The Night Shift
The Whys and Why-Nots of Extended Hours
By Steven Krolak
Illustration by Lydia Hess

Twenty years ago, you had to hunt for specialty coffee. Then coffee carts began appearing on downtown street corners. Soon they moved indoors, took on fixed addresses and became indispensable features of daily life.
   Today, finding specialty coffee in an American city is as easy as finding a slot machine in Las Vegas. Not only have coffeehouses proliferated, but like living organisms, they have adapted to a changing market by mutating into hybrid forms: Retailers have partnered with laundromats, bookshops, carwashes, supermarkets, antique stores, and other businesses to expand their reach.
   Now there are signs that the next step in retail evolution isn't the conquest of more retail space, but of the clock. By staying open into the night, coffeehouses are reaping substantial rewards. But to take full advantage of the night shift, owners must be prepared to retool their practices and redefine their vision.

In Search Of A Trend
Statistics on hours of operation are scant, but money does seem to be flowing to the dark side. For one thing, vendors of noncaffeinated beverages and flavorings have noticed an increase in demand, based in part on growing nighttime sales in coffeehouses. Torani Syrup's focus groups have made the company aware of some retailers' desire to generate more traffic in the evenings. According to Stacy Cooper Dent, Torani's communications manager, Torani is responding with a variety of promotional campaigns and event sponsorship built around afternoon and evening drinks.
   In many ways, the trend is a response to larger changes in society. According to Bruce Milletto of the Eugene, Ore.-based consulting and marketing firm, Bellissimo Coffee InfoGroup, "The search for the 'third place' is really driving the retail market-people need a place to congregate that isn't home or work. The coffeehouse is it."
   Changing demographics may also play a role. In an October 2003 article for The Seattle Times Magazine, Julia Sommerfeld writes, "the number of teens drinking coffee in cafes or restaurants has increased 12 percent since last year, on top of a 15 percent rise the year before."
   With their intimate feel, tolerance for long stays and ready supply of sweets, coffeehouses are more welcoming than malls and more liberating than home. "Like the soda shop of the 1950s or the 7-Eleven of the '70s," Sommerfeld writes, "coffeeshops have become the place for teens to just be."

Creatures Of The Night
The basic logic of the night shift is simple: longer hours mean more customers, and more customers mean more profit.
   Wade Beesley of Austin, Texas, opened Mojo's Daily Grind in 1994. "I had a big space that I paid rent on 24 hours a day," he remembers. "Why not get 24 hours of income?"
   Beesley's answer was a 24-hour operation that tapped into Austin's large student population and legendary independent subculture.
   But not everyone starts out with an evening concept. When Joe Ballato opened The Greenhouse Effect in Salt Lake City, Utah, he planned on relatively normal daytime hours. After six months, he realized that his daily revenue stream was too inconsistent. "By staying open later," Ballato says, "we stabilized our income and could offset a slow day."
   Bill Gregg of Reality Tuesday Café in Park Hills, Kentucky, became a victim of his own daytime success. Gregg started out as a one-man operation, open from 7 a.m. until 4 p.m., Tuesday through Sunday. After a few months, he needed help managing the crowds. At first his wife Traci helped out, and he extended the opening hours to 8 p.m., then 9 p.m. "But I was still running people out the door at closing time," he says. Finally he agreed to stay open until 11 p.m., Monday through Thursday, and until midnight on Fridays and Saturdays.
   By tweaking their tactics, these retailers slipped into the night shift. But they had little competition. "More often than not," Milletto observes, "changing hours really means that the whole coffeehouse has to change."

