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In Phoenix, an answer for chain stores and recessions

PHOENIX — A middle-aged man walked in just after Drip Coffee Lounge opened at 7:30 a.m. His drink, a small double-shot café americano latte with organic low-fat milk, was already being made for him by the owner herself, Gina Madrid. They chat briefly in a vernacular that exclusively exists between barista and regular before the local man pays in exact change and walks out.

It was just the beginning of another successful day for the Downtown Phoenix small business model.

“One of the reasons why I opened Drip was because […at chain eateries] you walk away and you feel… ill,” Madrid says as she adjusted the volume on the iPod speakers. Her independently owned cafe has a modern architectural design, and business cards of local artists and entrepreneurs line the front counter.

“When you are providing something good for yourself, that in turn spills over to the people next to you, and so on.”

Independently owned small businesses in the Downtown Phoenix historic districts have thrived in the face of an influx of corporate chains to the city because of their adaptability and willingness to work together.

“When you drive down the street, you’re gonna see the Applebee’s, but you’re not gonna see the Stinkweeds right across the street, or know what it is,” says Kimber Lanning, owner of both Stinkweeds Records on Camelback Road at Central Avenue and Modified Arts, a popular music venue and art gallery on Fifth and Roosevelt streets.

Lacking the financial clout of a large corporation, local entrepreneurs say they rely on adaptable business models to contend in the Phoenix economy.

For example, Lanning has kept her independent record store open for over two decades, battling the ability of national chains to heavily reduce music prices by catering to niche markets like vinyl, used CD’s and obscure musical genres. She even hosts “blues brunches” at the shop with live musical performance on the weekend.

“Every week we reevaluate our budget and say, ‘We need more imports. We need more used,’” Lanning says of Stinkweeds as she jovially rings up a customer and greets him by name. “Whatever it is that we need more of, and we’re able to do that on a week-to-week basis, and the big chains aren’t able to do that.”

Hayes McNeil, co-owner of Royal Coffee Bar on Jackson Street at Second Avenue in Downtown, agrees a limited supply and quick accommodation of regular customers are crucial tactics to a locally owned business’ survival.

“Because we’re small, we’re flexible, and can keep up on our product more,” McNeil says. “If you have multiple stores, especially hundreds of stores, you have one kind of product, one way of doing things. If we want to change the way we’re doing things, we can change in a matter of minutes, really.”

The true secret to survival for Downtown Phoenix small businesses, however, may be their mindset of mutual cooperation.

“All the Downtown businesses have this sort of camaraderie,” Lanning says. “They’re just, like, ‘Yes! We survived the light rail construction, we’re down here, we’re the pioneers, and we’re in it together.’ Everybody’s helping each other.

“So I thought it would be cool to start a website that was just these little businesses that have opened up,” she says. “I just wanted to build some civic pride, let people know that there is cool stuff [in Phoenix]; you just have to look a little bit harder for it.”

Lanning did just that, forming Local First Arizona in 2003, and eventually selling her other Stinkweeds location in Tempe in 2006 to devote more time to the nonprofit’s website. Localfirstaz.org features a database of 1,400 locally owned Arizona businesses and helps them promote themselves and form partnerships.

It is believed to be the largest such merchant coalition in the country.

“[Localfirstaz.com] is really helpful, for sure. It looks professional,” McNeil says. “And that’s why the local businesses work together, because you know, you have to have maybe 20 businesses doing the [advertising] work of one chain.”

Many local storefronts also combine enterprise, sharing space or exchanging products in order to attract customers. For example, Madrid lends her kitchen at Drip to Sam Filicetti, also known as “Sam the Chocolate Guy” and owner of ib2 Designer Chocolates. Filicetti creates his scrumptious confections from behind the café storefront, then distributes his products for sale at Drip and other Downtown Phoenix establishments.

“It’s really nice when local businesses use each others’ products,” Filicetti says, his amicable and goofy personality matching his light-hearted products. “It’s sort of the trend right now, you know, to utilize space more efficiently.

“It’s a great [business model]. It reduces competition: It’s more or less a synergy of people working together to bring together the best products, the best local products.”

McNeil and his partner Vincent Huizar say their similarly symbiotic relationship with adjacent Sweet Pea Bakery. The prospects of cooperation and mutual support were major incentives for Royal Coffee Bar’s current location.

“Obviously baked goods go well with coffee, and they were already here, so it seemed like a pretty good setup,” McNeil says. “The main thing is we serve each others’ products. She (Danielle Librera of Sweet Pea) does all our baked goods for us […] We have people who bring our coffee over there, and then they bring her products over here. We do catering together, and really try to serve on each others’ products.”

