Coffee shops are replacing the office but being a “third place” can be a third rail

Bedford Studio, an independent coffee shop in New York, sells more than just caffeine and pastries. It essentially sells table space for remote workers.

Lawrence Helfant, the founder, said Bedford Studio’s business model was designed to be a haven for remote work. In addition to selling coffee and other typical café goods, the hot spot, located in the West Village, sells memberships to use it as a workspace. Memberships — which are separate from the price of a cup of coffee — cost $10 a day, $30 a month, or $300 a year. 

“Laptop use for members only,” a sign in the shop says. 

“Remote work is here to stay, whether whole or hybrid,” Helfant told Sherwood in an interview. “I think people living in their small apartments, maybe with roommates, want to get out for a little bit but don’t want to pay $300-plus a month for a workspace. We have an affordable option to do so.” 

Coffee shops are at a crossroads. As the pandemic wound down, remote work held onto its newly popular place in Corporate America and people with laptops started staking out tables even more than they had before the pandemic. Even with a growing list of companies now calling their employees back to offices, Google Trends data shows that people are searching more for coffee shops to work from than ever before. 

Reddit has threads in communities ranging from Boston to Los Angeles specifically looking for remote-work-friendly coffee shops. There are Instagram and TikTok accounts and Substack newsletters (including my own New York City guide) dedicated to finding spaces where remote workers can continue to flourish.

Now shop owners are balancing remote workers camping at tables versus rising costs. They’re also reckoning with a trend of consumers tightening up on purchases, weary after years of high inflation.

Helfant told Sherwood that Bedford Studio has sold roughly 100 memberships since the shop opened 18 months ago. He said 20% of them have been annual memberships. Even day memberships, which are only $10, have an impact. 

“If you know you paid for a day pass and enjoy the experience, you are more likely to come back,” Heflant added. 

Remote-worker influx

Steve Sutton is the owner and operator of Devocion, an independent coffee-shop chain and roastery whose flagship location in Williamsburg, Brooklyn, is consistently touted as one of the top places for remote work in New York City. He’s had to strike a balance between being a welcoming place for workers while also making sure customers can enjoy their coffee. As a solution, the café introduced time limits on internet use. 

“As we became more popular and business grew, it became evident that we needed to somehow monitor the amount of time customers were spending in the shop,” Sutton said. 

Remote work is becoming an increasingly large part of the workforce, with hybrid work even more common. Last year, a study from Stanford University found that 40% of US employees work remotely at least one day a week. The market for freelance work is getting bigger, too: Upwork’s annual study showed that 38% of Americans freelanced last year, and the freelance workforce has grown by 78% over the last decade. 

The interest in coffee shops for remote work isn’t new, especially in major creative and entrepreneur-laden urban centers like New York, Los Angeles, and San Francisco. After all, the writer working on their screenplay in a big-city coffee shop is a pop-culture trope for a reason. 

But in other parts of the country, where working from cafés isn’t as big a part of the cultural zeitgeist, the surge of remote work has been a bit of a mixed bag. Kent Collins, the owner of Flying M Coffeehouse in Boise, Idaho, said it’s been slower, especially during the important morning rush.

“Before the pandemic, we had people waiting for the doors to open at 6:30 a.m. Now we have a rush at 8 a.m. instead,” Collins said. “There’s just less people down here. Luckily, after being in business for 32 years, we have very loyal regulars who still come in.”

Sometimes remote workers bring in more business, but that’s not always the case, Collins said.

“It’s completely hit or miss. Some people are courteous and will continue to buy things for the entire time they are here, and some people expect to take up a whole table by themselves for a $2 coffee,” Collins said. 

Rising costs and a cheaper consumer

Meanwhile, the industry faces challenges to its financial stability. The cost of imported coffee has gone up a staggering 65% in the past three years, thanks to supply-chain strains and climate-change woes. Extreme weather conditions have hindered coffee production in several key coffee-producing regions of the world, including Indonesia, Brazil, and Vietnam. 

Brazil’s wildfires damaged one-fifth of the areas that grow arabica, one of the world’s most popular bean varieties. Indonesia’s output fell last season amid extreme weather conditions, though a rebound is forecasted for this year. Even robusta beans — primarily used in instant coffee — are the most expensive they’ve been in more than four decades. 

The USDA said in June that the Russia-Ukraine strained fertilizer supply has driven up the cost of producing coffee. Those increased prices trickle down to farmers, buyers, and consumers. 

