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Originally published September 25, 2009 at 12:14 AM | Page modified September 28, 2009 at 4:48 PM

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Retail Report

Coffeehouse customers steamed about higher prices

Now milk prices are down, along with most other foods, yet coffeehouse prices are the same or higher, and some customers are steaming.

Seattle Times business reporters

Before the recession started devouring profits, skyrocketing milk prices were a scourge for the nation's coffeehouses.

Starbucks raised drink prices by 9 cents in 2007 and said rising milk costs would cut into profits.

Now milk prices are down, along with most other foods, yet coffeehouse prices are the same or higher, and some customers are steaming.

"I'm seeing 10 percent increases in many cases since last year, yet I see no justification for it," Michael Allen Smith, organizer for the Coffee Club of Seattle, recently foamed on his Coffee Hero blog.

He figures labor, real-estate and energy costs are flat or down, and the dollar has more buying power in many coffee-growing regions.

Smith has returned to home roasting for the first time since moving to Seattle a couple of years ago. He now roasts about half the coffee he drinks and recommends others reduce their intake, roast and brew at home and favor affordable coffee shops.

"If your cafe or roaster raises their price, put them in the time-out corner. Take your coffee dollars elsewhere," Smith wrote.

Seattle coffee-shop owners say they are not gouging customers. Their costs are up, particularly for high-quality coffee from Africa.

Sebastian Simsch, owner of Seattle Coffee Works, wrote on his blog that higher East African coffee costs pushed him to raise the price of his Seattle Space Espresso Blend by 50 cents to $13.45 a pound.

He's also raised prices on several other whole-bean blends. It's coming at a time when Seattle Coffee Works is saving money on coffee by roasting its own, but Simsch said that's not why he started roasting this summer.

"The only difference now is that we're maybe getting closer to paying a living wage to all the people who work here, including yours truly," he said. "For two years, I've worked here full time and not gotten a paycheck."

David Schomer, co-owner of Espresso Vivace, is considering raising drink prices because his coffee costs have gone up, too.

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He's stopped adding the lower cost robusta coffee to his blends to boost the brownish-red foam called crema. "It wasn't helping us," he said. "It's gone."

And he's facing higher green-coffee costs, particularly from Africa.

Matt Milletto, director of the American Barista & Coffee School in Portland, said coffeehouses should consider raising prices every couple of years to cover the increasing price of doing business.

But they should also find ways to absorb some cost increases, like the ones some coffeehouses are seeing now on coffee beans.

"Even if their costs went up $1 a pound to $9, which seems like a big increase, that's translating to only 2 to 5 cents in the cost of the drink," Milletto said. "That could justify a 5-cent increase (in drink prices), but if the retailer is serving a higher-quality product and can bring in five more customers a day, they've covered that cost increase (without raising prices)."

Of course, it's challenging to find more customers during a recession.

Sweet Maria's Coffee in Oakland, Calif., a popular online seller of green coffee to home roasters, has seen a 12 percent drop in sales this year, says co-owner Maria Troy. Green coffee costs less — about $6 a pound — and can be roasted in a skillet.

"People who are interested in home roasting are not necessarily interested in the price," she said. "They're interested in having the best coffee they can have. People who are interested in price go to Costco and buy cheap coffee."

— Melissa Allison

Tidbits

Silberman Brown Stationers, a locally owned stationery retailer, will move next week to a new downtown Seattle location, at the Fairmont Olympic Hotel. Co-owner Connie Brown said the lease at its Fifth Avenue store is expiring, "and we wanted a smaller store." Earlier this month Silberman Brown opened a new Bellevue location at The Bravern. — AM

The U.S. Department of Agriculture last week named recipients of $4.5 million in funding for its "Know Your Farmer, Know Your Food" initiative, which encourages and supports farmers markets. The Northwest Agriculture Business Center received $68,000, and the Northwest Cooperative Development Center received $59,205. The cooperative also received a $200,000 grant as part of different $4.8 million grant from the USDA to spur economic development and create jobs in rural communities. The later funds can be used for technical assistance, research and information materials to help rural residents form cooperative businesses or improve the operations of existing cooperatives. — MA

The Washington Wine Commission is hosting several top wine buyers at its second annual "Road Trip Washington Wine" from Oct. 4-8. Guests will include the worldwide wine buyer for Costco Wholesale, two regional buyers for Whole Foods, the wine director for the Bellagio in Las Vegas, sommeliers for restaurateurs Wolfgang Puck and Gary Danko, and the president of the Guild of Sommeliers. Together, the group makes more than $400 million in annual purchases. Details are at www.washingtonwine.org/roadtrip. — MA

Bartell Drugs opens a new store today in Issaquah's Overlake Center, at 5700 East Lake Sammamish Parkway S.E. The 16,395-square-foot store represents the Seattle-based retailer's 57th location and third opening this year. Recent openings also were in Mill Creek and Lynnwood. — AM

Local author Robert Spector has written a new book titled "The Mom & Pop Store: How the Unsung Heroes of the American Economy are Surviving and Thriving," published by Walker & Company. Spector previously wrote about Nordstrom and Amazon.com. — AM

Portland-based Fred Meyer opens a new store today in Lynnwood, at 2902 164th Street S.W., marking its 130th location. The 177,000-square-foot store employs about 320 people and includes a wine steward and garden center, drive-through pharmacy and Starbucks. — AM

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.

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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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