Aldo 2.0 - Part 1

We've always been unconventionally transparent and honest with this blog's readers.  Even so were a bit nervous about how to approach some upcoming decisions regarding the shop and whether we should talk about it publicly.  

At the risk of having the our intended message completely misconstrued and alienating a portion of our customer base, we've decided to just plow ahead and be ourselves.  So here goes...

We signed a six year lease on this space in September, 2004.  That lease is expiring in a few weeks.

To be perfectly honest, we have given serious consideration to just walking away and moving. 

But we're not.

However, we do believe that the current format of Aldo Coffee Co. has reached its peak. And maybe even passed its peak.  We've stopped growing.  The number of daily customers dropping by has leveled off - and on some days, and particularly afternoons, decreased.  While we understand the economy is part of the problem, we believe that the main culprits are our location, and our own compromises of important visions and ideals in order to fit community expectations.

We know we're going to hear comments like, "Location? You're right in the middle of our biggest business district on the street with the highest traffic in Mt. Lebanon.  How could you want more?" 

To which we say, take a look around.  Lots of businesses have up and left.  Others aren't doing very well.  Some storefronts have been vacant for months.  It's not a panacea here, nor is foot traffic very strong - perhaps 1/10th of Squirrel Hill or Shadyside or Oakland.  But the rent doesn't reflect that - it's still a premium rate (not the fault of our wonderful landlord who's simply charging market rate).

The store is profitable and has been for a couple of years now.  But in addition to providing Melanie and I with basic living expenses, it now has to start returning money we sunk into it the first three years, which was a pretty good chunk of our entire retirement savings.

At the end of the day, we're businesspeople and this is a business.  If it's not sustainable, it's time to leave.  Or to change.

Change is good.

In making any decision as to continue, we have to look at cold hard facts and not just our emotional attachments or naive hopes that suddenly everything will fall into place.  We have to make things happen.

Fact #1:  There simply isn't enough business in the immediate area to support any idea of significant growth for just serving beverages at this time.  When it comes to coffee, more people around here value convenience than taste or ethics.  So our coffee and tea revenue growth has to come from other sources.

Fact #2:  The community demographics by and large don't place a high value on sustainability or quality.  How else to explain the continuing development of chain restaurants, red sauce Italian and Applebees/Fridays imitators?  To generalize, the population is split between old people and 30-something families who live here just for the schools.  The typical resident is more at home in a mall than in an independent store.  It's not an enclave of foodies - we know many in the community would rather have a Panera here than us. 

Suffice it to say most everything we do here runs counter to what the immediate neighborhood is programmed to support.  We survive on the goodness of perhaps 500 folks who are exceptions to the above generalizations and like that we offer an alternative to mass produced mediocrity.  But without  income from catering and non-traditional revenue streams we'd barely break even.  Remember also that we used to draw many coffee geek customers from the city.  Now that there are good cafe options in most city neighborhoods, there's no longer a need to cross a river to come here. At least not nearly as often.

Fact #3:  It's ridiculously difficult to attract good baristas in the 'burbs.  And by that, we mean people who really want to understand coffee and tea and everything that goes into producing the best.  We're not talking about simple customer service or people who think Starbucks or Uptown is a pretty cool place to work.  With only a couple of exceptions, the best baristas we've had were not born and raised in the South Hills.

Fact #4: This is a big space.  Bigger than almost every other coffeehouse in town. And we pay rent on every square foot of it.  Other than mornings and weekends, a good part of that space isn't producing revenue while we're still incurring operational and labor costs.  That has to change.

If we are to re-up for another lease term, it has to be with the promise of an interesting financial payoff along with adherence to our ideals, professional satisfaction and an environment where we can attract exceptional talent.

That's a tall order.  And it could very well be that you don't care if we stay or go and won't care for the changes we're going to make.  We're willing to accept that risk.

So in considering whether to renew our lease - and for how long - the first thing we have to accept is that whatever we do is going to be an uphill battle and that we're going to make some enemies.  The reality is that many of the things we've been doing for the past 5.5 years aren't going to get us to where we want to be 5.5 years from now.

We've got some ideas on what we'd like to do and those goals are extremely challenging.  While we're not going to announce those just yet, the following (and subsequent posts) should get across what we're hoping to achieve in the next couple of years.

However, we will start that discussion with the following premise:

How do we get the Average Joe to appreciate an Exceptional Joe?

