Coffee conflict brewing

On any given day, there's a handful of people sipping lattes and nibbling on pastries in the small 3 Bees Coffee shop in downtown San Mateo.

It's a welcome sight for store owner Rafat Haddad. The store managed through some difficult times before the arrival of the downtown movie theater and the stores that opened in the wake of its grand opening three years ago. However, times could become rough again as the coffee shop faces its biggest challenge yet - its new neighbor, Peet's Coffee and Tea.

Peet's Coffee is "coming soon" to the corner of Third Avenue and B Street. It will have a bigger store, more staff, deeper pockets and 3 Bees owner Rafat Haddad will have to look at it every day from his window across the street.

"It's just not good business ethics," said Haddad of Peet's decision to open a store within a block of two independently owned coffee shops and about two blocks from Draeger's Market, which runs a cafe as well.

Both Haddad and Riyad Khoury, owner of Bean Street Coffee at 359 B St., asked the city to place a moratorium of coffee shops in downtown San Mateo. However, city officials said their hands are tied when it comes to deals property owners make with new businesses.

The city can only control what goes into a particular building when it's asked to help recruit or it owns the building. When the city is involved in finding a tenant for a particular building, it tends to look for a business that will balance the area, said Community Development Director Bob Beyer.

In the case of Jos. A. Banks, a men's clothing store, the city specifically planned to bring a national retailer with a different clientele than most the other stores in downtown.

Unlike parts of San Francisco, where Khoury said officials have put a moratorium on coffee shops, San Mateo isn't prepared to take that drastic of a step. Some tried to have a similar moratorium placed on restaurants in Millbrae with a failed ballot measure two years ago.

So the only thing for business owners to do is sit, wait and hope the city finds a way to increase downtown foot traffic to support all three businesses.

"Peet's will not bring more money. It'll just be sharing the revenue already here, splitting the pot," Haddad said.

To make it work, the business owners would like to see more activities - outside of eating - in downtown San Mateo. Khoury said more weekend activities to attract people downtown would be a start. He would also like to see a better selection of stores to entice people to stay longer.

Khoury's tiny shop has two tables, a small bar and some outdoor seating. Khoury said he has contemplated offering afternoon tea specials and authentic Italian espressos. The one thing that would really help his business is if the city could attract a bookstore to move in next door at the now empty former Rite Aid and Thrifty's store. The city has tried to attract a large bookstore to downtown for years.

The city had courted Kepler's bookstore to open a second location near the train station. Kepler's operated near the Menlo Park train station until its sudden closure last week.

"Look at Kepler's," Khoury said. "The same phenomenon is happening in every area of business."

At least the coffee stores don't have to worry about online competition.

Peet's coffee did not return a request for comment.

Dana Yates can be reached by e-mail: dana@smdailyjournal.com or by phone: (650) 344-5200 ext. 106. What do you think of this story? Send a letter to the editor: letters@smdailyjournal.com