Skip to main content

Businesses as Third Places

Jessica Sidman has a well-written story about Yola, the recently-shuttered yogurt/coffee shop in Dupont Circle. I'll admit that I didn't go to Yola especially frequently, though I don't work too far away. That said, it was the kind of business that people frequently say they want in their neighborhood - a warm, inviting shop with lots of seating and better than average food and drinks.

(from Brother O'Mara on Flickr)

One of the store's partners is surprisingly open about the experience and the hardships that came with it. It's a story that makes me feel pessimistic about doing something as entrepreneurial as opening my own coffee shop in the city. She explains the problem about as explicitly as anyone ever has:
"We are a $5 average check size business in a close to $10,000-a-month rent location. It just doesn’t work. The math doesn’t work.” 
It's easy for an observer to sit back and recount the ways the business was a failure, or how it was doomed from the start. The same thing happened when Mid City Caffe shuttered last year. These people would say "a businessperson who knew what they were doing would have never opened in the first place, because the conditions weren't right".

Unfortunately, that's the reality and the problem. The environment is such that either a bright-eyed entrepreneur tries, and eventually it doesn't work out; or the business simply never exists in the first place. So whether or not it ever gets a chance, it simply isn't a sustainable proposition.

To survive, the business has to make either the revenue side of the equation, or the cost side of the equation, work in their favor. The problem is a classic chicken and egg: in order to make revenue, you need volume, and volume is highest where there's a lot of foot traffic.  Rents are also highest where there's a lot of foot traffic. Given that constraint, how do you make it work?

When I researched and wrote about this last year, the owner of Peregrine Espresso explained it to me in pretty clear terms. You have to keep the rent costs down, which typically means having as few square feet as you can reasonably operate a coffee shop in. It means you do a lot of take out business, and dis-incentivize "camping" at tables. In essence, you make it work by not being a "third place".

 Over at District Bean, coffee guru Jonathan writes:
In the grand scheme of things, though, there is so much activity in the DC coffee scene that the closing of one shop is but a blip in a wave of progress. 
I think he's right, but I also think this points to the divorce between coffee and third places. We'll still have coffee shops, especially ones that serve good coffee, because more people are demanding it than ever. But these coffee shops will either be located in storefronts with virtually no space, requiring you to take your drink to-go; or they'll share space with a business that can successfully cross-subsidize the coffee side, like a bar.

At the end of the day, a business can only be a viable third place if it's also profitable, and I think the days of coffee shops being meeting places or studying places or blogging places are over. Good coffee will live on, but the space where we enjoy it will change.

Comments

Popular posts from this blog

In Praise of Southwest's 'C' Boarding Group

A few weeks ago I saw a tweet from someone complaining that their Southwest Airlines boarding pass had been assigned A20 (meaning they would be at least one of the first twenty passengers to board the plane). Apparently this person though they should have been assigned a higher number, less their flight experience be considerably spoiled.

Despite the complaints, Southwest has resisted demands to assign seats on its flights, a decision which I personally applaud. I'll admit that I was skeptical when they rolled out the newest boarding procedure, assigning both boarding groups and a line number; but in hindsight it seems like one of the best operational decisions they've ever made. If nothing else, it effectively eliminated the infamous "cattle call" whereby fliers were getting to airports hours in advance and sitting in line on the floor as if they were waiting for the midnight showing of the new Star Wars movie.

When I was an intern at Southwest Airlines last winter, I…

So You Want to be a Southwest Airlines Intern?

My personal website must have pretty decent SEO - because in the past year, I've received about two dozen emails from aspiring Southwest Airlines interns looking to draw on my experience in search of their own dream internship. In the past two weeks alone a few new emails have already started rolling in...

(from flickr user San Diego Shooter)

If you've found your way here, you might be hoping for the silver bullet; a secret tip that will propel you above the competition. Unfortunately, I do not know any inside secrets. I can only share my experience as an internship candidate about two years ago and, rather than responding individually to future emails I anticipate to receive, I hope that potential interns will find the information posted here valuable.

Understand: Southwest Airlines is a very unique company. The corporate culture at Southwest is truly unlike that of nearly every other company. But you probably already knew that, since it now seems mandatory for every management,…

Good Advertising

The blogosphere seems to be one fire over Microsoft's new "Lauren" TV commercial. Frankly, I don't see what the commotion is about.



If the critics are correct, then "Lauren" is actually Lauren De Long, a Screen Actors Guild eligible actress; and apparently, if you look close enough, she never even enters the Apple store.

Even if all of that is true, it doesn't refute the fact that Apple's laptops are significantly more expensive than most PCs. It isn't a lie that Apple doesn't sell any 17-inch laptops for less than a grand. The advertisement doesn't make any reference to the quality of the machines (or contest any of the claims made in Apple's "I'm a PC" commercials) or provide any good reason to buy one other than price.

As far as I can tell, after years of horrible commercials and a series of flops, Microsoft seems to finally have hired an ad agency that put together a decent advertisement. It's not likely to persuad…