Brewing Battle: Local Coffee Shops vs. Starbucks

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Jan. 23 (Bloomberg) –- Chinatown Coffee Company Owner Max Brown and Sweetleaf Coffee & Espresso Bar Owner Rich Nieto discuss the differences between the local shops and Starbucks and the lessons they’ve learned from the company that have made them so successful. They speak to Pimm Fox on Bloomberg Television’s “Taking Stock.” (Source: Bloomberg)

Thanks for having me.

So, six shops in d.c. got together and said, come to each one of our shops, get a stamp and then the sixth coffee, you can go to any one of our shops and get a free coffee.

It's a way for folks who experience lots of different shops and for small businesses here in d.c. to support each other.

Rich, tell us about sweet leaf.

How you started the company and where you've grown it to the point where you do your own roasting.

Yeah, just started about a week ago.

It's going to help us bring costs way down.

Customers don't understand that right now we're paying more per pound than they pay walking into starbucks.

And we're buying wholesale.

You're paying more per pound than the customer pays by going into starbucks and buying a cup of coffee.

Yeah.

Right now we pay an average of about $13 a pound.

Why is that?

Because it's the best coffee.

It's the best coffee.

Because it costs more.

That's it?

Yeah.

Tell us about how you put the company together.

We started in 2008 and in a neighborhood long island city in new york.

Neighborhood that i've been working in for a long time.

And we opened up two shops there and one shop in williamsberg in 2012. and the second shop in 2013. max brown, is what's good for starbucks good for local coffee entrepreneurs?

You know, i really think it is.

I think howard schultz, tremendous credit for creating a category and an industry, which really brought coffee to the fore.

And i think what you're seeing with sweetleaf, chinatown coffee here, bringing independent coffee shops and quality, high-quality coffee to people that they didn't have access to, so we bring in coffee from chicago, 49th parallel in vancouver, ritual coffee, in san francisco.

We give customers an experience not only from a coffee perspective but also from a place and neighborhood perspective that you can't get at starbucks necessarily.

Max, you mentioned these different places from which you source your coffee from, whom you buy it.

But is it really making a difference?

Can you taste the difference?

It makes a huge difference.

And it's really like wine.

There's great wine, there's good wine and there's not so good wine.

And so to get the highest quality beans you have to have these relations with the farmers in colombia, in brazil, in guatemala.

And our partners have access to those farmers, direct trade, they're getting top dollar for their beans.

It's being roasted in a way that's just top, top grade, that you can't get anywhere else, especially not starbucks.

And the baristas we have are first-rate.

They're trained, they understand what it takes to make great coffee.

And our customers, many of whom come in for that high-quality experience, bean preparation, different processes that we use , and importantly a different experience.

So, for example, chinatown coffee's design might be different than filters on capitol hill and people want to have differings in their daily experience and i think jay crew really understands this on a sort of large scale.

They have some stores that don't even look like j. crew anymore.

I think starbucks is going to have to pick up on that to sort of compete with this next generation of coffee drinkers, the millennials who are demanding for rich experiences.

Rich, let's turn to you.

What did you learn from roasting the coffee yourself?

Just run us through the proelse is.

What it does is it gives us more control of the whole process from a to z. when you're just brewing the coffee, we worked with great roasters, ritual as well.

The thing is that you are left with just the one side of brewing it.

You can't control the roasting.

So if you want to make a coffee taste different, you're limited by what the roaster has done to the coffee.

So, by roasting it ourselves, it allows us to choose the application of the coffee and roast accordingly.

What about the machinery that's necessary to make this happen and the cost that goes into this?

It's a big cost.

We wouldn't have been able to afford to do it with one shop.

Now that we have three, the roastry will be paid for with one year and the one year that we save, we're going through about 600 to 700 pounds of coffee a week.

Is it good business, can you roost for others?

We will.

Right now we're focused on our shops and roasting for ourselves.

We will make it available.

Want to thank you, gentlemen, very much.

Different perspective on the world of coffee.

This text has been automatically generated. It may not be 100% accurate.

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