The Starbucks Solution

Mike Sheldrake figured he was dead when Starbucks opened two stores near his indie coffeehouse. Now his business is up 40 percent.

Photo by Keith MayCraggy coffee beans, chipped and charred and blistered, are strewn like spent bullets across the top of a small wooden table at Polly's Gourmet Coffee. Mike Sheldrake is inspecting, arranging and considering them with the comfortable panache of a venerable gunslinger, simultaneously appalled and pleased and fascinated. Sheldrake is 51 years old, and he has been roasting premium coffee beans since 1976 in a little Long Beach shop adorned inside with rustic wood and frosted outside with terra-cotta stucco. He knows coffee beans. Loves 'em, actually. Believes in them, ultimately. That's why he can't stop dwelling on the collection of defectives he's got going on the tabletop. Again and again, Sheldrake smugly removes another little cripple from a bowl of beans labeled THEIRS and places it on the table. "Frankly," he says with a sincere, if perverse, smile, "I'm glad Starbucks has come to Second Street."

Well, those are brave words, anyway, even if they do sound like the last ones from a man facing a firing squad. Starbucks has put two stores within seven small blocks of each other in Belmont Shore's cozy Second Street shopping district. It's not exaggerating to say they constitute the cross hairs of a high-powered scope that has targeted Polly's Gourmet Coffee for a fatal 2,100-gun salute. That's about how many stores were in Starbucks' international arsenal when the second Belmont Shore outlet store opened one and a half years ago. By now—well, as of June 1, anyway—the count is up to 2,217. It's the kind of well-chronicled corporate firepower that has been mowing down mom-and-pop coffeehouses for most of the 1990s.

"When Starbucks opens one of its corporate stores next to an independent, its very presence knocks 10 percent to 15 percent off the independent's business," explains Sheldrake, speaking from experience. "What kind of small business can afford that kind of loss? After a few months, it's usually enough to knock the independent out. And Starbucks is big enough to survive until that happens."

But as Sheldrake sits in his shop, telling his story while picking out one disfigured coffee bean after another from the bowl labeled THEIRS, he has become convinced that Starbucks is one of the best things that ever happened to Polly's Gourmet Coffee. He pauses, breaks into a wide smile and sighs with satisfaction. "My business," he says, "is up 40 percent."

Until Starbucks whipped up a mania for high-end caffeine, Polly's Gourmet Coffee was mostly a curiosity, a vanity, an occasional indulgence for most of Sheldrake's customers. And that was a surprisingly short time ago: Starbucks' first Los Angeles store opened in 1991, the chain arrived in Orange County in 1992, and there are 209 stores in the LA/OC area now. "It was Starbucks," Sheldrake acknowledges, "that brought specialty-roasted coffee to the masses."

Until Starbucks' mass appeal grew so monstrous that it threatened to wipe out Polly's Gourmet Coffee, Sheldrake never took a hard look at what he was doing as a small businessman. He was pessimistic about what independents could do to survive the corporate chaining and franchising of America. He has gotten an unflinching eyeful now, and in the past 18 months, Sheldrake's business philosophy and practices have taken a 180-degree turn. So has his attitude—from a helpless sense of impending extinction to something approaching a lust for competition.

That's where that bowl of raunchy coffee beans comes in—the one Sheldrake has been sorting through, the one labeled THEIRS. Sheldrake has become an expert on what his opposition is using for ammunition. "These are Starbucks coffee beans," he says, raising his eyebrows. "And may I add that these are typical Starbucks coffee beans; I bought them right off the supermarket shelf and poured them all in this bowl. I didn't have to doctor them. Go to any Starbucks. Pick up a bag at any store. Open it up and look inside." What you'll find, Sheldrake claims, are beans that are "chipped, burned, defective and stale."

"At Starbucks, we go through extreme lengths to buy the finest arabica coffee beans from around the world,"countered Scott Martin, Starbucks' coffee-quality manager, in a written statement to the Weekly. "Our quality and freshness standards from purchasing to roasting to selling coffee are among the most stringent in the industry. Our coffees are packaged in Starbucks Flavorlock packaging to ensure product freshness. Once opened, the coffee beans are donated to a local charity after seven days."

Some Starbucks beans that didn't go the charity route are on permanent exhibit in Sheldrake's shop, right next to a bowl of plump and shiny beans that were roasted right there at Polly's Gourmet Coffee. In fact, the display is positioned in front of Polly's huge imported roaster, which exudes an aroma so captivating that local real-estate agents say it has helped them sell homes. When Sheldrake speaks to small-business seminars or college classes or community groups—and as word of his success has spread, so have the speaking invitations—he always brings a bowl of Starbucks beans to compare with Polly's. In March, Sheldrake even displayed a bowl of Starbucks beans in the Polly's Gourmet Coffee booth at the Coffee Fest trade show at the Long Beach Convention Center.

Next Page »