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The Honolulu Advertiser
Posted on: Wednesday, December 21, 2005

Local coffee shops tough it out

By Dan Nakaso
Advertiser Staff Writer

Bank of Hawaii workers Laverne Abaya, front, and Judi Leslie, right, stopped at The Coffee Bean and Tea Leaf shop at the Koko Marina Shopping Center. The California-based chain followed Starbucks into the Hawai'i coffee market last month.

BRUCE ASATO | The Honolulu Advertiser

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Business fell at the Morning Brew coffee house in 1999 when Starbucks opened up a few blocks away, then last month manager Michelle Holland faced another large, Mainland-based competitor, The Coffee Bean & Tea Leaf, which went up inside the Kailua Foodland supermarket.

So Holland has been making a point to thank her regular customers for sticking with the mom-and-pop Morning Brew despite their bigger, name-brand choices.

"I tell them, 'Thanks for coming back to us and we appreciate that you're giving us your business,' " Holland said.

She believes it's the little touches that will help her survive the arrival of another coffee corporation sitting just a few hundred yards away from Starbucks.

The California-based Coffee Bean & Tea Leaf's entry into the Hawai'i market last month offers yet another choice for caffeine junkies. But for smaller, boutique coffee houses, it means another battlefront following the rapid rise of Starbucks in the Islands over the last nine years.

Starbucks has 54 Hawai'i locations and expects 14 more next year for a total of 50 sites just on O'ahu. Three Starbucks are operating along the same small stretch of Auahi Street among the Ward complex of shopping centers.

Starbucks also plans to continue to expand its offerings of hot foods, spokeswoman Sherri Rigg said.

The Coffee Bean & Tea Leaf, which is based in Southern California, opened its first three Hawai'i locations last month in Kailua, Manoa and Hawai'i Kai. The Sullivan Family of Cos., which operates Foodland Super Market Ltd., has an area development agreement with The Coffee Bean & Tea Leaf and plans to open a total of 15 stores across the Islands at free-standing sites and inside Foodlands by the end of 2006.

The rapid growth of coffee chains in recent years has continued in Hawai'i and other markets around the country with no signs of reaching saturation. Starbucks, the nation's largest chain with more than 7,000 stores, last year increased from 10,000 to 15,000 the number of stores it believes the U.S. market can accommodate.

Jana Hanawahine of Hawai'i Kai eagerly bought a $3.50 ice blended mocha yesterday during her visit to the The Coffee Bean & Tea Leaf in the Koko Marina Shopping Center.

She first got hooked on The Coffee Bean & Tea Leaf's coffee menu in Las Vegas. Since then, Hanawahine has tried other coffees in the Islands but simply prefers the taste of The Coffee Bean & Tea Leaf over boutique shops and Starbucks.

"I'm really happy they're open," Hanawahine said. "I was excited when I heard they were coming."

Bank of Hawaii workers Laverne Abaya and Judi Leslie stopped in at The Coffee Bean & Tea Leaf for the first time yesterday and between them bought a $2.50 tea "infuser" for a gift, a $14.99 canister of Jasmine tea, a 16-ounce serving of Apricot Ceylon tea for $1.75 and a $5.99 tuna and artichoke wrap that they planned to split for lunch.

"We like tea and we saw that they had the word 'tea' in their name," Abaya said. "I think we'll be back."

None of Starbucks' or Coffee Bean & Tea Leaf's expansion plans offers reassurance to small business owners like Michelle Uehara, who runs It's a Bea-utiful Day Kafe in Manoa with her husband, Kent, and their two teenage daughters.

But so far, loyal customers have continued to pull into It's a Bea-utiful Day Kafe even though they can drive just a few hundred yards to get to either Starbucks or the new Coffee Bean & Tea Leaf in the Manoa Marketplace, Michelle said.

"I was a little concerned in the beginning, with having two of them right down the street from me," she said. "I was afraid they would take even a small percentage (of business) from us. Because if you're a small business, any percentage lost is big for us. But so far we're OK."

Rob Moore, who owns Common Grounds Cafe on the waterfront of the Hawai'i Kai Shopping Center with his wife, Robin, now has two Starbucks nearby.

But Moore doesn't mind.

"I think competition is good for the market," he said. "If your product is of a higher value or taste, then people find you. And competition is good, period. That's how our economy works."

But Moore has another reason to accept another competitor in Hawai'i's increasingly busy coffee house market.

"There's more than enough coffee drinkers in our neck of the woods," he said.

Reach Dan Nakaso at dnakaso@honoluluadvertiser.com.