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[19 comments]

Free Wi-Fi But Coffee Shops Limit Access for Laptop Users

August 7, 2009

By George Anderson

The customer experience touted by Starbucks and others that gave them a competitive point of difference from McDonald's, delis and other establishments selling coffee was that they provided a place to hang out for long periods of time engaging in both social and work activities. Signs announcing free Wi-Fi access are pretty common sights in shop windows.

But lately, as a Wall Street Journal piece points out, some coffee shop owners have begun discouraging the use of laptops during certain periods of the day. It seems that laptop users that take up space nursing a latte for hours are not so welcome because they're keeping paying customers who want to sit down and eat a meal from being able to do that. It's simple a matter of space. It's also a matter of lost sales if the needs of paying customers can't be satisfied.

Naidre's, which has two small coffee shops in Brooklyn, NY, has a sign, according to the Journal that reads: "Dear customers, we are absolutely thrilled that you like us so much that you want to spend the day... (but) people gotta eat, and to eat they gotta sit."

To make sure people have room to sit, Naidre's has a ban on laptop use at its shops between 11 and two during the week and 10 to three on weekends. The only exception is if a person is eating while using the laptop at the same time.

Norm Elrod, who writes a blog called Jobless and Less, said he understands why shops are putting locks on outlets. "I used to be one of the abusers, sipping a two-dollar cup of coffee in a to-go cup for hours."

Discussion Questions: Are coffee shops shooting themselves in the foot by preventing laptop use? Are there alternatives that would allow laptop users who nurse their coffee to remain while making space for those coming in during meal hours?

Discussion Questions:

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How much will coffee shops be helped or hurt by preventing laptop use during certain hours of the day?

Comments:

It's easy to understand how laptops in coffee shops can be an overwhelming burden on tables and space due to customers that buy one cup of coffee and sit all day, however, I'm confident that well managed companies such as Starbucks will find a happy medium to make it work. For example, there might soon be a day where coffee shops have "laptop" tables, or "no laptop" tables; or they can limit the number of plugs in the wall which would help to some degree, especially for those users that don't have long battery life!

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David Biernbaum, Senior Marketing and Business Development Consultant, David Biernbaum Associates LLC

This is really a tough one. As CMO of a coffee franchise with 125 stores nationwide, we heard the problems early on. Trying to find the "paying" customers vs. the "abusers" is tough and can set up an adversarial relationship, but one guy at a table that seats 4 with his junk spread out is costly. Discontinuing free service seems to be a worst-case scenario but necessary.

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Bob Phibbs, President/CEO, The Retail Doctor

Understandable. I've left coffee shops, with or without my laptop, when all the tables are taken by web-surfing or e-mailing latte sippers. Why not a small counter along a side wall where people can STAND and check their email while sipping a coffee, leaving meal tables for those who want to eat? And, when I was in Jacksonville recently, a shop I visited had a two-hour limit on internet access (I'm not sure how that was accomplished, but that notice popped up when I signed on). I thought two hours was more than generous, and I was done and gone in a half hour.

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Warren Thayer, Editor & Managing Partner, Frozen & Refrigerated Buyer

Most coffee shops I visit are pretty much dead and no one cares how long I milk their free Wi-Fi. If a coffee shop is so busy that seating is an issue, then I see no reason why they cannot limit Wi-Fi time. If a coffee shop is that busy then people are coming for the coffee and food, not the Wi-Fi. On the road I know where I can go and spend $1.29 for unlimited refills of coffee and sit all day long if I want with my laptop. Personally I would never go to a coffee shop that did not offer unlimited Wi-Fi and unlimited free refills.

David Livingston, Principal, DJL Research

The comments by David and Warren are spot on...there needs to be a happy medium. Coffee shops need to offer Internet access, especially in a down economy where people are looking to get out of the house and interact with others, either in person or on the web. And patrons need to be respectful of the coffee shop's need to keep patrons happy by having room for all. That said, I don't think that eliminating web access during certain hours is good for business. It isn't consumer friendly and may result in lost business.