Taking Up The Challenge
Profiting from opportunities after sunset often requires a broader familiarity with restaurant management and the principles of business.
   Everyone knows that location is important. But the nuances in location become crucial after dark. The same financial-district location that parlays office-worker fly-bys into a daytime bonanza may kill all hopes for a tonier after-dinner scene. This unholy dilemma of sow's ears and silk purses can force many retailers to start from scratch.
   Duane Sorenson's new Stumptown Coffee Roasters shop in downtown Portland, Oregon, is a prime example. The sleek, spare, brightly-lit space sits at a point of contact between Portland's Chinatown, Old Town, music clubs, and high-rise banking district.
   But individual stories show there are no hard and fast rules. O'Henry's Coffeehouse is located in Homewood, a gracious old suburb of Birmingham, Alabama, with a timepiece downtown that rolls up the sidewalks at 5 p.m. This situation-the kiss of death for many coffeehouses-is a boon for O'Henry's, which stays open until 11 p.m. Monday through Thursday, midnight on Friday and Saturday, and 10 p.m. on Sunday. The coffeehouse is a destination for evening bible study groups from a local college, couples on romantic strolls through the nostalgic district, and high schoolers in search of a safe meeting place.
   In the morning, bleary-eyed commuters may be oblivious to generic surroundings as they shuffle along the line for a latte-to-go. But in the evening, when the coffeehouse becomes a destination, visitors are more discriminating in matters of décor and presentation. An owner's personal taste and creativity can make or break a coffeehouse. "Creating atmosphere can be as inexpensive as installing a dimmer switch," says Milletto, "or as expensive as a total architectural renovation."
   Additional payroll is another cost of night operations, approaching 25 percent in some instances. Some of this cost comes from adding menu items. According to a Food Ingredients First survey, since 2000 the consumption of espresso-based drinks has increased by 68 percent, but only 4 percent of these drinks are consumed in the afternoon or evening. Thus retailers are compelled to offer a wider range of beverages, including decaffeinated coffee, herbal infusions and milk-based specialty drinks. Expanding the menu entails more responsibility for baristas.
   The same applies to food, only more so. When muffins give way to soups, salads and panini, foodservice decisions affect the floorplan, equipment budget, marketing, waste disposal, and labor costs.
   Many coffeehouses also choose to serve alcohol. While most restrict the list to carefully selected high-end wines and imported beer, issues of licensing, storage and presentation arise. "Your 18- to 20 year-old barista may be a wizard on the espresso machine, but know nothing about Napa Valley Chardonnay or Belgian Trappist ale. There's a need for training, not only in product, but in serving principles. That increases time and cost," says Milletto.

Getting It Right
While success results from knowing the product, assessing the market, besting the competition, the X-factor may be maintaining the coffeehouse's individuality by offering something nobody else can.
   Reality Tuesday serves award-winning pastry recipes handed down by Gregg's father. Randy Adamy of O'Henry's showcases a locally-baked cheesecake that's a big attraction. Ballato offers crêpes derived from a third-generation family recipe.
   In Austin, Mojo's Daily Grind maintains customer loyalty by pushing the entertainment envelope. With a graffiti wall, annual TV-smashings, and gladiatorial bouts pitting teams of laptop-wielding hackers against their similarly outfitted web-defenders, Mojo's demonstrates that there is a market beyond mellow.

Community And The Bottom Line
By doing it right, many coffeehouses are enjoying startling success. Sorenson of Stumptown reports that 25-30 percent of total daily sales come after 5 p.m. Adamy puts the number at 20-25 percent during the week, and as high as 30 percent on weekends. "It's not the cake," he says. "But it's the icing on the cake."
   The numbers are just as good, if not better, for retail-only coffeehouses. Daytime sales are still "the biggest income-driving force," says Gregg. But nightshift receipts reach 30-40 percent of his daily total. With his all-night operation in its 10th year, Beesley of Mojo's Daily Grind draws an even 50 percent of his receipts between 6 p.m. and 6 a.m. And one third of this total comes during the graveyard shift. Ballato goes so far as to admit, "Evenings are the only reason we're still in business."
   For many, staying open into the evening has enabled the coffeehouse to outgrow its service-sector relevance to embrace the much larger role of community gathering place. This, in turn, is good for business.

Steven Krolak is the editor of Fresh Cup Magazine. He can be reached at steven@freshcup.com.

Lydia Hess is a Portland, Ore.-based illustrator and designer, and can be reached at 503-234-4757 or at LydiaHess.com.