Starbucks moves into Wilmington

For those nursing a cup of coffee as they sat in the window at Brew HaHa! on Delaware Avenue in Wilmington, it was impossible to miss the giant logo of the nation's largest coffee chain looming across the street.

Starbucks has 20,519 locations worldwide, and Brew HaHa! has just nine, all in Delaware. Earlier this month, Starbucks opened in the Nemours Building at 1007 N. Orange St., in the former location of the Sugarfoot Café, marking the entry of Starbucks into Wilmington.

But the folks at the local chain don't appear to be fazed. Alexa Irazabal, the Brew HaHa! store manager at 222 Delaware Ave., said business dropped somewhat on the day the Starbucks opened three weeks ago, but has been creeping back since and is now just "a little slower" than before. She said she's seeing encouraging signs as longtime customers return.

"It's not like we're in a war with them. Good luck to them, but we're going to keep doing what we do," Irazabal said. The quality of Brew HaHa!'s products, she said, "speak for themselves."

Starbucks also plans a location at the Riverfront, at the Residences at Justison Landing. Starbucks declined The News Journal's request to visit the Delaware Avenue location and interview customers, and did not answer requests for an interview or a statement. The company's website shows 19 locations, both freestanding and within larger stores, in Delaware.

A reporter stood on the windswept sidewalk outside the Delaware Avenue location on Thursday afternoon to interview Starbucks customers, but the few who exited during that time declined to be interviewed.

According to the Specialty Coffee Association of America, which represents independent coffee shops and makers, specialty coffees represented 37 percent of coffee sold in the United States, whether in shops or stores, as of 2012.

James Butkiewicz, chairman of the economics department at the University of Delaware, said when Starbucks enters a new market, it tends to have a big impact. He compared it to when Wawa or Sheetz arrives in an area, and locally owned gas stations tend to suffer, he said. Big chains can afford to come in, offer low prices and not be profitable for a while as they soak up the business that used to go to the local option, he said.

He recalled a longtime True Value Hardware in Newark that went out of business shortly after Home Depot opened nearby. They couldn't compete on price, he said. The same thing happened with big grocery stores, which drove out the small, local ones, he said.

"They'll hang in for a while, but the question is, in the long run, how viable are they going to be?" Butkiewicz said.

When attempting to compete with a big chain, a smaller coffee shop can only hope to provide a good quality product at a competitive price, he said. "That's easier said than done. It's economics," he said. They can try and differentiate themselves with different products, but that can be costly, he said.

Some customers, Irazabal said, told her they stopped in once to Starbucks to buy a drink and check it out. Brew HaHa!'s nearby location at 835 Market St. has been doing strong business throughout, she said.

Mike Nardozzi, owner of Purebread Deli, just down the street at 500 Delaware Ave., said his business hasn't been hurt at all by Starbucks' arrival. Perhaps people who work in the Nemours building will go to the Starbucks over his own shop, but since Purebread is known for its sandwiches, it sets it apart, he said. Purebread was more affected, positively, by the closure of Sugarfoot, he said.

Starbucks customers, Nardozzi said, have probably been finding a way to get their fill all along, perhaps finding a location closer to home and bringing it with them to work, he said.

"The people that have grown to love our coffee, unlimited refills, rewards, we don't feel like they're going to leave," Nardozzi said. Purebread has four locations in New Castle County and one in Glen Mills, Pennsylvania.

The Delaware Avenue location of Brew HaHa! was doing brisk business on Thursday afternoon, when Ti Hall and Mauri Rapp, of the Delaware Repeal Project, talked business over sandwiches in the private meeting room there.

"I like to support local businesses wherever I go. I prefer that to going to chains," Rapp said, enjoying "The Arden" sandwich – hummus and tomato, and she requested provolone cheese.

"They're really friendly, make an effort to know your name," Hall said.

Teresa Asman, of Middletown, was at the Brew HaHa!, pouring half-and-half in her iced hazelnut coffee. She said she prefers the taste of the coffee there. Starbucks, she said, is too bitter; she gets it for convenience when she's traveling, and "I usually end up throwing it out after a few sips," she said.

Sergio Pellegrino, chef and owner of Café Mezzanotte in the Nemours building, said Starbucks could be good for bringing more business to the area. People could be going to Starbucks and see the sign for his own restaurant, he said.

"Indirectly, we create benefits for everybody," Pellegrino said.

Calls to LOMA Coffee, Presto Coffee Bar Bistro and eeffoc's café were not immediately returned.

Contact Aaron Nathans at (302) 324-2786 or anathans@delawareonline.com.