Coffee shops help stimulate Detroit economy

Jaclyn Trop / The Detroit News

DETROIT -- It seems when one Detroit coffee shop closes, another opens.

The exodus of three Starbucks stores from downtown Detroit last fall has not left caffeine fiends yawning for long. Newly opened independent and franchise operations are empowering Detroiters with more choices than ever before and helping stimulate the local economy.

"Things are moving in the right direction," said Olga Savic Stella, vice president of business development for the Detroit Economic Growth Corp., a private nonprofit that helps create new investment and job opportunities in the city.

Tim Hortons, Bearclaw Coffee Co. and the Book Cadillac's in-house WBC Coffee recently opened for business downtown. Biggby Coffee in Midtown and the independently owned Mercury Coffee Bar in Corktown are also new additions to the scene.

The new shops are a "positive sign" that entrepreneurs are heeding Detroiters' "pent up demand for retail and restaurants," Stella said, noting that coffee shops brighten any community as places to congregate and share ideas.

By staying open later and on weekends, many of the shops are showing that the city has a viable market beyond the office crowd, Stella said. Greater Detroit, which includes downtown, Midtown, Corktown, the riverfront and Eastern Market, has more than 86,000 residents, according to a recent DEGC report.

But other shops are thriving on the city's corporate culture. Dexter-based Bearclaw Coffee Co. -- in the Doubletree Guest Suites Fort Shelby on West Lafayette -- draws most of its customers from nearby offices, including from the Federal Building, Comerica Tower, and those of local television and print media, such as WDIV-TV Channel 4, The Detroit News and The Detroit Free Press, said company founder Debi Scroggins.

Business at the street-level shop has been strong and Scroggins hopes to open a second downtown store soon.

But it's doubtful that coffee shops alone can revitalize downtown Detroit, said Robin Boyle, a Wayne State University professor of urban planning.

"The notion that a coffee shop can be a catalyst for economic development is far-fetched," Boyle said.

'A lot of opportunity'

Nonetheless, for downtowners who loathe lines or live more than a short walk from their favorite fix, more coffee is on the way.

Another Tim Hortons shop is slated to open in July at the new Rosa Parks Transit Center downtown, and the chain has been eyeing other nearby locations for additional stores.

"We see a lot of opportunity with downtown Detroit," said Rachel Douglas, spokeswoman for the Ontario-based chain.

Jose Cayo, co-owner of a Biggby Coffee set to open at the Studio One Apartments complex on Woodward in Midtown on Tuesday, leased the space a year ago, before the economy collapsed and the credit crunch froze financing.

"Right after that came the big bang, but what can you do? You just have to work it," Cayo said.

Cayo hired 25 Wayne State students and said that the university community is excited about a new coffeehouse and the store's free Wi-Fi.

Challenges: space, money

The main challenges franchises and independent shops face in choosing where to locate are finding the right space and amassing enough start-up capital, Stella said. Once open, it's important to establish an optimal schedule and offer products appropriate to the market, she said.

Despite the onslaught of new options, differentiation will keep Detroit's shops from putting each other out of business, said Walter Bender, co-owner of the Tim Hortons store that opened in December in Starbucks' former Millender Center space.

"I always felt there was a market for it" he said of Tim Hortons' menu -- coffee, pastries, breakfast and lunch -- and down-market prices.

"We just keep it at a simple cup of coffee," Bender said. "I don't know many places where you can get a 24-ounce cup of coffee for under $2."

You can reach Jaclyn Trop at (313) 222-2300 or jtrop@detnews.com.