Collins said he’s feeling the sting from rising costs of ingredients beyond the coffee bean, like milk. Prices for alternatives like oat milk are also surging. 

Demand is rising, too. The National Coffee Association, an industry trade group, said this spring that daily coffee consumption has hit a two-decade high. 

Even Starbucks, the biggest coffee chain in the world, is having trouble navigating this environment. About a year ago, the Seattle-based behemoth set out to open eight stores a day until 2030 as it looked to revamp its brand. While the brand did not fulfill that goal this past month, the chain still managed to open roughly 30 stores in October alone. Starbucks Everywhere — a website that tracks branch openings — reported that the company opened 31 new locations last month. 

But it’s also stumbled on the sales front. Starbucks in August replaced its CEO with Chipotle’s Brian Niccol after the former chief drew criticism from activist investors and Starbucks founder Howard Schultz. In Starbucks’ latest quarterly earnings report, same-store sales dropped 7%. In response, Niccol said he would simplify the company’s menu, overhaul its shops, and go back to using Sharpies to write customers’ names on cups.  

The coffee-shop chain has seen a surge in to-go orders. Mobile orders make up 30% of transactions, Niccol said in the company’s earnings call. Staffers haven’t been able to keep up with the onslaught. 

“When you try to be both an experience-based retailer as well as a convenience-focused retailer, you end up not serving either group very well. And I think that’s been the biggest challenge for them the last couple of years,” said RJ Hottovy, head of analytical research at Placer.ai, a location-analytics company. Hottovy studies how consumers interact with physical real estate, including foot traffic. 

Niccol has also said he wants to return the business to its roots as a hub for the community. 

“We’re refocusing on what has always set Starbucks apart — a welcoming coffee house where people gather, and where we serve the finest coffee, handcrafted by our skilled baristas. This is our enduring identity,” Niccol wrote in a letter to stakeholders in September. 

Analysts praised the approach. “We appreciate the acknowledgement for the drift in store operations to establish credibility, as this is a focus area underpinning the upcoming turnaround,” Andrew Charles, a senior analyst at TD Cowen, wrote in a note following Niccol’s initial letter.

Schultz, the founder of the company, said the ethos of Starbucks was to become a common “third place” where people could gather outside of home and work. The chain was one of the first to offer free Wi-Fi to customers — a move that emboldened the remote workforce. 

Despite the headwinds, more Starbucks locations and more small, local coffee shops have opened around the country. The sheer number of independent coffee shops has surged by 2.4% nationally every year for the past five years.

The vibes vs. the money

Independent coffee shops don’t have the financial runway that Starbucks does to trial-and-error new approaches. Food and beverage businesses typically survive on slim margins, and even before the pandemic, as many as 74% of coffee shops didn’t last five years. 

So shops are trying to balance out having higher turnover, which typically leads to more revenue, with attracting remote workers who may want to park at a table for a while. The Bean, a New York City chain that operates three stores in lower Manhattan, is trying just that. It uses a platform called GoGoGuest to time its users’ Wi-Fi access. With each new purchase, a customer can get more Wi-Fi time. GoGoGuest said that because of the adjustment, customers spent an average of 32% more per visit. 

The Bean didn’t respond to a request for an interview. 

GoGoGuest CEO Jessica Valenzuela said more than 1,000 businesses use the platform. 

“In terms of the market, we are popular in major cities — LA, Houston, Dallas, Miami, and New York City. All through word of mouth and organic searches. We are also growing in university and urban areas where there are commercial and residential neighborhoods,” Valenzuela told Sherwood. 

Devocion also uses GoGoGuest, but didn’t say whether implementing new restrictions affected sales. 

Many shops around the country have taken a similar approach to Bedford Studio, trying to lure in remote workers. Brass Tacks is a hybrid event space and is listed as one of the best coffee shops to work from in Houston. Regional chains Coffee Republic and 787 Coffee even have opened dedicated coworking spaces in some locations. 

For coffee-shop owners like Collins in Boise, maintaining success in the remote-work era is finding balance. 

“As long as people buy something, we try to be accommodating. I would say for us it’s not a huge benefit because it does take up a lot of space where bigger groups could sit, but it’s not worth fighting with people all day. As long as they are cool to us, we’re cool to them,” Collins said. 

Andy Hirschfeld is a reporter in New York. In addition to Sherwood News, his work has appeared in Fast Company, Al Jazeera English, The Daily Beast, Mashable, National Public Radio, and Marketplace, among other notable outlets. Follow him at @andyreports on X, Threads, and Instagram.