“Essentially, we can be in three places at once” by working together and sharing space and products, Madrid says. Her Drip Coffee Lounge also works in heavy partnership with the row of local businesses on Seventh Street north of McDowell Road to “create a destination space” of their grassroots effort.

“My biggest wish is that people come here, to Sheridan Square, and they don’t even know where they’re gonna go,” Madrid says while serving a slowly rising stream of customers. “We all come with our own expertise and our own uniqueness to build something that’s even bigger than ourselves and even more unique.”

The relationship between these small and independently owned businesses and the Downtown Phoenix historic district community extends past detached service and into active membership.

“I think very much that [local businesses] should offer the best customer service, should reinvest in their community—naturally, inherently, do reinvest in their communities, because they hire local CPA’s, local sign makers, local attorneys,” Lanning says. “If I need a carpenter, I’m gonna hire a local guy, whereas all of that would get outsourced at a national chain.”

This reinvestment in the local economy may have resounding benefits for Downtown Phoenix. Shopping local ensures that 45 cents of every dollar spent stays in Arizona, as opposed to 13 cents spent at national chains, according to Local First Arizona’s website.

Many local businesses also take part in community events like First Friday art walks, acoustic concerts and charity auctions. These stores and their owners are fully integrated with Downtown Phoenix and each other, willing to adapt to the changing Phoenix marketplace, because such a business model is best suited for their survival.

Arizona entrepreneurs are not always just a community in the sense of economic cooperation, either; Madrid and McNeil are literally neighbors in the Coronado Historic District.

“Most people who own businesses down here actually do live here,” McNeil says. “I mean, it is our neighborhood.”

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>>Email the editor at aklaw@zoniereport.com.

Tempe coffee startup gives caffeine crowd the jitters

TEMPE — It all started with a couple wanting to do something together as a family.

“We both love people,” Cartel Coffee Lab co-owner Amy Silberschlag says, referring to the shop’s other owner, husband Jason.

Jason Silberschlag started his quest to open a coffee shop when he decided to go to Guatemala to talk directly with coffee bean farmers.

His love for coffee has driven him to bring some of the best beans in the world to his shop at the southwest corner of University Drive and Ash Avenue in Tempe.

Jason Silberschlag trades directly with foreign farmers to ensure buying the best beans. Needless to say, the shop has attracted a loyal following in a caffeine-crazed college town.

“I think just the idea of having really good coffee makes the difference,” Jason Silberschlag said. “Any one who cares about quality I would say is our main customer.”

But the Silberschlags’ shop also has an eco-friendly approach to their business. The cups are made of a compostable cornstarch and are reusable due to the thickness of the material.

Cartel features a spacious and relaxing atmosphere, despite the slight hum from the big red coffee machine in the back of the shop.

“I love it,” said Jessica Clark, 19, a Cartel regular. “I appreciate the concept. (The shop) is less of selling your soul to the devil and more appreciating each other.”

Jason Silberschlag stated he wanted a place that created a community atmosphere and relationships based on a mutual meeting place. Matt Kenny says it works well.

“I’ve tried other coffee places and this one has won my heart,” said Kenny, 22, a transplant from Bellingham, Wash.  “I thought I would never find a place like this in Tempe.”

“(The) mixture of art makes a good atmosphere,” he added. “It has a real local feel.”

The quality of the Silberschlags’ product and welcoming spacious shop attracts a diverse customer base.

“I would say most people who come in have a respect for higher education,” Jason Silberschlag said. “(We attract) your average chase employee all the way to full-on sleeves of tattoos and piercings.”
The green direction and friendly environment of Cartel has also wooed potential employees.

“I was looking for a more eco-friendly business,” said Liana McNeil, a Cartel barista.  “It almost feels like a second home, I feel really comfortable here.”

The knowledge needed to be a successful barista at Cartel surpasses most major corporate coffee shops.

“It’s not just pushing a button here, it’s more of a skill and a knowledge of the machine,” said barista Melissa Marriott, who will be competing in a national barista contest in Austin.

Cartel staff welcome the competition. On Sept. 20, Jason Silberschlag went to Columbia with an organization called Cup of Excellence, which judges coffee from all over the world.

The winning coffee is sold to the highest bidder during an Internet auction. The winning roast can fetch up to $120 per pound, Jason Silberschlag said.

The Silberschlags actually sell a Cup of Excellence coffee in their shop, plus 3 other types of coffee. They are currently offering La Union Farm from Nicaragua, a top finisher from 2007.

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>>Email the editor at aklaw@zoniereport.com.