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Nick,
Your quote "I am relentlessly marketing every week to all of the businesses in the surrounding area and nothing has changed" should give you some clues to how to move forward. You need to change something.
You can't sell coffee drinks and beat the chains even if you serve the very best coffee in the world. Coffee shops sell atmosphere, and community, and relaxation. You sell culture and a place to go to "get away" from the rat race. Maybe you sell something else. Whatever that something is make sure that it is clear to you and to your new customers. As a case in point Harley Davidson does NOT sell motorcycles. They sell prestige. Sell that thing that makes you special and different from the other guys.
First, remember that competition doesn't mean that things are harder. Competition can mean that the other guy may be training your future help at no cost to you. Competitors spend their marketing and advertising dollars to draw people to your area who are probably open to trying your store as well. Competitors create dissatisfied customers who will pull their family, friends, and associates to your store. Also, having a competitor allows many people's natural tendency to polarize towards favorites and foes. The big chains make good foes.
The presence of competitors validates the market. If the chain is there then there is room for everyone. They don't make decisions like location lightly. The presence of a chain means that they have spent thousands of dollars performing a due-diligence on the location to be sure of the success of the new owner's store.
All of that supposes that you find competitors a threat. I try to make them allies. It might be difficult to deal with a chain store manager, but there are things you can do like dual promotions and purchases that neither of you could afford on your own, or sponsoring an event like a concert that would take the money from both of your coffers to cover.
As far as marketing, I'd say you have to add services and push them out to the community. The hint about free internet is a great one. Nearly every coffee shop that I go to has free internet. The good ones also provide a laser printer. A fax isn't that expensive or you can put in a scanner and let you clients use internet faxing for free. So provide some more basic business services.
There is a coffee shop that I frequent for business because they provide a small meeting room. Its glassed in, and they have a table chairs and have places to mount white boards and screens for projectors. They only charge $15 per hour. They provide you with treats and drinks that and then balance that against the $15 per hour. If you just buy 5 coffees for 3 bucks for the hour then you get the room for free!
I have to tell you, Starbucks baked goods are really not the best. Sorry if people disagree, but they aren't. You could very easily partner with a local bakery and have them supply you with fresh baked goods throughout the day and you provide them with coffee for their morning rush. Of course you each get to have prominently placed signs in each other's stores. You both win.
Find local businesses and offer a coffee service, or discounts to their employees. You could take morning coffee to them, or provide decanters for their employees to come by and pick up if you don't want to provide delivery service.
Along these same lines, maybe your store has a very slow periods during the day. Provide the store as a meeting place for businesses to use. With the same idea as the room I described let the business use your whole store. You can still take customers and if you schedule correctly you can work out some nice incentives for getting business in.
Also, don't limit your sales to your store. Find other outlets and if you don't have other goods or sell bulk coffee then get them and start selling outside of the store. Make sure that your packaged goods are on the shelves in grocery stores right next to the big guys. Because you are local you'll get notice from retail grocers who will be very likely to let you sell through them. Offer free samples of your coffee that the grocer can give away or ask to be allowed to sit in the store and give out samples.
Make sure that whatever you sell in person, through the store, or through some outside outlet is available for sale on your website. It give you credence and will act as a way for clients to get your wares more easily. Provide good shipping terms.
Some other outlets would be to go to little league fields and sell during games, parks (make sure to get the appropriate permits for your city and state), sporting events, outdoor concerts, and public meetings. Make sure to have a cart or stand at parades and holiday celebrations.
Go to local hotels that have meeting rooms and sell them coffee and pastry service for their meeting rooms and for their continental breakfasts.
If you sell bulk or bagged coffee with your brand try to get a deal with a local restaurant to serve your coffee. Make sure to include in the contract that they must display "We proudly serve Nick's coffee" prominently at each table and somewhere in the hostess area so everyone can see it. Not that tough to do.
I'm a fan of having open mic nights. Bands are sometimes too much if you have a small store. If you put up flyers for a monthly open mic show and have in musicians who will play their own original royalty free material then you get the people the musicians bring in to hear them play and other folks who would like to hear live music who have seen your fliers. Make sure to not let them do cover material so you don't get in trouble with the music unions over royalty payments. Its your responsibility to pay not the musicians.
Another source of quality live music is the music departments at a local college. get music students to play classical music and very old jazz its all public domain and not subject to RIAA tyranny. Yes, I said it, shoot me. I'm a musician and I don't like them. They don't help me, they help themselves.
