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Originally published Friday, March 21, 2008 at 12:00 AM

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Retail Report

Kapow! Coffee hit with rent increase, rising prices

Kapow! Coffee, one of Seattle's smallest coffee shops, will raise drink prices next month and open Sundays for the first time in its 10-year...

Seattle Times business reporters

Kapow! Coffee, one of Seattle's smallest coffee shops, will raise drink prices next month and open Sundays for the first time in its 10-year history to help pay for the rising cost of coffee, milk and rent.

The 200-square-foot shop next to Taco del Mar in South Lake Union — known to longtime Seattleites as the Cascade neighborhood — is feeling pressure from the area's gentrification. Other coffee shops have moved in, and Kapow!'s rent shot up this month.

"The rent tripled, but there isn't triple the business," said owner Angela Baker, who declined to say how much she pays for the space that used to be a storage garage. Munro Family Trust owns the space, according to King County property records.

Baker gets a cut from the thousands of "Ride the S.L.U.T." T-shirts that have been sold in her shop by her only employee, Jeremiah St. Georges, and his business partner, Don Clifton.

The shirts refer to the South Lake Union Trolleys, or streetcars, which are housed nearby.

"We're inadvertently a tourist attraction," St. Georges said. Last fall, he stayed awake nights folding huge numbers of the popular T-shirts, which his girlfriend, Lisa Ripley, designed "in less than three minutes on a computer."

Tourists have come from as far away as China and Cameroon for the shirts, said St. Georges. He's been a barista at Kapow! since a month or two after it opened in 1998.

Baker started Kapow! while she was manager of the Taco del Mar next door.

"It used to take a half hour to get coffee," she said. "I figured if we had it right here, employees would be back quicker."

After about a year, the shop generated enough money that she left Taco del Mar.

The dot-com bust hurt Kapow!, but sales were rebounding until construction for the streetcars began in 2006.

Now the streetcars are running and Baker hopes business will grow as Mirabella and other residential buildings open. "There's all this hope, but everybody's not here yet," she said.

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St. Georges wants to capitalize on the popularity of the T-shirts. So far, there are "Ride the S.L.U.T." mugs and coffee beans.

"I'm working on 'Ride the S.L.U.T.,' the musical," he said.

— Melissa Allison

Tidbits

Burberry, the British fashion house known for its trademarked check pattern, plans to open a store in Bellevue Square in late summer. The new Burberry store will take 5,300 square feet near Nordstrom on the mall's first floor. Also, Lacoste is on track to open its first Northwest store at Bellevue Square in May. — AM

Marcus & Millichap's 2008 national retail report ranks Seattle third for the overall strength of its retail real-estate market, up two notches from last year. San Francisco is No. 1 on a West Coast-dominated top-10 list capped by Portland, which rose seven notches from 17th last year. Others in the top 10 include San Diego, at No. 2; New York City, 4; San Jose, 5; and Oakland, 6.

"Retail spending is expected to exceed the national rate this year, as demographic trends in the metro remain mostly favorable," Marcus & Millichap, a real-estate-investment services firm, says of Seattle. Rankings are based on numerous forward-looking supply-and-demand indicators, such as employment growth, retail sales and local housing-market conditions. — AM

Three customers represent about 29 percent of Jones Soda's total revenues, the company said in a securities filing this week. Sales to Wal-Mart alone are about 13 percent. Jones said it anticipates decreased dependence on a few distributors and accounts as it expands its network. — MA

Pioneer Organics, a Seattle grocery home-delivery company that also delivers in Portland, merged last week with Vancouver, B.C.-based Small Potatoes Urban Delivery, or Spud.

Ronny Bell, who founded Pioneer Organics almost 11 years ago, sold his shares to business partner and relative Michael Knight, said Henri Parren, a Seattle executive from the Spud side of the deal. The company has not decided whether to change Pioneer's name to Spud, which is the largest organic home-delivery service in North America.

Bell sent an e-mail to friends and business associates saying he's sad about the sale. — MA

Dressbarn Woman has opened at Crossroads Bellevue across from sister store Dressbarn. Dressbarn Woman sells sizes 14-24. — AM

Starbucks will open its first stores in Poland this year, chief operating officer Martin Coles told reporters after the company's annual meeting on Wednesday. Starbucks or its business partners already said it would open this year in Argentina, Bulgaria and the Czech Republic. It plans to open in Portugal next year. — MA

Celebrate Express, of Kirkland, has hired Harold Egler as vice president of marketing. Egler, 55, was global VP of customer intelligence at Getty Images from 2002 to 2007. Previous stints also were at Eddie Bauer and Lands' End. Celebrate Express will pay him an annual base salary of $220,000, plus a bonus worth up to 20 percent of his salary. — AM

Heckler Associates came up with the name "Mastrena" for the new espresso machines that Starbucks will roll out beginning next month. The Seattle firm's founder, Terry Heckler, was in the advertising business with Gordon Bowker in the 1970s, when he happened to mention that words starting with "st" are powerful. Bowker was co-founding a Seattle coffee company at the time and the suggestion led him to call it Starbucks. — MA

Retail Report appears Fridays. Melissa Allison covers the food and beverage industry. She can be reached at 206-464-3312 or mallison@seattletimes.com. Amy Martinez covers goods, services and online retail. She can be reached at 206-464-2923 or amartinez@seattletimes.com

Copyright © 2008 The Seattle Times Company

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About Retail Report
Retail Report is a look at the trends, issues and people who makeup the dynamic and versatile retail sector throughout the Puget Sound region. Every Friday with Melissa Allison and Amy Martinez. Send tips or comments to mallison@seattletimes.com or amartinez@seattletimes.com.

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