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Coffee chain tackles expansion conundrum Add to ...

Espresso is a delicate art. It begins with the beans and ends in the hands of a barista, ideally working a manual grinder.

Even then, a grind too coarse can ruin the best beans, hot water flowing through the coffee too quickly in the machine. It's a fraction of a difference on a grinder that can make for an espresso that's too weak or too bitter.

"Espresso is fickle. It's a multivariable equation," said Kyle Straw, current Canadian barista champion and a store manager with Vancouver-based Caffe Artigiano Inc., a small chain of 14 cafés set to slowly expand to North America's largest cities: Toronto, Montreal, New York, Chicago, Los Angeles.

When Starbucks Corp. abandoned manual grinders a decade ago, sacrificing quality for speed, it planted the seed of a new wave of coffee sellers, from Stumptown Coffee Roasters in Portland and Chicago-based Intelligentsia Coffee & Tea Inc., to Vancouver's JJ Bean Coffee Roasters and Caffè Artigiano.

Now Artigiano (Italian for artisan or craftsman) is attempting a Starbucks-like ascent - not in scale, but in geographic scope. The same difficult equation exists: to maintain delicate standards as the company gets larger and further flung. Like Starbucks before it, Artigiano has staked its expansion on developing quality workers at its existing cafés to open new stores and finding top-quality busy locations to draw in new customers one by one.

Annual sales of the privately held company were more than $10-million in 2009, up about 40 per cent from the previous year after a burst of expansion.

"As you get bigger, the purists will say you'll never be as good as when you had one, two cafés. It's hard to convince them it's possible," said Willie Mounzer, chief executive officer and co-owner of Artigiano. "We'll never be Starbucks. You just have to take it slow. If Artigiano can occupy this niche in Vancouver, it can do it anywhere."

Mr. Mounzer, 52, has helped do it before. In 1982, he started as a server at a new restaurant in Edmonton called Earls. Mr. Mounzer rose quickly and for years was vice-president of operations as Earls expanded, never more than four stores in a year. But Mr. Mounzer had always wanted his own show. So when he walked in to one of the two Caffè Artigianos about seven years ago, he fell in love, thinking: "This is exactly what a café should be." He offered to buy Artigiano right away, but was turned down several times.

Artigiano was born as the 1990s ended. Founder Vince Piccolo had worked in Vancouver's fine dining business. He was starting a family and wanted a day job. He felt there was an absence of great coffee, so he opened Artigiano and several years later founded 49th Parallel Coffee Roasters. In 2006, when Artigiano had five cafés, he sold to Mr. Mounzer to focus on the roasting business.

"At one point, Starbucks was the predator," Mr. Piccolo said. "They'd set up wherever there was an indie café. What's happening right now, indie cafés are opening near Starbucks and taking business. I don't know how Starbucks can compete."

A telling experiment is the attempted resurrection of Starbucks circa 1987 as the company imitates the upstart competitors it inspired. Last year, as part of what CEO Howard Schultz is calling "start-up mode, hand-to-hand combat," Starbucks opened 15th Avenue Coffee & Tea, and Roy Street Coffee & Tea, two faux independents in Seattle "inspired" - and owned by - Starbucks. Both stores use manual grinders - Mr. Schultz "always hated" the automatic machines, a Business Week story last summer said.

To Mr. Piccolo, it's can't be done well on a large scale. "The coffee world has really evolved in the past five, 10 years, the science of extraction. A large corporation can't focus on that. Coffee's becoming more and more detailed."

Join professor and author Bryant Simon, and Canadian barista champion Kyle Straw for a live online discussion about all things coffee today at 1 p.m. (ET).



Small chains such as Vancouver-based Caffe Artigiano and Portland-based Stumptown Coffee Roasters are winning customers in the high-end coffee market that Starbucks launched. Bryant Simon, a professor at Temple University in Philadelphia and author of 2009's Everything but the Coffee, a book on U.S. culture and Starbucks, says pressure on the Seattle chain will intensify.

A decade from now, will Starbucks be overtaken by a hundred little café chains?

A million little ones are already chewing away.

What's changing?

In the 1990s, and early 2000s, Starbucks seeded the demand for upscale coffee. The reason people went, it reflected discernment. ... Going to a Stumptown, or an Artigiano, you show that discernment, appreciation of subtly, of quality. It says: "I know enough about this to appreciate it."

What else is going on?

Much of what companies sell today are stories, narratives. The Stumptowns literally sell the farmer to you; you can touch the farm, and the beans, where it came from, the terroir. David Ebner

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Follow on Twitter: @davidebner


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