Coffee Shops Are Replacing The Office But Being A “Third Place” Can Be A Third Rail – CoffeeTalk

Bedford Studio, an independent coffee shop in New York, offers table space for remote workers, offering memberships separate from the price of a cup of coffee. The business model was designed to cater to the growing demand for remote work, with people seeking affordable workspace options.

The pandemic has led to a surge in remote work, with companies calling their employees back to offices and Google Trends data showing that people are searching more for coffee shops to work from than ever before. Reddit threads in communities ranging from Boston to Los Angeles specifically look for remote-work-friendly coffee shops, and there are Instagram and TikTok accounts and Substack newsletters dedicated to finding spaces where remote workers can continue to flourish.

Shop owners are balancing remote workers camping at tables versus rising costs and reckoning with a trend of consumers tightening up on purchases, weary after years of high inflation. Bedford Studio has sold roughly 100 memberships since its opening 18 months ago, with 20% of them being annual memberships. Even day memberships, which are only $10, have an impact, as they make remote workers more likely to return.

Devocion, an independent coffee-shop chain and roastery whose flagship location in Williamsburg, Brooklyn, is consistently touted as one of the top places for remote work in New York City, has had to strike a balance between being a welcoming place for workers while also making sure customers can enjoy their coffee. As a solution, the café introduced time limits on internet use.

Remote work is becoming an increasingly large part of the workforce, with hybrid work even more common. A study from Stanford University found that 40% of US employees work remotely at least one day a week last year. The market for freelance work is getting bigger, with Upwork’s annual study showing that 38% of Americans freelanced last year and the freelance workforce has grown by 78% over the last decade.

The interest in coffee shops for remote work isn’t new, especially in major creative and entrepreneur-laden urban centers like New York, Los Angeles, and San Francisco. However, the surge of remote work has been mixed in other parts of the country, with some businesses experiencing slower growth and others experiencing hit or miss situations.

The coffee industry is facing financial challenges due to rising costs and a cheaper consumer. The cost of imported coffee has increased by 65% in the past three years, due to supply-chain strains and climate-change issues. Extreme weather conditions have hindered coffee production in key coffee-producing regions, including Indonesia, Brazil, and Vietnam. Brazil’s wildfires damaged one-fifth of the areas that grow arabica, one of the world’s most popular bean varieties. Indonesia’s output fell last season amid extreme weather conditions, though a rebound is forecasted for this year. Even robusta beans, primarily used in instant coffee, are the most expensive they’ve been in more than four decades.

The Russia-Ukraine strained fertilizer supply has driven up the cost of producing coffee, which trickle down to farmers, buyers, and consumers. Rising costs of ingredients beyond the coffee bean, like milk, and prices for alternatives like oat milk are also surging. Demand is also rising, with the National Coffee Association reporting daily coffee consumption hitting a two-decade high.

Starbucks, the biggest coffee chain in the world, has struggled to navigate this environment. The chain opened roughly 30 stores in October alone, but same-store sales dropped 7% in Starbucks’ latest quarterly earnings report. In response, Brian Niccol said he would simplify the company’s menu, overhaul its shops, and go back to using Sharpies to write customers’ names on cups.

The coffee-shop chain has seen a surge in to-go orders, with mobile orders making up 30% of transactions. Staffers haven’t been able to keep up with the onslaught. Starbucks founder Howard Schultz said the ethos of the company was to become a common “third place” where people could gather outside of home and work. The chain was one of the first to offer free Wi-Fi to customers, emboldening the remote workforce.

Despite the headwinds, more Starbucks locations and more small, local coffee shops have opened around the country. The sheer number of independent coffee shops has surged by 2.4% nationally every year for the past five years. Independent coffee shops don’t have the financial runway that Starbucks does to trial-and-error new approaches.

Shops are trying to balance out having higher turnover, which typically leads to more revenue, with attracting remote workers who may want to park at a table for a while. The Bean, a New York City chain that operates three stores in lower Manhattan, uses a platform called GoGoGuest to time its users’ Wi-Fi access. With each new purchase, a customer can get more Wi-Fi time. GoGoGuest said that because of the adjustment, customers spent an average of 32% more per visit.

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