Wednesday June 30, 1999

HUGH>>
 ON LIFE AND TIMES TONIGHT, THERE'S NO DENYING, COFFEE IS HOT. ALREADY TROUBLE BREWING.

MIKE SHELDRAKE>> 
OUR SALES STARTED DROPPING FIVE OR TEN PERCENT A MONTH AND IT WAS A CHRONIC PROBLEM, BUT WHEN THE STARBUCKS OPENED 75 YARDS AWAY, IT WAS AN ACUTE PROBLEM.

HUGH>> 
ALSO, MEET THE MAN KNOWN BY MILLIONS AS THE VOICE OF THE DODGERS AND IT'S NOT VINCE SCULLY.

JAIME>>
 BUT FOR AN EVER GROWING NUMBER OF DODGER FANS THIS IS THE VOICE OF THE DODGERS:

(SHOWING SPANISH CLIP)

HUGH>> 
AND IS THE THIN BLUE LINE A WALL THAT WOMEN CANNOT CLIMB?

THOSE STORIES COMING UP NEXT ON LIFE AND TIMES TONIGHT FOR WEDNESDAY, JUNE 30TH, 1999.

LIFE AND TIMES TONIGHT IS MADE POSSIBLE BY THE FOLLOWING
CORPORATIONS AND FOUNDATIONS:

THE JAMES IRVINE FOUNDATION
WHICH IS DEDICATED TO THE DEVELOPMENT OF AN INFORMED CALIFORNIA CITIZENRY.

GTE
A COMPANY COMMITTED TO TELECOMMUNICATIONS EXCELLENCE AND AN OPEN DIALOGUE AMONG ALL PEOPLE.

BANK OF AMERICA
DID YOU MAKE A DIFFERENCE TODAY? WHAT IF YOU DID? HOW WOULD IT MAKE YOU FEEL? BANK OF AMERICA, PUT THE FUTURE IN MOTION.

AND THE L.K. WHITTIER FOUNDATION
DEDICATED TO IMPROVING THE QUALITY OF LIFE BY SUPPORTING INNOVATIVE ENDEAVORS IN THE FIELDS OF MEDICINE, HEALTH, SCIENCE AND EDUCATION.

HUGH>> GOOD EVENING, I'M HUGH HEWITT.

OUR TOP STORY TONIGHT IS A MODERN DAY VERSION OF DAVID VERSUS GOLIATH IN THE BUSINESS WORLD, AND THE BUSINESS WE'RE TALKING ABOUT IS THE CUTTHROAT WORLD OF COFFEE.

A WORLD WHERE STARBUCKS IS SUPREME AND JUST ABOUT EVERYONE ELSE IS PLAYING CATCH-UP. EVERYONE, THAT IS, EXCEPT A COFFEEHOUSE OWNER IN LONG BEACH WHO HAS TAKEN ON BIG GUYS AND HE'S WINNING.

PHILIP BRUCE REPORTS FROM THE FRONT LINES OF THE COFFEE WAR.

PHILIP>> IF ANYONE KNOWS BEANS ABOUT COFFEE IT'S MIKE SHELDRAKE WHO SPENT TWO DECADES ROASTING AND BREWING ONE GOURMET CUP OF COFFEE AFTER ANOTHER. HIS SHOP, POLLY'S COFFEE, IS A LANDMARK IN BELMONT SHORE, A CHARMING SLICE OF A NEIGHBORHOOD IN LONG BEACH WHERE A LOT OF PEOPLE CAN AFFORD THE FINER THINGS OF LIFE. FOR YEARS IT MEANT MIKE'S BUSINESS WAS BOOMING UNTIL IT WASN'T.

MIKE SHELDRAKE>> I THOUGH I WAS DEAD.

PHILIP>> MIKE'S GOURMET COFFEEHOUSE AFTER ALL THOSE COMFORTABLE YEARS NESTLED AMONG THE QUAINT LITTLE MOM AND POP SHOPS ON 2ND STREET, A NIGHTMARE WAS COMING TRUE JUST A FEW BLOCKS AWAY. ITS NAME WAS STARBUCKS. THE DEATH STAR OF COFFEE HAD ARRIVED IN POLLY'S BACKYARD. IF THAT WASN'T ENOUGH, A SECOND OPENED EVEN CLOSER, THIS TIME ON MIKE'S SIDE OF THE STREET.

MIKE SHELDRAKE>> OUR SALES STARTED DROPPING FIVE OR TEN PERCENT A MONTH. IT WAS A CHRONIC PROBLEM. BUT WHEN IT OPENED 75 YARDS AWAY, WE HAD AN ACUTE PROBLEM.

PHILIP>> IF THE FOLKS FROM SEATTLE CAME TO BELMONT SHORE LOOKING TO WAGE A COFFEE WAR, IT LOOKED LIKE POLLY'S MIGHT BE AN EARLY CASUALTY. MIKE SHELDRAKE KNEW EVERYTHING ABOUT GOURMET BREWS, BUT NOTHING ABOUT HOW TO FIGHT A GIANT COMPANY EXPANDING INTO EVERY CONCEIVABLE OPEN SPACE.

