BC Business
David Rootman was concerned. The proprietor of Kits Coffee Co. Ltd. was tidying up his West Fourth Avenue and Yew Street café one night when he noticed a car in the parking lot; a man sat alone in the vehicle. It was long after closing and Rootman feared the man might be casing the premises, planning a break-in. “I was getting ready to call the cops,” Rootman says.
But when he moved to the window for a closer look, he realized the theft was already in progress: the man in the car had an open laptop. He was stealing Kits Coffee’s free wireless signal. Rootman shut off the wireless router and the man drove away – The Great Signal Heist thwarted. Of course, the master criminal would only have to pop in during business hours to grab all the signal swag he could handle: Kits Coffee offers free wireless to every customer.
Getting wired has always been the point of visiting a coffee shop – but it’s not just about the caffeine jolt anymore. Increasingly, the standard café business model is overlapping with Kinko’s. While some cafés still rely on coffee quality as their major selling point, for others the offer of wireless service has become essential just to stay competitive when, in the Lower Mainland alone, there are now over 200 independent cafés, as well as the mighty chains: Starbucks Corp. (SBUX-Q), with 237 shops, and Blenz Coffee Inc., with 42. Everybody wants loyal customers, especially in a market this fierce, but as businesspeople and freelancers have embraced the opportunity to create connected “offices” wherever they happen to be, cafés have been forced to decide whether those virtual offices should be located at their tables. Wi-Fi or no Wi-Fi? Free Wi-Fi or paid Wi-Fi? Should cafés provide rent-free residency with every latte?
For Rootman, free Wi-Fi is about gaining a competitive advantage in a very tough market. “We’re on a key corner. It’s a location that a lot of big coffee chains would love to occupy,” he points out. “There are at least six coffee bars within a few blocks of us. 49th Parallel Roasters Café has just opened up down the block. There’s good coffee up and down the street. Plus, we have very high overhead.” Rootman pays around $65 a square foot, with taxes, building fees and services adding another $15 to $20 a square foot. He says that because he doesn’t have the buying power of the big chains, he can’t compete on price and has to find ways of providing extra value. No-charge Internet is part of that. “We just upgraded our router for about $100, and Shaw service is about $100 per month. We’ll eat the cost and make up for it in extra volume,” says Rootman, adding, “It has definitely helped us stay competitive – we’re busier because we have it.”
Just a half-block away, 49th Parallel Coffee Roasters takes a different approach. Although he sold his ultra-successful Caffè Artigiano chain to local restaurateur Willy Mounzer in 2006, Vince Piccolo retained control of 49th Parallel, which still provides beans to Artigiano. Under the terms of the sale, Piccolo was allowed to open a single Vancouver retail coffee shop. 49th Parallel Roasters Café now does brisk business in a narrow space at 2152 West Fourth Ave. and features champion baristas, gourmet coffees and the latte art Piccolo pioneered at Caffè Artigiano. (In addition to the original café at Pender and Thurlow streets, Caffè Artigiano has six other Lower Mainland locations, one in Calgary and even a satellite operation in Seoul, South Korea.) Neither 49th Parallel nor the Artigiano chain offers wireless.
“I love the idea of having Wi-Fi,” Piccolo insists. “But it has to be in the right space. If you’ve got a lot of square footage, I completely agree with the concept of free Wi-Fi. I used to enjoy going to Calhoun’s on West Broadway and getting some work done. They must have about 4,000 square feet there – it’s perfect.” At about 900 square feet, his shop is a cupboard by comparison. “We’ve got seating for maybe 15 to 30 people. With that kind of limited space, you really can’t afford to do it.” He says he pays $60 a square foot before taxes and needs about 500 customers a day “to do well.”
Somewhere between the extremes of “free” and “none” lie various paid models. Major chains such as Starbucks, because of overall brand awareness, don’t need wireless to lure customers in – but they’ve discovered they do need something to keep up with the Jonsers. Canadian Starbucks locations use a variety of service providers with different rates: an hour of Bell service, for example, will cost you $7.50. (A new wireless service, as yet unannounced, is in the works.) “We believe our customers want a fast, guaranteed wireless experience they can rely on wherever they may be,” says company spokesperson Rebecca Irani. “We provide a premium service, and our customers see value in paying for it.”
Among the providers of for-fee service, Vancouver-based FatPort Corp. is a dominant presence in local café wireless. General manager Bilal Kabalan says the company services approximately 150 cafés – including Calhoun’s Bakery Café Ltd., various Cuppajoe locations and Melriches Coffeehouse in Vancouver. According to Kabalan, “In today’s environment of ubiquitous wireless networking, it is expected that a café will offer some form of wireless Internet access.” FatPort installs its system for a fee of $495 for a small café. Café customers then sign up online – two hours’ use, or 24 consecutive hours, cost $9.95. If quarterly online billing exceeds $300, FatPort kicks back 30 per cent to the café; if that café wants to offer free wireless, FatPort will sell access codes to the café for a fee, starting at $75 a month. (Melriches, for one, offers its customers free wireless only after 4 p.m. “Before that,” says manager Julie Lee, “we’re too busy with the morning rush and lunch customers.”) [pagebreak] As for the free-versus-paid debate, Kabalan says it’s a balancing act. “Free access may well be beneficial for the café operator by drawing customers from other cafés,” he says, “but paid wireless can become a great additional stream of revenue in the right environment. Also, one has to keep in mind that free networks are often viewed as less secure than paid networks.” Just don’t try to pull that argument on the people at WifiMug. Its Vancouver website (vancouver.WifiMug.org) has compiled a list of local cafés offering free wireless and atop its home page is the warning, “Remember that this site is intended to only list the free cafés in town, so no FatPort, Boingo and the like, please.”
