The Java Joint That's Swallowing France

No, it's not Starbucks, which has yet to enter the local market. It's tiny Columbus Café , which is racing for domination

News that a Columbus Café store is opening up near BusinessWeek's Paris office at the end of September was greeted with delight from those of us who miss our java in paper cups. Here's what we can expect: Mochaccinos, iced Percolattes, Chai teas, and fresh-baked chocolate-chip muffins -- to go. The cafes are nonsmoking and furnished with big, comfortable, leather easy chairs.

Sound familiar? Sound like Starbucks? It's no accident. Despite the hyperexpansive Seattle-based chain's global ambitions, it has yet to set foot in France, fearing it may face fierce resistance from old-style French cafés and their chauvinistic clientele (see BW Cover Story, 9/9/02, "Planet Starbucks").

Meanwhile, France's own Columbus Café is prospering. Each time the press has falsely reported Starbucks' imminent arrival in the past couple of years, critics forebode disaster for take-out coffee competing with old-style French cafés. But Columbus has staked its claim in France and Belgium, and is now the second-largest coffee chain on the Continent, with 35 stores (vs. about 1,200 outside the U.S. for Starbucks, which has nearly 5,700 stores altogether).


  Columbus' expansion has proceeded by fits and starts. Co-founders Philippe Bloch and Ralph Hababou have opened 12 new stores since pulling themselves out of debt and onto a firm financial footing last year, but they need to continue to expand at breakneck speed to maintain a shot at survival once Starbucks finally arrives. Columbus Café has its eye on other European markets, but it has far fewer resources than the American giant. Still, Bloch is frank about his ultimate goal: "We could be the European Starbucks."

Columbus Café has succeeded in some ways because it isn't a household name. Starbucks' mermaid logo may be recognized around the world now, but Columbus Café has shown that in France it's better to be unknown. In a recent survey, 50% of customers thought the coffee shop was French, and the other half thought it was American. "It resolved the culture problem," says Bloch, who lives with his American wife in Paris, even though he loves the entrepreneurial energy of the States. "Now we're just universal."

Bloch was inspired by a 1993 visit to a New World-style café on New York City's Columbus Avenue (hence the company's name). He liked the novel kinds of coffee, pastries and desserts, good music, and calm atmosphere. He convinced Hababou, with whom he had written the best-selling book Service Included in 1986, to join in the venture.


  After the first two expensively renovated shops bled cash, they hunkered down and gave coffee one last shot with a simple café in Paris' trendy Marais neighborhood. Bouyed by tourism and the area's gay population -- which Bloch says is more adventurous than the average French person -- the lines stretched down the block. "It was an overnight success," he recalls.

Now, Columbus Café is in a race against time -- with limited cash at its disposal. Refusing to franchise means that each new store sucks up the company's money. But after years of losses, private investors were reluctant to ante up their backing until recently. Each new store is now profitable within 12 months, and same-store sales are up 15% year-over-year. Bloch expects this year's sales to top $7 million, and Columbus is turning a net profit.

With new confidence, Columbus Café can now dare to be different. Bloch and Hababou refurbished their flagship store in the Marais over the summer and have made it the first nonsmoking store. In cigarette-friendly Paris, where restaurants rarely have a smoke-free section, that's a rarity. But Bloch says customers already like it. And when Starbucks' arrives, Columbus Café will still claim the title of first nonsmoking Café in Paris.


  Will the concept take Europe by storm? The new-style coffee market on the Continent is still wide open -- no country has a dominant chain. Each of Germany's six major cities has its own chain. So far, there haven't been any acquisitions, but Starbucks' entry may force others to consolidate to better compete. Starbucks could even swallow Columbus Café if the price is right.

But one thing is for sure: The French are now hooked on coffee to go, and that addiction means more cafés to come.

By Christina W. Passariello in Paris

Edited by Thane Peterson

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