Specialty coffee shops taking off

Despite bigger competitors, independent cafes find demand for fine brews

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By Kathleen Pierce
Globe Correspondent / February 9, 2011

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It sounds like an MBA’s dream, getting backing from a venture capital firm to open a new business in Cambridge’s tech-savvy Kendall Square. That’s what Lucy R. Valena did during the fall. But Valena, 25, didn’t attract outside money with the promise of a game-changing phone app or software program — she did it with coffee.

At her three-month-old Voltage Coffee & Art, each cup is brewed individually from coffee beans roasted in Massachusetts.

“I’m focused on the beauty of the process, it’s artisanal. Hundreds of people have put their hands on it. I think of all the farmers involved and try to honor that,’’ said Valena.

Voltage is one of a dozen independent cafes to open in the Boston area over the past two years, including a handful that just began doing business in the last few months. These newer coffee shops focus on slowing down the brewing process to bring out coffee’s subtle flavors — at a premium price. Most cups are brewed individually, and lattes are made with less milk and more finesse, compared with the go-go style that Dunkin’ Donuts and Starbucks specialize in, according to independent shop owners.

“This is not the place to grab coffee to get your fix. Our customers are buying into the concept,’’ said Hugh Geiger, co-owner of Thinking Cup, which opened on Tremont Street in Boston in December.

Such boutique cafes — which are thriving on the West Coast, New York City, and now Boston — put the focus on the coffee farmer, roaster, and barista. While Starbucks is the largest coffee chain in the world and Dunkin’ Donuts the largest coffee and baked goods seller, independent cafes are helping boost the projected $27 billion coffee shop industry in the United States this year.

Independent cafes “have figured out how to compete with companies like Starbucks by differentiating themselves,’’ said Eric Giandelone, director of food service research for Mintel International Group, a marketing research firm in Chicago that tracks the industry.

In addition to Thinking Cup and Voltage, shops that have opened in the area over the past year include Blue State Coffee and Pavement in Boston and Ride Studio Café in Lexington. George Howell, whose now-defunct Coffee Connection stores were a precursor to Starbucks in the region, got back into the business last fall when he purchased Taste Coffee House in Newton. He is also considering spaces in Boston and Cambridge as locations for more shops.

“The timing is right, based on the huge successes of other cafes in Boston,’’ Howell said. “People want to know more about coffee.’’ When he opened the first Coffee Connection in Harvard Square 36 years ago, Howell introduced espresso drinks to a public weaned on Folgers and Sanka.

After Starbucks bought out his 24 shops in the mid-1990s, Howell opened Terroir Coffee Co., a wholesale roaster in Acton, but he has been anxious to get back into face-to-face coffee sales.

Besides selling rare coffee from single-estate farms in Guatemala and Ethiopia, these cafes “have become more neighborhood focused and are building in the ethos of the community,’’ said Giandelone. And they are opening on well-caffeinated city blocks. The challenge for the newcomers is not only to get consumers to switch coffee shops, but also maybe pay more for their daily fix at a time when the economy’s health remains tenuous.

“Coffeehouses are risky to start in any economy,’’ admitted Voltage’s Valena, “but the added risk of a shaky economy wasn’t going to stop me.’’

It also didn’t prevent LaunchCapital in Cambridge from kicking in $150,000 to get Voltage going.

“As long as there are sleepless MIT students, snowy days that dump 12 to 18 inches of snow, and an innovative economy that requires someone to work 10-hour days, coffee will have a future in Boston,’’ said Heather Onstot, director of small business for the venture capital firm.

Because of their niche appeal, however, such specialty shops don’t pose a major threat to the big chains, including Canton-based Dunkin’ Donuts, which has 205 shops in and around Boston alone.

“Boston has always had a wide variety of coffee retailers, but people who live and work in the city have turned to Dunkin’ Donuts for more than 60 years because they recognize our brand as offering a great cup of coffee served in a friendly environment at a great value,’’ said Jessica E. Gioglio, public relations manager for Dunkin’ Brands Inc. “Our coffee beans and coffee specifications have become a universal standard in the industry for superior coffee.’’

Like craft beer, wine, and bread, some types of coffee have been elevated to connoisseur status with price tags to match. At Barismo in Arlington, several manual brewing options are offered, including a siphon — a double-boiler style method that can take 10 minutes to make a $7 cup.

“The whole idea of paying a lot for coffee has been established,’’ said Kenneth Davids, who rates coffee for the online website The Coffee Review, based in Berkeley, Calif. Consumers “have been softened up by buying lattes,’’ he said, so waiting longer and paying more for a refined cup is no longer a jaw-dropper.

That doesn’t mean handcrafted espresso is only for the affluent.

“I was here almost every day last week,’’ said Joe Ryan, a 21-year-old Suffolk University student sipping an iced coffee with friends at Thinking Cup recently. “I used to go to Starbucks all the time, but I feel over the past few years it’s become more of a chain. I like the warm feeling here.’’