Freelance television producer Paul St. Amand is often seated at just such cafés – laptop out, catching up on work between meetings. On this afternoon, he’s soaking up the free waves at Blake’s Coffee Parlour in Gastown. For him, offering Wi-Fi seems like a no-brainer. “First thing I’ll do after a meeting,” he says, “is think about the closest place I can go to get wireless to do some follow-up, sending emails and so on. I’m only sitting for about 45 minutes or an hour at any one location. I might spend about eight bucks, maybe getting a bowl of fruit or a scone and some tea.”
St. Amand points at a nearby table where a customer is defiantly clinging to that retro technology, a book. “What’s the difference between a laptop and that?” he asks rhetorically. “Why not stop offering newspapers? There’s no real difference between sitting with your face buried in a newspaper or the Internet. The whole idea of a shop is that people should be able to hang out and talk, while other people work. The café has become a destination for both socializing and work. If you take that away, it’s a mistake.” A café can become a destination for free Wi-Fi even if it doesn’t offer it: St. Amand says he will often visit Caffè Artigiano’s Hornby Street location despite the lack of a free signal. “There’s an unsecured Linksys signal you can sometimes pick up near the door . . . and if you grab a table near the south end of the patio, on a good day you can piggyback on the free signal offered by Bellagio Café, two doors down.”
Another veteran café surfer is Handol Kim. The itinerant tech executive is originally from Vancouver, but before moving to Toronto last year he pretty much lived at the Blenz on the corner of Davie and Granville streets. “I was there every day during office hours when I wasn’t on the road,” Kim recalls. “I spent between $7 and $20 a day, on average. They should have named an espresso drink after me for all the coin I spent in there.” For Kim, it wasn’t the free wireless that drew him in. “For professionals who chose to work at coffee shops, it’s not really a huge carrot, because we can usually expense the monthly fee from a Wi-Fi provider. The most important criterion for me was location, then the quality of the coffee, then the service and the vibe – I liked the energy of the place.”
Kim, who also worked for five years in Silicon Valley, says that Vancouver is behind the curve on the whole idea of working remotely from coffee houses. “In Bellevue [Washington] or Palo Alto [California], you can’t go into a Starbucks without tripping over startup teams working and holding meetings, or single-person consultants or investors working away at their notebooks, enjoying their Wi-Fi – which, by the way, is usually not free in the U.S.” Whatever the cost to the coffee shop, Kim extols the benefits to the city as a whole. “It’s more environmentally friendly,” he points out. “Instead of spending two hours a day commuting, I just stroll to my coffee shop/office.”
That’s not to say everybody loves the Wi-Fi squatters. Blenz director of operations Ron Downie has heard feedback from more than 50 franchisees. “About 10 per cent of them bitch about seats taken up by wireless users,” he admits. “You want to give customers a reason to be there, but if those reasons don’t involve spending money, it can be a problem.” When Downie himself owned Cito Espresso on Davie Street, he tried the starvation route. “I didn’t have any electrical outlets except for a hidden one for the vacuum,” he says. “But of course people got smart and started buying seven-hour batteries.”
Blenz franchises, says Downie, can determine their own approach to wireless service. The majority offer it free, although some use code systems that limit usage periods. “These days it’s less of a competitive advantage in Vancouver, but at our Kelowna franchise it’s tremendously beneficial. Free wireless is not common there.” Still, the next time Downie opens his own shop, he’ll do it differently. “I won’t have it,” he insists. “I want a traditional European style, not people with their heads buried in laptops. That’s not coffee culture.”
Vince Piccolo agrees. Not every café should be all things to all people, he believes. “When we started Caffè Artigiano, we thought of it as a meeting place, a gathering place, a place for conversation and debate,” Piccolo says. “A guy sitting alone with a computer sort of ruins that theme.” Sipping a latte at the Hornby Artigiano location, IBM technology strategist Mike Barnard says he understands. “They are aiming for an Old World, old-media kind of environment here. Newspapers and books, not computers. This place is about the coffee.” Down at Kits Coffee, Rootman doesn’t need to be sold on the café-as-office concept. All he asks is a little restraint. “When people come in for five or six hours and buy barely anything, that’s a little tough,” he says. “But we generally don’t say anything. It evens out.” The customer, it seems, is always right – even when he’s barely a customer.