Learning to cope with the growing pain of costly coffee

Economic woes are percolating down to Americans' morning brews.
Java junkies looking to pinch pennies are sipping less expensive coffee drinks, brewing at home or going cold turkey altogether. The shift is hurting both small-time coffee shops and giants of joe such as Starbucks, which said Wednesday that it expected lower second-quarter profit and full-year earnings than it originally projected because in-store sales and traffic had declined. It blamed the economy, not its prices, for the slowdown.
"These days, I'm not about to buy a $5 coffee," said Carlos Medina, a house painter from Covina who has persuaded his girlfriend to get her daily fix at McDonald's, which introduced a premium drip coffee in 2006, rather than Starbucks.

Starbucks has faced cut-rate competition in recent months from companies such as McDonald's Corp., which is rolling out a line of premium coffee drinks, and 7-Eleven Inc., which in February unveiled a multimillion-dollar advertising campaign to talk about its freshly brewed coffee. Partly as a response, Starbucks this month introduced Pike Place Roast, a drip coffee, and has distributed coupons allowing consumers to get the blend free on Wednesdays.

"The current economic climate is the weakest in our company's history," said Howard Schultz, Starbucks Corp.'s chief executive. The company said it was being hit especially hard in California and Florida, which make up nearly one-third of its U.S. retail revenue.

In a caffeine-addicted nation, there will of course always be people like Justin Rabalais, a West Hollywood bartender who still goes to Starbucks every day despite being a little low on cash these days. "I need it to wake up," he said. "They must put something in it, because nothing else works as well."

But many are like Kat Ward, a head-shot photographer in Hollywood who has restricted her Starbucks intake to twice a week, down from four or five times. Now, she buys beans at the grocery store and brews coffee at home. With her photography business slow because of a potential actors strike, she said, "It's cutback season."

Sarafina Rodriguez, assistant manager at the Groundwork coffee shop on 2nd Street downtown, said more customers are becoming their own baristas.

A pound of coffee costs $9.50 to $17.50 at her shop and yields about 40 cups. That would run you $56 at Groundwork.

Those who haven't given up the coffee-shop routine are buying less expensive drinks: drip coffee rather than a caramel macchiato, or an iced coffee instead of a frappuccino.