Shade Tree Coffee closes its doors?

Word from a BCR reader is that Shade Tree Coffee has closed its door in the last few days. The coffee shop at Erwin Terrace next to Duke, which recently began serving crepes to go along with its java, now has a sign on its door noting that the business is no longer operating, and inviting customers with store gift cards to call proprietor Greg for refund information.

It's an unfortunate loss for the area; Shade Tree was one of the first retail businesses to open in Erwin Terrace and weathered a slow lease-up period for apartments, retail and office space, all the while drawing a very loyal crowd from Duke and neighboring apartments.

Typically Shade Tree slowed down during the summers and picked up business once Duke's termtime activity started back up. No word whether traffic, competition from neighboring Pavilion at Lakeview, or other factors contributed to the closure.

Comments

[Justin Y]

Since Starbucks is having problems, its no surprise some of the mom-and-pop coffee shops are having problems, too. $4 gas doesn't just cut into discretionary spending (though, some would argue coffee isn't discretionary!), but also the willingness to drive to a place to get a cup of coffee.

[Matt Sayler]

I will miss Shade Tree. They had (IMO) the best coffee in the area.

[Jessica]

That's too bad, I really enjoyed the crepes and coffee the time I was there.

[durhamfood]

Meh. I didn't like the place or the coffee much. No biggie.

[TSQ75]

I never went to the place or had any real opinion of it, mainly because its just out of the way for me, i'm never over there...

but just the same, I'm always sad to see a small business shut down...

for instance, when recently the YogaSpot in Central park shut down. I didnt really go there, but it was sudden and sad and owned by neighborhood folks. and it seemed like they were doing so well...its sad when we want to badly for more small businesses to open, and we have to lament the passing of a perfectly good one...whether it was our personal favorite or not.

[durhamfood]

Na. I wouldn't be sad at all if, say, Rainbow Chinese disappeared.

[JMS]

I loved Shade Tree. Very friendly staff, good coffee and food. Sad to see it go.

[Lenore]

I will definitely miss Shade Tree. I've spent a lot of time there over the years and their lattes were superb. They have a farewell message on their website now:
http://shadetreecoffee.com

[durhamfood]

PS I in now way meant to compare Shade Tree to Rainbow. Shade Tree was far better.

[merry]

Isn't it obvious? The arrival of Dunkin Donuts with the coffee that no transplant from the northeast can resist has put Shade Tree out of business. Because really, no one goes to DD for the donuts. It's the coffee, honest.

[LD]

That's a shame. I have a copy of their crepe menu and was planning to go some weekend morning to check it out. Since it's not on my way to anywhere except my optometrist, I am not in that area often. The one time I went in for coffee and a pastry I was kind of surprised by the prices, they seemed high. Coffee was good though.

[durhamwalkingdog]

it didn't help that there was no convenient parking. can we hope they'll open in a better location?

[durhamwalkingdog]

it didn't help that there was no convenient parking. can we hope they'll open in a better location?

[STfan]

This is so sad - I loved having a great coffee shop so close to Duke. I met the owner on multiple occasions and he was super nice. This is a tough economy...

[Joshua Allen]

The place was hopping for the several Saturday afternoons I went there this summer. I'm surprised if it closed due to lack of business. I will miss the crepes most of all.

[Jonathan]

Boo, I used to go there all the time. I liked it much better than Mad Hatter's or Blue Coffee Co., which were the next closest coffee places.

[durhamfood]

Jonathan: try Bean Traders on 9th St

[Lenore]

Amelia's now has a sign that they have started selling crepes, so they must have observed how excited people have been about them.

[gg]

@durhamwalkingdog

The root cause of Shadetree closing probably isn't a "though economy" or competition from a chain... Most businesses like these that fail do so because of poorly conceived business plan. So before we blame external factors in its failure let's consider the business itself.

So... How may cups of coffee would he need to sell just to pay for rent and utilities? (I have NO idea about the details of the ShadeTree space... but I could make a guess.)

Assumptions:

Retail Space: 1,500 square feet.
Rent: $25 / foot (annual)
Utilities: $400 / month
Monthly Rent: (1500 * $25)/12 + 400 = $3,525

Average Sale: $2.50 (Again, just a guess.)
Gross Margin: 25% (Sale Price - Variable Cost = Gross Margin <-- the money left over to pay for fixed costs and produce a profit)
Therefore: Each customer contributes $0.63 to pay for rent and utilities.

How may customers do you need to pay for rent?
$3,525 / $0.63 = 5,646 per month or 235 per day (assuming they're open 24 days per month)

What if gross margins are double that (50%)?
$3,525 / $1.25 = 2,820 per month (118 per day)

(Again, just back of the envelope numbers and obviously subject to debate.)

How many customers does a blockbuster coffee shop get? Was it reasonable to expect Shadetree to do that volume of business?

These numbers should look pretty alarming to anybody considering selling coffee. That's why most Starbucks are in small spaces and offer a lot of add-ons to get the average ticket up - in contrast to Shadetree where I was hard pressed to buy a cookie to go with my $1.84 cup of coffee because they were frequently sold out.

It's sad to see any business fail. It hurts owners (investors), employees and happy customers. And it's tempting to place the blame on malicious landlords, competition or the stupid consumer. But ultimately it's the decisions of the individual business owner that have the biggest impact on the company's success.

[G W Lamm]

These numbers are not accurate and over simplifies the plight of Shade Tree...

[Phil]

For the record, I have always loved Rainbow Chinese. (Click my link for a photo). For as long as I've had an office at Brightleaf Square, Rainbow Chinese has been my "comfort food" lunch -- familiar dishes served by familiar faces. (Well, technically, they were served by me since it's a buffet at lunch, but you get the idea.) Not that Rainbow is anything special as a Chinese restaurant. The food is generically oily and oversalted. But it's still been "home", and the place I can always go when I'm dying for some green vegetables.

That said, I'm sorry I never made it to Shade Tree Coffee. I'm not much of a coffee or pastry person, and I don't spend much time in that neighborhood, so I missed out. I did drive by this late afternoon and it seemed like several of the businesses were closed. Or maybe they just have heavily tinted windows that don't reveal any light from inside?

I appreciate gg's back of the envelope analysis and wish that GW Lamm could provide more. But I'll understand if s/he can't.

There's a coffee shop at the edge of Noe/Mission in San Francisco that my best friend didn't want me to patronize because he knew it was doomed for failure. His theory was that every dollar I spent there was a few more minutes they were going to struggle to stay open, instead of closing like they were meant to. So anyway, that was three years ago. They're still running.

A local neighbor who was independently wealthy ran a small used book "shop" out of the cafe. He stocked their 25 linear feet of shelving with nice trade paperbacks. I think that he was happy to give the cafe ~50% of the gross profits on each sale. It seemed like a sustainable way to keep the business in community.

[justin bieber supra]

Don't know what is wrong what is rite but i know that every one has there own point of view and same goes to this one