MIKE SHELDRAKE >> I HAD EXHAUSTED ALL MY IDEAS. I DIDN'T KNOW WHERE TO TURN.

BOB PHIBBS>> I'M THE RETAIL DOCTOR. THAT'S MY NAME.

PHILIP>> MIKE TURNED TO BOB PHIBBS, A FREQUENT POLLY'S CUSTOMER, WHO JUST SO HAPPENED TO BE IN THE BUSINESS OF FIXING SMALL COMPANIES.

WHEN BOB PHIBBS SAW STARBUCKS TAKING ITS TOLL HERE HE TOLD MIKE SHELDRAKE HE COULD WIN THIS WAR, BUT ONLY IF HE WAS WILLING TO GET TOUGH.

BOB PHIBBS>> WITH HAD A CREW THAT WAS MOSTLY UNTRAINED. SERVICE WAS WIDE FROM ONE TO THE OTHER. WE HAD EMPLOYEE THEFT WHERE PEOPLE WOULD GIVE AWAY FREEBEES.

MIKE SHELDRAKE>> THEY WERE DOING IT SO LONG I DIDN'T SEE IT AS A PROBLEM, THAT WAS JUST THE WAY WE DID THINGS. AND TO MY DETERMENT, I DIDN'T MONITOR THAT, BUT WHEN I FINALLY STARTED MONITORING THAT THINGS GOT BETTER RIGHT AWAY.

PHILIP>> WITHIN DAYS POLLY'S OLD STAFF HAD EITHER QUIT OR BEEN FIRED. BOB PHIBBS SCREENED ALL THE NEWHIRES AND EVERYBODY HAD TO GO THROUGH AN INTENSIVE 30-HOUR PROGRAM HOW TO ROAST, BREW AND SELL COFFEE WITH A SMILE.

THE STORE ITSELF GOT A MINOR FACE LIFT, MORE LIGHTS AND OPEN SPACE THAT ALLOWED CUSTOMERS TO SEE THE ROASTING MACHINE BUT IT WOULD STILL TAKE MORE TO DO BATTLE WITH STARBUCKS.

BOB PHIBBS>> MIKE LIKES TO JOKE ABOUT HOW MUCH HE LIKES TO PLAY GOLF. AND I SAID THAT'S FINE BUT I NEED YOU HERE AND SO YOU CAN TAKE DAYS OFF, BUT I NEED YOU HERE. AND IT WAS LIKE WELL, WHY? AND I SAID YOU KNOW BETTER THAN ANYBODY. YOU'VE BEEN HERE 23 YEARS AND PEOPLE WILL RESPOND TO THE PERSONAL CONTACT.

PHILIP>> MUCH TO MIKE SHELDRAKE'S SURPRISE HIS SECRET WEAPON HE NEEDED TO BEAT STARBUCKS WAS STARING HIM IN THE FACE ALL ALONG. THE ONE THING HE HAD THEY DIDN'T WAS HIMSELF.

PHILIP>> TELL ME THE REALITY OF WHAT YOUR BUSINESS NOW VERSUS WHAT YOU THOUGHT.

MIKE SHELDRAKE>> WELL, WE THOUGHT WE WERE GOING TO GO UNDER AND WE THOUGHT WE MAKE A FIGHT OF IT AND DO WHAT WE COULD. RIGHT NOW OUR BUSINESS IS RUNNING ABOUT 20 PERCENT AHEAD OF LAST YEAR.

PHILIP>> POLLY'S PROFITS HAVE GONE UP SINCE THE TWO STARBUCKS HAVE MOVED IN.

SOME FOLKS HERE SAY IT'S ABOUT TIME THE BIG GUYS GOT SLAPPED BY AN UNDERDOG.

MIKE SHELDRAKE>> IF YOU LOOK AT THIS STREET, THERE'S NOT ONE MAJOR CHAIN THAT HELPED BUILD THIS STREET, IT INDEPENDENT, UNIQUE BUSINESSES. AND UNFORTUNATELY CITIES FORGET THAT AND END UP SUPPORTING THE BIG GUYS MORE THAN THEY SHOULD AND ALMOST DISREGARDING SMALL BUSINESSES.

PHILIP>> THIS COFFEE WAR ON 2ND STREET SAYS A LOT ABOUT THE BATTLE TAKING PLACE ON MAIN STREETS ALL ACROSS AMERICA. IT'S A CLASSIC STORY OF THE SMALL BUSINESSMAN GETTING SQUEEZED BY THE CORPORATE GIANT. WHILE IT'S NICE TO SEE THE LITTLE GUY WIN ONE FOR A CHANGE, MANY PEOPLE HERE SAY THERE'S PLENTY OF ROOM IN BELMONT SHORE FOR EVERYBODY TO COMPETE.