We've been thinking a lot about what we'd do differently (and in many cases should've done all along).  We keep coming back to places like Il Pizzaiolo and Sharp Edge.  If you want a cheap, greasy, industrial delivery pie, you don't call Il Pizzaiolo.  If you want a cold glass of tasteless Coors Light, you don't go to Sharp Edge.  The former strives for an authentic Neapolitan pizza experience, the latter focuses on Belgian beers and American microbrews.

You wouldn't compare Il Pizzaiolo to Mineo's let alone Vocelli or Pizza Hut.  Everyone who walks through their door understands they're getting something better and are willing to pay for it.

And you wouldn't compare Sharp Edge to the Saloon or Korner Bar.  Again, the guy looking for an icy mug (or several) of watered-down mass-produced beer wouldn't even consider going to Sharp Edge to spend the night with perhaps one pour of a delicious and refined triple-hopped ale.

So our challenge going forward is to get across and cement the concept that what you get at Aldo Coffee is something entirely different than at Starbucks.  And certainly vastly different than Uptown Coffee or Get-Go.

If you look at online reviews of either Il Pizzaiolo or Sharp Edge on Yelp or Urbanspoon, it's obvious the public understands that both offer a different experience than the typical pizzeria or bar.  And higher expectations. 

Reviews for both are overwhelmingly positive.  And the negative reviews are interesting in that for Sharp Edge they usually focus on the limited food offerings (not the beer), while for Il Pizzaiolo it's the noise level or some service issue (not the pizza).  

While distinct styles and quality of pizza and beer have crossed the threshold into public consciousness, coffee hasn't.  At least not in most of Mt. Lebanon or the South Hills. 

The "concept" of coffee for most people here remains that of a somewhat tolerable beverage that provides caffeine.  Thus for many it's almost irrelevant where they purchase their coffee - a bakery, a mediocre coffeeshop, a gas station, Starbucks. Enough sugar and milk can cover up many sins.

Worse, the concept of specialty coffee is that of huge cups of commodity milk steamed inconsistently mixed with boatloads of high fructose corn syrup flavorings and substandard espresso with unlimited options for customization - all of which neglect to address the basic problem that the ingredients themselves suck.

To try and rise above that dreck brings cries of "pretentiousness" and "attitude" from a public that isn't ready to accept the fact that coffee - like beer or pizza (or steak or wine or cars or mobile phones) - has readily defined and obvious levels of quality as well as numerous varietals and roast profiles that offer taste  beyond "bitter" and "burnt". 

"Pretentious" means elevating the status of something that's not deserving of it.  It's right up there with hyperbole as the sign of a fraud.

When you're serving and talking about coffee that actually is better than anything else available locally, that's not pretentiousness.  That's simply selling something you believe in. No hyperbole. No fraud.

All coffee isn't the same.  Nor are all coffee roasters or coffeehouses.

This is the first post of we don't know how many that will set the stage for what we hope to achieve next.  We believe most of our customers will want to come along for that ride, although we recognize that some won't.  And that's OK.

Comments

[Jayfanelli]

Well said. This behavior is endemic to Pittsburgh. Locals have rarely experienced the best of anything—the quality of goods or services available in New York, Chicago, or even Cleveland—so there's a suspicion and even rejection of it. Convenience and consistency reigns above all.

If they don't love you in Lebo, bring it to the city.

[Jay Roman]

Don't go! i just got out of the hospital and am counting on "coffee therapy" at Aldo Coffee Co!!! Bring on the Brazilians! (coffee, that is!) Congrats to Espanha, but look out for Brasil 2014!!!!

[VJ Marks]

I read your post with great interest, and would like to share my thoughts. While I do not drink coffee, and have never visited your store, I have been a marketing professional for over 20 years - hopefully that counts. Your situation is not uncommon outside of the retail coffee business.

There are 2 primary approaches to expanding your market, as you know: 1) reach more people who prefer the best coffee, and 2) get the average Joe to prefer the best coffee.

Yes, it's difficult to get people outside of your local area, but it can be done - example - Sharp Edge has done it. (I used to frequent it way before new management purchased it and repositioned it successfully.) I suggest that you find a way to talk with the owners of the Sharp Edge on how they did it. Have you tried bringing the coffee to other locations via events or partnerships with restaurants? If you go outside of Mt Lebanon and meet people who prefer the best coffee, you'll get to know them personally, and they will become evangelists for your coffee and store. Are there coffee stores that sell the best coffee like yours but are not nearby in Mt. Lebanon? There is a good chance that they have the same issue. You could possibly partner with them to share the marketing costs for expanding the market for each store. Yes, there are some risks, but they are shared, and the benefits are, too.

