.

Cindy Arsaga was a nurse and her husband, Cary Arsaga, was selling real estate in Fayetteville when they got the coffee bug in 1992 after trips to Boulder, Cob., led them to an attractive coffee shop. They educated themselves on coffee and invested $50,000 in equipment, furniture, training and other startup necessities.

"At the beginning, we didn't even have a coffee maker in the house," said Cindy Arsaga.

The Arsagas now boast four coffees shops and a bakery, and they plan two more kiosk-style outlets in a local hospital and library. But it wasn't easy for the Arsagas, who only recently have cut down to 40-hour work weeks after a decade of working 50 and 60 hours a week.

They had to do some educating of the public about specialty coffees--a task admittedly eased by fact that they are located in a college town.

"There was nothing here, and it was waiting to happen," Arsaga said. "The general public didn't know what it was about. They thought, why pay $3 for a cup of coffee [espresso] when you can pay 50 cents down the street?

"We had to explain the differences between our coffee and Folger's and Maxwell House and what a coffee shop was and how it contributed to the city."

Sufficient Grounds has grown from a single shop in The Heights to include shops at the Victory Building on West Capitol Avenue--within a few minutes' walk of a host of state government offices--and downtown at the Union Plaza Building at Capitol Avenue and Louisiana Street.

Co-owner Newbern and friend Adam Frith were teaching English in Japan and tossing around ideas for their return to the United States.

"While there, due to sheer boredom, we talked about what we'd do when we got back," Newbem said. "Gourmet coffee was prospering at the time, and we knew that whatever was hot [in metropolitan areas] would be in little Rock in five years.

They launched in May 1996 and, like most new restaurants, enjoyed a six-month "honeymoon" before business tapered off. But the cash register started singing again in 1998. Newbem and Frith found Little Rockians took to specialty coffees quickly.

"If you do a good job in the first low period, you'll end up doing very well," Newbem said.

Chris and Michelle King opened their Churchill's Coffee in Pine Bluff in October 1999. They found Pine Bluff a tougher bean to roast, with most resistance being related to price, and didn't hit profitability until 2001.

"There are always going to be certain people that all they see is Folger's," Chris King said.

When the Kings get a new customer to try what Chris calls "real coffee," they see one of two reactions: "When they get real coffee they're hooked. But a 40-year-old person drinking Folger's most of their life, who finally drinks 'real' coffee for the first time, it might be too bold for them. They're used to bland. But most people won't go back."

Price has also been a factor for shop owners. Three-dollar--or more--espressos were initially discouraging, as were regular coffee prices that are typically over $1. But over several years, prices have remained somewhat stable, even considering that a vast majority of the world's coffee beans are grown in Third World nations where civil strife isn't uncommon.

Unstable African nations made it nearly impossible to get some coffees in the 1990s. The Arsagas stopped buying Kenyan AA coffee after it nearly doubled in price per bag. But an 8-ounce cup of joe priced at "75 cents 11 years ago, has only went to $1.25," Arsaga said, apparently not noticing that he was talking about a 66 percent increase in price.

Starbucks

Hoopla around Little Rock's new Starbucks hasn't convinced shop owners they're about to be crushed by a national behemoth. While they may be bugged by the perception that fine coffee has suddenly come to Arkansas, in the long run they believe the rising tide of coffee will float all boats.

The Arsagas have been competing with a Starbucks operation inside a local Barnes & Noble bookstore, as have Little Rock shop owners.

"What Starbucks brings to the market is a huge marketing opportunity, which could be good for all coffee places," Newbem said. "The more people out there drinking specialty coffees the better it is for all of us. [But] every situation with Starbucks would be different. We knew they were coming, so we read up on them and did research. If you serve a good cup of coffee, have friendly service and a fair price, you'll do OK.

"If they moved next door, I'd maybe watch more closely."

The SCAA's Lingle agreed.

"Starbucks has helped build the market in communities where they're active," he said. "As a result, people drink more specialty coffees."

But the competition does force independents to improve staff training, product quality and store function and layout, Lingle added.

Lloyd said Starbucks typically opens three to six stores within a two-year period.

While coffee is their focus, most independent operators have bolstered their offerings with light breakfast and lunch menus and smoothie-style fruit drinks.

The Arsagas have taken advantage of a college town's possibilities and created coffee house forums in which a cup of coffee can come with a side of poetry readings, singer-songwriter nights and small exhibits of local artists' works.

"Starbucks doesn't do that," Arsaga said.

Churchill's has also had occasional acoustic music evenings to go along with about 80 varieties of coffee, while Sufficient Grounds is operating a "hot spot"--a wireless Internet connection zone for laptop computers.

One of the bigger challenges has been selling coffee in the hot and humid South, but ice coffee sales simply rise, shop owners say.

The Arsagas were painfully aware when Starbucks products began to be sold at the nearby bookstore five years ago.

"People started coming up and using Starbucks' terminology," Arsaga said. "Starbucks is really defining for the general public how coffee is sold, and we had to accommodate our customers.

Hence the recently christened "Sagacinno" to compete with Starbucks' frapucinno.

But Arkansans may not take so well to Starbucks coffee--a dark roast with a stronger, more bitter taste. Most Arkansan coffee shop owners seem to prefer medium roasts, which don't lose a full-bodied taste.

"Many of our customers want to support Arkansas companies, and they look at Starbucks as the 'big corporation' from out West. There are a lot of people who don't like the dark roast," said Cheuvront. "I'm not really sure what contributes to that. It could be the South isn't used to that type of flavor yet, without a previous Starbucks and West Coast experience. They prefer milder coffees."

Still, Starbucks plans to add more outlets and spread that taste around Arkansas.

Although price differences are minimal, independent operators say Starbucks does bring an image-honed hipness.

"The draw with Starbucks is that people associate it with Seattle and think it's pretty cool," Arsaga said. "If you didn't have the local business mentality, then you might be drawn there."

The Arsagas, though, will fight for their local market.

"If [Starbucks] opens a stand-alone shop here," Arsaga said, "we'll open a shop right across the street from them."
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Author:Holcombe, Carl D.
Publication:Arkansas Business
Geographic Code:1U7AR
Date:Jun 30, 2003
Words:1723
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