You can try the same thing with comedians, but for me, I'll stick with guitar players. Even a horrible guitar player is better than a bad comedian. Your call. You might have some really great talent around.
Another good source of new customer draw and a way to keep things changing in order to keep your customers interest is to sponsor a local artist. Showcase one artist per month. Allow them to sell their work through your store. Take a 5 to 8 percent commission. Have a new artist display their works on a monthly basis. It keeps things fresh but not changing so much that you destroy the feeling of "familiarity" that is very important to coffee shop appeal.
Another food tactic you could try would be to strike a deal with some local confectioner. Lots of people make homemade fudge, candies, and other treats. The quality of these is usually exceptional and many times will attract a very strong following. Make sure to write in a contract that you are the ONLY coffee shop who they sell through. Take everything on consignment rather than buy it. Have them sell their own goods and you take a percentage. The big draw is to this idea is that it will act as a pull to bring in new customers. When someone walks out of your door with a cup of coffee, they rarely share it with anyone. By the time they get to work or home its gone. But a box of chocolates will last a long time and be sampled by many people. If you are a sole outlet for that delicious morsel someone tried at work then they will be in to get more and to sample your other wares.
You could do something similar by setting up a very small arts and crafts display that had something to do with your community or tied into the theme of your store. Have local crafts people bring in consignment goodies and offer them for sale on your shelves. Change them out once a quarter unless someone is really selling lots of goods. Remember that in all of these shared deals the people who you partner with be it the baker, musician, artist, confectioner, etc. are all going to do lots of promotion to bring people in on their behalf that will also benefit YOU!
If you have local authors, offer up your store as a place where they can do book signings. The same goes to local politicians. Let them come in and talk. Get the media involved. Its good exposure and you get the resulting customer draw.
Make sure to create an email list and send out a monthly newsletter. Put together some tips on things that are important to people in your community, a coffee recipe that features your products, and your featured product or gift of the month and a link to the buy page on your web site. There are plenty of web sites where you can create free word searches and crossword puzzles so you can put word games with some uniform theme that applies to events in the community in the newsletter.
I'm a huge fan of article writing. Write articles for the local neighborhood type of newspapers. If its an informative article, like what affects the prices of coffee in a down economy then they will usually print it for free with a simple web address for you at the bottom of the article. Don't make it a sales pitch, inform the readers. These articles are usually only 400 to 1000 words with 1000 being very much on the long side. As of the last period this one is at 1,701 words.
The same is true for radio. Its fairly easy to get onto local radio shows. There are lots of articles on the web that will tell you how to take care of do it yourself PR. Search for public relations and radio on your favorite search engine. Its much easier to do that you might think and all you have to do is be an expert on coffee or tea. Many morning shows look for this type of guest.
If you sell bulk coffee or by the bag in your store you could write your own coffee recipe book. Make it fairly short, 20 to 25 simple recipe that feature your products. Release a new one every 6 months. Most people don't realize it but public television is very easy to do and shows don't cost more than $100 do produce. Usually less if not free depending on how your local PBS works. Have a weekly coffee and coffee product recipe show on PBS.
If you don't want to come up with the recipe yourself, then have contest and publicize it that you'll take the top 20 to 30 recipe from patrons and feature them in your new book! Make sure the recipe feature your products, then find a graphic designer to help you with the layout and publish the book and sell it in your store, local grocery stores, and on your website.
A good way to launch a book and get some instant momentum is to sell a few on ebay. Start the bidding at .99 cents and let it go up from there. Even if you only get a buck you get the exposure and the web traffic that ebay can generate. Its awesome!
You can also offer up your store during college finals for cram nights . Go to the local college and put up a flyer that your store will be open from close until opening the next day for people who want to study. Do this for the week before finals. You could even work out a deal with local tutors and have them be on-hand to help anyone who needs it based on a schedule.
As for additional services, have a masseuse with a chair come in on certain days of the week. He or she gives neck and shoulder massage and you charge a little for them to be there. The patrons get a nice treat, the masseuse gets paid, and you provide a nice incentive for your customers to come back.
Its really hard for the big guys to beat you on your own home court. They are the visitor no matter what. You have to sell something they don't. You can't be JUST a coffee shop otherwise the big guys will run over you. Little stores can still compete with Wal Marts and you can compete with Starbucks. Be very clear about what it is you REALLY sell. It's not coffee I guarantee you. And don't limit your market to the store. Reach out the the community.
Good luck Nick,
Gail
"Things are difficult only while you don't understand them."
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