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Max Goldberg, President, Max Goldberg & Associates

As a consultant who spends time on the road, I search out locations that have free Wi-Fi and a work conducive environment. My favorite office on the road is Panera Bread. They offer free Wi-Fi, great coffee, breakfast and lunch items and the environment is work friendly. What I find are most people using laptops will gather in one location in a Panera and the rest of the store is free for consumers that are coming in for a meal and conversation.

Some suggestions for restaurants and Deli's to help solve this issue without losing customers: Create a special area with a limited number of seats specifically for Wi-Fi users. Offer free Wi-Fi with a minimum purchase. If I spend $10 on lunch I should be allowed to use the Wi-Fi. Create a Wi-Fi club program that patrons can sign up for. You sell them a $50 gift card that they can use throughout the month for anything in the location. With the purchase of this monthly gift card they have access to unlimited Wi-Fi. Now you have turned what could be seen as a negative into a service and revenue stream that meets everyone needs.

Panera and some other major chains have the right idea. If you want business from people that need to work and use Wi-Fi then you need to create an offering that makes sense for them and you. If you don't want their business simply stop offering the service of free Wi-Fi.

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John Boccuzzi, Jr., Managing Partner, Boccuzzi, LLC

With financial institutions running commercials showing how cutting out your daily $4 cup of coffee can save up to $800 year, coffee shops are going to need some type of proposition to keep customers coming in.

I believe that the bigger issue is understanding why people go to coffee shops. I very rarely see anyone just sitting and talking (a/k/a "Friends" & "Frasier"-type settings) and I don't know of that many people who go to coffee shops specifically for the food. The majority of people I've witnessed as in-store, sit-down regulars at coffee shops are the ones who are conducting some type of business (e.g., interviews, meetings, and laptop users).

Since most of the older coffee shops (and restaurants in general) threw in Wi-Fi as an afterthought, usually individuals have to shut down after 2 hours due to low battery life. Even some of the newer shops don't put in outlets (same holds true for airports that have Wi-Fi) with all of the laptop users sitting on the floor next to the outlets along the corridors). The 1-year old McDonald's with its plasma TVs, padded bench seating and free Wi-Fi have no consumer accessible outlets--and during this past summer was packed with local high school and college students who ate 1-2 meals there while typing away on their laptops and/or mobile phones.

So if I just want coffee, why would I come in and sit down instead of drive through or takeout? The aspect of Wi-Fi (even limited) should be incorporated as part of the overall value proposition behind actually leaving the house to get a cup of coffee.

PJ Walker, Principal, All Things Awesome

Look outside of the "Coffee Shop" category, and the creative manner in which SOUTHWEST AIRLINES (best airline going) has dealt with the problem. SOUTHWEST, like other airlines, used to have Consumers at gate areas looking for electrical outlets on walls, posts, etc. They were sitting in the middle of the floor.

SOUTHWEST didn't try to throw the folks out. They built convenient, well designed platforms with stools, and gave we laptop junkies a place to work. Since we are all together, 5 or 6 outlets per area, everyone has to "play nice in the sandbox," and open up space.

This is a tempest in a teapot--a couple of New York shops need space at lunchtime--this isn't an industry crisis. Use some common sense, look outside the box to another industry, and an answer might please all--store owner/operators, laptop obsessed, and added customers.

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Roger Saunders, Managing Director, Prosper Business Development

What happened to the "Third Place" idea? Are coffee shops giving up on that? I think it's a bad move in any case to set a strategy that becomes a part of your culture, then change it. It's one thing to change merchandise philosophy or uniforms or logo or store design, and a totally different, harmful thing to change your culture. Better to start a sub-brand and call it "coffee to go."

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Lee Peterson, EVP Creative Services, WD Partners

The correct answer is--it depends. Coffee shop owners need to understand, however, that they are a destination spot in many cases for this purpose. I know it's a destination spot for me at my resort home.

It certainly begs the question of innovation. It could be something as simple as asking a buck ($1) for the key during peak hours. No reason not to make money on a service. I know for myself, I'd pay a buck for the convenience. Why this became a 'free' service in the first place, I'll never know.