SOME CITY OFFICIALS BELIEVE THAT BIG CHAINS PREVENTED THIS NEIGHBORHOOD FROM BECOMING A DINOSAUR BURIAL GROUND, FILLED WITH SMALL SHOPS THAT ALL CLOSED AT SUNDOWN. LONG BEACH COUNCILMAN FRANK COLONNA CALLS IT SURVIVAL OF THE FITTEST AND CLAIM THAT CHAINS HAVE MADE LIFE BETTER.

FRANK COLONNA>> IT REALLY ELEVATED MARKETING THAT SOME OF THE SMALL BUSINESSES HAVE CAPITALIZED ON. IF THEY CAN LOOK AT THEIR MARKETING STRATEGIES AND I THINK MIKE WAS ONE OF THEM.

PHILIP>> YOU'LL NEVER WIN ANY FRIENDS AT POLLY'S WITH THAT ARGUMENT, MIKE SHELDRAKE ISN'T EXACTLY WINNING FRIENDS AT STARBUCKS EITHER. HIS NEW CAMPAIGN INCLUDES STARBUCKS BEANS. HE BOUGHT BAG AND SPILLED THEM OUT NEXT HIS. MIKE SHELDRAKE CLAIMS HIS BEANS ARE PLUMPER AND FRESHER BECAUSE HE ROASTS EVERY DAY, WHILE STARBUCKS COFFEE MAY BE WEAK.

MIKE SHELDRAKE>> WE WERE IN A TRADE SHOW A COUPLE MONTHS AGO SHOWING THE DIFFERENCE BETWEEN THEIR BEANS AND OUR BEANS, AND SOME STARBUCKS PEOPLE CAME BY AND TOLD ME I CAN'T DO THAT ANYMORE. AND I SAID, "TELL ME WHICH PART ISN'T TRUE AND I'LL STOP DOING IT." THEN THEY CAME BACK AND SAID, "THAT'S OUR COFFEE BAG, YOU CAN'T USE THAT LOGO." I SAID, "YOU KNOW WHAT, I BOUGHT THAT DOWN AT THE SUPERMARKET; I OWN IT, I CAN DO WHATEVER I WANT WITH IT."

PHILIP>> JUST A FEW DAYS AGO ANOTHER NEW KID CAME TO TOWN AND IT'S SAFE BET MIKE CAN'T WAIT TO PUT THE SQUEEZE ON THEIR BEANS.

THIS IS PHILIP BRUCE FOR LIFE AND TIMES TONIGHT.

HUGH>> JOINING US NOW, PHILIP BRUCE. FIRST A TIP OF THE HAT TO O.C. WEEKLY, WHICH DID A LITTLE STORY ON THIS, TURNING YOU ONTO IT.

BELMONT SHORES IS A UNIQUE NEIGHBORHOOD IN A CITY THAT IS OFTEN OVERLOOKED, LONG BEACH. IS IT THE NEIGHBORHOOD OR THE TECHNIQUE OF BOB PHIBBS COMBINED WITH POLLY'S THAT MAKES THE DIFFERENCE HERE?

PHILIP>> IT'S A COMBINATION OF BOTH. THIS IS A NEIGHBORHOOD THAT'S SPECIAL. THEY FEEL THAT THEY'RE SPECIAL AND THEY WANT TO REMAIN SO. THEY'RE AFRAID OF BEING TURNED INTO ANOTHER STRIP MALL.

THIS IS A CASE OF THE LITTLE GUY WHO WASN'T SATISFIED SAYING I'M YOUR LOCAL COFFEE HOUSE, YOU'VE GOT TO SUPPORT ME FOR THAT REASON. HE REALIZED EARLY ON THAT HE HAD TO REINVENT HIMSELF, MAKE HIS PLACE MORE PROFESSIONAL. AND IN DOING THAT, HE DIDN'T TRY TO YOU IMITATE STARBUCKS, HE DID WHAT HE DOES BEST, AND THAT'S PROVIDE A UNIQUE BLEND OF COFFEE.

HUGH>> IT SOUNDS LIKE BOB PHIBBS CAME TO THE RADICAL DISCOVERY THAT SERVICE MATTERS.

PHILIP>> HE SAID THIS STORY CAN BE USED TO ILLUSTRATE WHAT'S HAPPENING TO BOOK STORES, COFFEE HOUSES, SMALL RESTAURANTS, WE ALL SEEN HOW THE SMALL BUSINESSMAN IS GETTING SQUEEZED OUT. IT DOESN'T HAVE TO BE THAT WAY. IT'S ONLY THAT WAY IF YOU CHOSE NOT TO FIGHT. WHEN YOU CHOSE TO FIGHT, YOU HAVE TO FIGURE OUT HOW AND THEN GO ABOUT SETTING A BATTLE.

HUGH >> THANKS FOR COMING IN AND FILLING IN A LITTLE BIT OF THE DETAIL.

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