Rival CEO: Booze a bad move for Starbucks

Saxbys CEO Nick Bayer. (Photo from Saxbys/Slice Communications)

Nick Bayer, a doubter of Starbucks' plan to have its shops offer beer, wine and spirits at night, is also head of a rival regional chain that plans to move its home to Philly soon.

But Bayer doesn't just doubt the plan because he's a competitor. In fact, he's a Starbucks supporter. It's just because he's already been down that road.

"They're going to have a huge uphill battle to convince consumers that they're good at both," said Bayer, CEO of Saxbys coffee, which has about 35 coffeehouses mostly in greater Philadelphia, the Mid-Atlantic and on college campuses.

Bayer said he keeps a constant eye on what Starbucks is doing because "they're the biggest player in our industry. We look at them and we can see where the industry is going."

But in this case, Starbucks is exploring where Saxbys has already been.

Bayer said his company considered selling alcohol two years ago in a proposed shop at 12th and Walnut streets. But after evaluating the additional costs of a liquor license, insurance and lawyers' fees, the idea was dropped.

"The biggest reason is running a coffee-centric cafe and a bar are two different things," Bayer said. "I don't think Starbucks is going to fool the public that the place to get a great cup of coffee is the same to get a good glass of wine. That's why we didn't do it."

Driving Starbucks' decision to offer booze is the need to show more revenue and more profits from its 20,000 stores and 200,000 employees to satisfy Wall Street and investors, Bayer said. "They've tried live music. This is just the new 'thing' of the day. It's a by-product of the fact that they're a public company."

Saxbys, in contrast, is a franchise business, employing about 500. The majority of its coffeehouses are locally owned.

"If anybody can do it, it would be Starbucks," said Bayer, who called himself the huge chain's "biggest proponent."

"I think they're doing it well, with local beers and semi-local wines" he said. "But consumers see them as a coffee shop, not a bar.

"This is the European way of life, not the American way," he added. "We like to put companies in a box and nobody so far has been successful at getting out of that box."

Saxbys, meanwhile, is staying true to its roots as a neighborhood coffeeshop, but Bayer said he hopes to grow his chain over time to 100 stores. "We don't have a specific target date for it. We want to make really good real estate decisions."

As part of that growth, Saxbys will move its headquarters this summer from Broomall, Delaware County, to rented space in Center City for 18 employees. Bayer said he's eyeing three different locations west of Broad Street, between Market and Locust streets.

"I absolutely love it here," the Chicago native said, noting Philly is a magnet for the kind of entrepreneurial talent he likes to hire.

"We have four new people starting on Monday and three of them probably wouldn't have accepted the job if we weren't moving in to the city," he said.