Coffee shops - Not just a fad?

I'm on my day off of work and I decided to go over to the local Caribou Coffee shop to pass the time. I walked in off the street and it looked like a start-up company set up shop in here! I immediately grab a corner table and post up, a perfect spot for people watching. Needless to say, the place is buzzing right now. People have their laptops out (including me), meetings are being held, textbooks are being read. I guess I never utilized a coffee shop as a place to get my stuff done. I am obviously not the 99% (#occupycoffeeshops).

I've never fancied a drink of the joe, but I could definitely see the benefits of a place like this. The environment is warm and inviting with baristas whipping up expresso concoctions and ideas and thoughts being synthesized and reified between local patrons. I feel like I'm sitting at the cool kids table in the cafeteria. The mood is mellow considering the amount of caffeine being consumed right now - these people are obviously seasoned coffee drinkers.

Starbucks is the real genesis behind this discussion today. They were the first movers, the pioneers to push the price-taker stigma out the door and sell a $4 coffee and actually have demand outpacing supply. Premium roasted coffee is where it's at. And just by the way it smells right now, I can see why. I consider Peets and Caribou the next in line behind Starbucks when it comes down to total market share.

But, I live in Minneapolis right now and I'm really interested in Caribou right now. They go against the one size fits all, cookie cutter mentality of Starbucks. Each shop is individually tailored to fit the attributes of the community. I can honestly see Caribou gaining on Starbucks a considerable amount. It doesn't just come down to the quality of the coffee bean anymore. It is all about diversification. Caribou is now releasing new products to market to specific customer segments and above all they have entered into partnerships with local business to expand selling channels.

Additionally, they are moving into the Chicago market, which I think will be a huge step in the right direction. I'm not even a coffee drinker and I'm getting excited about the growth potential of the Caribou coffee shops. As I alluded to above, it's a place that caters to people beyond satisfying their coffee thirsts. It's a meeting place, a place to exchange ideas, a place to take a date, and for me: a place to pass the time.

Going forward, they need to utilize the customer base and the large traffic they get (much like a retail business). Reward programs with loyalty incentives - who knows - maybe they already have them (I'm new here). All I know is that they are in the right direction. And the great thing is people are willing to pay the premium cost for the service and products offered.

Who are the coffee shops main competitors? Besides each other, I think it comes down to McDonalds or Duncan Donuts, businesses that can undercut the present prices set by Starbucks, Peets, Caribou and still produce quality, premium coffee. Additionally, Keurig coffee makers and their success are a threat, with the main winners of that "at home alternative" being Green Mountain Coffee.

Not sure how interested people are into all this coffee talk, but a great presentation that sort of summarizes the coffee market (especially pointed towards growth potential) is done by Caribou at the Alpha Select Conference.