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Faced with empty seats, a small coffee shop becomes a roaster and a wholesaler during the pandemic.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN  - Dax Johnson has pivoted has coffee shop, Capitola Coffee, which he opened in 2018 on Northeast Prescott St. Now his business depends on selling roasted beans by the bag more than on making drinks.

In the age of COVID (-19, as we call it), how will your average indie Portland coffee shop survive?

Gone is the steady drip-drip of laptop workers buying a day-old scone or fourth refill. Replacing them is usually a space with chairs on seats and the front door blocked by a makeshift counter. There are sneeze guards, hand sanitizer, and a touchless point of sale system for to-go orders.

One local store has shown how to pivot and stay alive. Capitola Coffee is the type of labor of love coffee shop where the locals have been coming by foot for their brew since Dax Johnson opened it in 2018. Johnson is from Capitola, California, and moved to Portland in 1997.

The logo is cute; there's a bird on it. Prices are not ridiculous: $2.75 for a pour-over and $4-plus for a foamy drink.

Capitola has two things going for it that make it if not unique then interesting: it has ramped up its coffee-by-the-bag sales so it doesn't rely so much on making drinks, and it takes part in a Tip the Farmer scheme, whereby coffee farmers receive a direct share of sales.

Johnson knew that you need to provide more than just excellent coffee drinks to thrive in a town where you are up against coffee shops such as Good, Heart, Queue, Prince, Never, Stumptown, Coava, Upper Left Roasters, and Nossa Familia. You need a strong brand and then sell coffee beans by the bag as a retailer and wholesaler. Landing a restaurant or hotel contract is a strategy for survival.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN  - Put two birds on it, why not? Until it closes at 3 p.m., Dax Johnson's Northeast Prescott coffee shop, Capitola Coffee, looks like just another walk-up coffee window in the age of COVID-19. He now uses the inside as a staging area for his beans business, which he roasts on the spot in a small, energy efficient Bellwether roasting machine.

The machine

Johnson thought about occasionally renting a roaster but discovered the Bellwether roaster after being open for six months. It's a small, electric machine the size of a fridge which he keeps behind the counter. He can load up green coffee beans, pick a profile using the integrated Bellwether software, and have the machine roast them to the exact specification. (Green coffee beans are about $4 a pound from the farmer. Capitola's 12-ounce bags of roasted beans go for around $15.) Roasting takes about 20 minutes.

Capitola's bags are broad, and the graphics are plain. They are compostable. But one particular thing written on the outside helped boost sales. Johnson put "Roasted in Portland, Oregon on a zero-emissions roaster" on them.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN  - Dax Johnson rents a Bellwether roaster for his Northeast Prescott coffee shop, Capitola Coffee. It has transformed his business into a specialty coffee brand, which he sells by the bag for pick-up and through online grocer Milk Run. The small, energy efficient roasting machine is from Berkeley, California and according to Bellwether costs $75,000 to purchase or $1,150 a month to lease.

"Now we're known as a legitimate roaster, which adds a lot to our brand," said Johnson. "It put us on the map in Portland."

The shop may be quiet and close in the early afternoon, but Johnson is busy behind the scenes. During COVID-19, those words led to a profitable partnership with Milk Run a local food delivery service that's all about sustainability.

"This partnership was a lifeline because their business shot up as an online food delivery platform," said Johnson. "We went from selling them 30 bags per week to 120 bags per week. I attribute that success to them being attracted to the sustainability model."

Because of off-gassing, coffee peaks in quality nine to 12 days after it is roasted. (That is why some bags have valves.) Coffee connoisseurs always look for the roasting date on the bag.

"The machine provides a way to roast coffee on my own without a gigantic investment. It also provides me a lot of flexibility. I can roast to order for customers or for the shop or for wholesale accounts."

He could even be a one-person operation, closing the shop in the afternoon, but since COVID-19, he has cut from six people to just himself and one other.

Inside the coffee shop, what was once the seating area is now piled with sacks of coffee. Café tables are covered with 12-ounce bags waiting to go out to customers. There were always a dozen people sitting in the shop. "And now it looks like a production facility. But that's been fine," he said.

COURTESY: BELLWETHER COFFEE - A model loads green coffee beans into a Bellwether roasting machine, which according to the Berkeley, California-based company costs $75,000 to purchase or $1,150 a month to lease and has no software or support fees. Dax Johnson rents a Bellwether roaster for his Northeast Prescott coffee shop, Capitola Coffee (named for his California hometown), which helps him survive the COVID-19 recession. With no customers sitting at cafe tables, Capitola now relies on selling roasted beans more than drinks.