For the average Joe customer, it is possible to win some of them, too. It starts with getting them to try it. People that like fine wines, belgium beers, premium cigars, etc. didn't start that way; they tried it and acquired a taste and appreciation for it. Since there are a lot of "average Joe's" out there, you'll need to be more precise in targeting this next wave of lovers of great coffee. Do you know several people who used to be the "average Joe coffee drinker" but now love the best coffees? If so, talk with them - try to understand what other premium products they like, and the places or events they frequent, or the places they live. If you see a pattern, then you could try to reach more people like them. You could possibly partner or co-market with the sellers of those other products to run 'tastings', or other marketing tactics; or reach them by having a presence at the same events or places.

But, all of this marketing and education effort requires money and time. To do so you MUST increase your profits and profit margins to fund the strategy for growth. Sell more per visit. Lower your costs. Raise your prices. Your customers that prefer the best are not likely to be price sensitive. Uncomfortable raising prices, test it on one or two items, in small increments and see what the results are. If you can't raise the prices, try to find other creative ways to get more per transaction (can you offer larger servings at higher prices? or smaller servings at the same prices?) As I said, I don't drink coffee, so I can't be imaginative on this.

Hope this helps.

[Amelie]

Rich-
You've been in business much longer than we have, however, I'm sure you know that many of the issues you've discussed above are not strictly confined to the suburbs and we experience the same frustrations. I believe there has to be a happy equilibrium whether you're talking pizza or coffee and the mineo's of the world are not going anywhere, nor do I believe they should. Good luck in your future plans! I read that cow girl espresso in Seattle increased their sale 100% when their barista started wearing bikini's. We'll be changing our dress code/uniform in the near future ;)If they don't come for the coffee, Barb's larger ones may just do the trick.

[Chris Mayhew]

I would pay a premium to not see anyone at Aldo's in a bikini. Except Frank.

[Drew Lehman]

You are welcome to join Gregory in Dormont...the T stop is very busy...

[Ward]

Rich and Melanie,
Location, location, location. You could sell swill (many do) if you have the right location. You can lead a horse to water, but ya can't make him drink, and if he has to be inconvenienced like finding a parking space, will just as soon lower his standards and drink from the first puddle that's more convenient.
After closely working with La Prima and witnessing the "I could give a shit" attitude that permeated throughout most coffee shops in the city, it was a pleasure to stumble onto Aldo. Along with Amy at tazza, you have pioneered and carried the weight of introducing this city to higher standards, and the effort was not without results. I can personally attest that La Prima improved their product because of what you were doing in Mt. Lebanon, and the two of you have helped immensely improving the level of quality throughout the city. The followers, my shop included, have found a community where the culture of coffee is promoted, and the city has benefitted. As a former Seattleite, tazza was the first local coffee shop I'd experienced that reminded me of what was possible, and then visiting Aldo prior to opening Simpatico I believed I'd found an example of what I could strive to achieve in the business venture I'd been planning. In fact, the help I got from Melanie – training and talking about the business – was possibly the most important ingredient that helped us establish ourselves to produce a quality product. We've always enjoyed our relationship with La Prima as our roaster, and feel they sell a good product, but it was Aldo's assistance and example that we followed to get the most out of what we work with. We've struggled to make our venture worth the investment, and we also struggle with location. But like you, we enjoy what we do. The unfortunate reality is the toll it can take as the luxuries of life are being enjoyed by many others that don't have to put much effort into gaining their luxuries.
I hope others –– 21st St., Voluto, espresso a mano, and other quality shops I'm forgetting to mention –– join me in wishing you luck in the decision you make, and sincerely thank and respect you for your efforts and what you have done for the local coffee community. I doubt many locals realize the respect you have garnered beyond this city, giving us all a good name (I believe Pittsburgh has gained a reputation as a city you can now get quality espresso/coffee). Simpatico is not in the same league if compared to what you produce (I stand behind our product but we've compromised standards and offer lots of fructose and milk :) ), and hope you continue what you've established but with more financial reward for your effort.
Buona fortuna ed auguri!

[mtleb99]

Nice shots at Uptown, way to be neighborly

[Rich]

Here's neighborly: http://www.aldocoffee.com/community