There are, I'm sure, a million ideas as to how to resolve it. Going to the point where you eliminate customers is certainly not the answer. Those customers are likely frequenting you at other times as well. They need to keep in mind that the customer has chosen them when they had other choices.

'Scanner'

As retailers we all understand the need to turn inventory. In the food business, they need to turn tables.

I fully support the concept of limiting the amount of time a person can be online. The issue is, how is the best method to do so without offending that segment of the market? Is it an outright ban on the practice during certain hours or limiting the amount of time or some combination--two hours during not-peak meal time and half hour to hour during peak time (with a meal purchase)? What is the right approach for a coffee shop may not be the right approach for a restaurant, etc.

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Steve Montgomery, President, b2b Solutions, LLC

Part of the value proposition that these coffee shops have built is the customer experience. The relaxed ambiance and casual pace is an important part of this. This experience is what enabled them to differentiate themselves and build their business in the first place. I would tread extremely lightly here.

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Ted Hurlbut, Principal, Hurlbut & Associates

Although this might be occurring at a few places, the majority of food and QSR establishments who embraced wireless access, still do. The reasons are the same; this brings in customers.

These customers pay for their meals or coffees, and limiting this access eliminates these customers. At the end of the day there are more business men who want to work for 20-30 minutes, while enjoying a casual meal or drink, then those who will willingly go elsewhere to stay connected!

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Kai Clarke, CEO, American Retail Consultants

A patron "abusing" a restaurant's Wi-Fi seems wrong to me. But coffee shops? During college and at the dawn of Wi-Fi in Starbucks and other coffee shops, I worked at Starbucks' biggest competitor. I can't tell you how many times during a shift I'd get a call from a student asking if we had free Wi-Fi yet. We didn't. And about 95 percent of the time, that person didn't come in.

Especially in college towns (this was specifically in the Chicago area), everyone knows most college students don't pick a regular hangout based on the quality of coffee. They pick it based on the added amenities--specifically, free Wi-Fi. Even charging 25 cents per refill should make it worthwhile and make a coffee shop able to turn a profit. And while they might not go there to eat, they will get hungry and have to buy food if they stay long enough.

Randy Hofbauer, Managing Editor, Private Label Buyer magazine

By and large, Wi-Fi enabled cafes around the world are more expensive than the ones which are not. Wi-Fi goes along with the more premium positioning, and they should be able to balance the space premium lost on long-term Wi-Fi users with the grab-and-go customers who are paying higher prices without using the facilities.

That said, in specific cafes or at specific times of day or days of the week when there is a bottleneck, they should be able to limit the length of the IP-lease.

All it takes is a bit of thought and a tiny application of technology.

Devangshu Dutta, Chief Executive, Third Eyesight

Let me get this straight:

Unemployed customers in NYC are abusing their right to a table to the detriment of the business. The restaurant owner sets a fair policy to protect new customers (generally employed) who desire to buy lunch.

It must have been a slow news day for WSJ.

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Christopher P. Ramey, President, Affluent Insights

Once again, you see retailers here making decisions across the board and not being customer-centric. In order to increase revenue stability and growth, a retailer must reinforce value to Best Customers, the ones who combine frequency with enough value to be meaningful to the business. Discourage those consumers in any way from frequently your business and you will quickly pay the price. Restricting laptop access across the board is one way to discourage customers, which, if they are the best, can have significant impact to the overall business.

One way to address the low-value customer clog issue is to offer 2-hour wireless cards to customers with any purchase and to permit Best Customers to have unlimited access. In this way, you can restrict access somewhat, and also provide the recognition and access that Best Customers crave.

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Mark Price, Managing Partner, LiftPoint Consulting, Inc.

With the growing popularity of Wi-Fi cards (Sprint, Verizon, and AT&T) and access through cell phones, most of these "roaming offices" will have to be shut down in another manner.

Mark Johnson, President and CEO, Loyalty 360

This is essentially an easily fixable technology question. The Wi-Fi service could potentially be a function of the money spent by a customer at the cafe and the time of day. By combining these two factors, you are providing the most service to your best consumers. Adding a loyalty card to the mix will prevent miffing a usual big spender who just wants a small coffee that one time.

Aman Nanda, Director, Information Resources Inc.

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