The man

Johnson leases the Bellwether roaster, saying it costs "a lot" to buy or to lease. But it pays for itself if the shop is going through maybe 100 pounds a week."

The branding is everything.

"That's an advantage of being able to do this ourselves. So, Capitola Coffee can now sit in the grocery store itself, or it can be at the farmers market. We have a brand that will grow."

He adds, "That's been one of the silver linings of COVID. There has been less drink sales, but more beans."

Johnson doesn't get into equipment sales. If customers want a pour-over he recommends what he uses, a Japanese Hario V60, or maybe an AeroPress for espresso. In the shop, he uses a Synesso espresso machine made in Seattle but doesn't get into the high-end world of servicing customers who want a $10,000 machine to sit on their kitchen counter. The focus is on specialty coffee.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN  - Capitola Coffee also takes part in Bellwether's Tip the Farmer scheme, whereby coffee farmers receive a direct share of sales. Shoppers still tip their barista but the extra fee can be used by farmers at their discretion. In one example, a farm group in Tolima, Colombia, called ASOPEP, received $3,000 which they spent on personal protective equipment for the coffee farmworkers during COVID-19.

Robust profile

The second part is Bellwether's Tip the Farmer program. "For every pound of coffee that we roast, a few cents goes into a fund that then goes directly to the farmer. Say there's 100 of us right now roasting on Bellwether machines, we're all collecting it, and they're able to create a very nice tip for a specific farmer."

One farm group in Tolima, Colombia, called ASOPEP, received $3,000, which they spent on personal protective equipment for the coffee farmworkers during COVID-19.

It's a classic feel-good marketing scheme which personalizes opt-out good deeds. It's a a separate charge paid by the retailer not the customer, who can still tip their barista.

American retailers need multiple, strong stories to keep consumers engaged.

PAMPLIN MEDIA GROUP: JOSEPH GALLIVAN  - Dax Johnson rents a Bellwether roaster for his Northeast Prescott coffee shop, Capitola Coffee. It has transformed his business into a specialty coffee brand, which he sells by the bag for pick-up and through online grocer Milk Run. The small, energy efficient roasting machine is from Berkeley, California and according to Bellwether costs $75,000 to purchase or $1,150 a month to lease.

Under COVID-19, retail has gone from "come and get it" to "bring it to me now," and small businesses like Johnson's have to keep up. In the Great Recession in the late 2000s, one of the first things people cut from their budget was the $4 latte. That's not happening yet in the COVID Depression. Johnson sees good coffee as being on the borderline between luxury and necessity.

"People think of it as a luxury. I know customers feel like they're really treating themselves when they come here. And that's nice."

Capitola Coffee

Where: 1465 N.E. Prescott St. unit B, Portland

Web: capitolacoffee.com/

TIPS WELCOME

Grayson Caldwell, manager of Tip the Farmer at Bellwether Coffee, explained that customers who own the roaster can buy green (not yet roasted) coffee from Bellwether's chosen farmers as a 'percent to the farmer' program. "Instead of going to a co-roaster or buying from a wholesaler, he's able to choose the coffee profiles that he wants and roast on site," she said.

Bellwether of Berkeley, California, sells both the roasting machines and the coffee, although their main product is their roaster.

"We have a small profit margin on our coffee because we focus a lot on sustainably sourcing the coffee," Caldwell told the Business Tribune. "It goes through a really strict vetting process on our end, to make sure that it's aligned to their values, and they were working with coffee farmers that have a certain level of quality and transparency and sustainability in the coffee that we're sourcing."

Bellwether signs a contract, and if they buy a container of coffee, they send farmers 20 cents per pound — on top of the contract — by wire transfer.

"The Tip the Farmer program is building connections across the supply chain," said Caldwell. "So, bridging the gap between the end consumer who's drinking the cup of coffee, and the coffee producers who we're sourcing the coffee from. There's no actual tip jar; it's a surcharge that's paid by consumers. You can think about it as a price premium that's paid back to farmers."

She added, "We saw coffee shops like Capitola launch an e-commerce site within 24 hours because they had to shut their doors. So they immediately locked in this new revenue stream, because they were roasting on a Bellwether rather than buying (already roasted) from a wholesaler."


Joseph Gallivan
Reporter, The Business Tribune
971-204-7874
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