RJD writes: Good morning, Chris, Some bad news this morning at my daily coffee stop, It’s A Grind, at Carefree Highway and I-17. Pat, the owner, notified me that today would be their last day. The economy and high cost of the build out have forced them into this decision. It’s really too bad, despite being a franchise, this place really had a independent feel to it. -Richard Thanks for letting us know Richard. It’s A Grind 3170 W. Carefree Hwy Phoenix AZ, 85086 Phone: (623) 580-0063
Austin Another one bites the dust. I am wondering if the economy is being given credit for what would be a normal summer slump. Lots of people are seeing effects of a bad economy, but is it actually hurting this industry as bad as a hot day does? 0 Reply July 29, 2008
Brandon Last summer we had a 20% decline in our sales, this summer we’re at 32% and it’s not over… 12% difference is a lot to handle for any business owner, so I would have to give the current state of the economy some credit. It’s too bad to see another shop close… 0 Reply July 29, 2008
Victor I dunno about the general state of the economy being a factor. By looking at large shopping mall parking lots, one would think it was a week before Christmas. I would say it’s more heat related. 0 Reply July 29, 2008
Victor Oh yeah, besides the heat. I believe a number of cafes opened up during the peak of the housing bubble when folks used the equity in their homes and real estate dealings to fund their businesses. Now we’re seeing a correction. Certainly not in all cases, but definitely a significant amount of them. I don’t believe for a second the economy is as bad as the press would have us believe. 0 Reply July 29, 2008
Austin Victor, I think its bad right now, but a LOT of it has to do with this housing stuff. People who aren’t affected by that industry probably aren’t feeling it as much. I imagine carefree is one of those effected areas. My company has been hit by the economic downturn both in the banking and housing sectors. One hurts the other. It is their own faults, but there is a lot of “thems” out there. 0 Reply July 29, 2008
RJD I just stopped by with my family for a final drink and a chat with Pat, the owner. What a great guy. Cheers, Pat. You will be missed. 0 Reply July 29, 2008
Steve The unfortunate situation was mentioned in the original blog. The cost to build a “Its a Grind” is entirely to high for a coffee house, secondly (and this comes from a former owner) It’s a Grind requires its franchisee owners to purchase from specific vendors at pre-negotiated prices (again un-fair and unfortunate). I too often visited one close to me at Northern and the 101 and the former owner now manager expressed to me that It’s a Grind grew too fast just like Cold Stone Creamery. I wish owners of that shop the very best. 0 Reply July 29, 2008
Mary Clark Wow! I just posted a message a few days ago about how much I miss INZA Coffee and here they go again… My best wishes to the owners of Its a Grind. 0 Reply July 30, 2008
Ron Cortez Hello Folks. This has been an interesting summer indeed. Who knows the real story behind each of these closures? Like most incidents in life the reason is due to multiple causes. The economy and the psychosis related to this is a great challenge to the indie. I know that whoever is still standing at the end of all this, will grow again. There will be people that will open new coffee shops and they will perhaps pay more attention to; location, business plan and marketing strategies. Victor is right, home equity lines of credit are the main source of financing for many of the businesses that I have helped open in the past. The summer is almost over and Arizona is not a bad market. Starbucks closed only one store in our state. 0 Reply July 30, 2008
Bill and Ginger Sandweg The franchise system in the United States is another unfortunate process that corporations use to separate people from their money. I am a capitalist in so many ways, but Franchise agreements tie your hands in so many ways: often, your location is chosen for you by statisticians and a corporate “real estate department” that hasn’t been to Phoenix in years, you don’t need/have to produce a business plan (“We take care of that for you!), and it’s harder to get out than the Mafia. Closing is often the only way out. Our industry may have (relatively) large margins, but the price points are so low, it requires a great number of customers to hit your break-even point. It’s easy to see how an unscrupulous vendor/franchisor/landlord can impact a business enough to keep it out of the black. How many of us signed a bad merchant processing agreement, or paid a premium price for a piece of inferior equipment? School of hard knocks is putting it lightly. 0 Reply August 5, 2008
Bill and Ginger Sandweg I have a neighbor whose air conditioner died last month. She lost all of her inventory (chocolate-candy store), and was closed for three weeks while the landlord got a new air conditioner installed. Now the landlord wants her to sign a new lease WITH THE NEW A/C PRICE BUILT IN! I think she’s gonna just stay closed. Also, my dad was golfing with some Air Force buddies back east, and one of these guys is a retired B-52 pilot who now owns an It’s A Grind. He is telling the same story about high franchise fees, fixed vendor prices and little to no margin for himself. He’s frustrated, but he loves the coffeee business. 0 Reply August 5, 2008
