Water Mill-based Hampton Coffee Company adds locations, develops new

Long Island Business News, Feb 17, 2006 by Adina Genn

As an NYU student in the mid 1990s, Jason Belkin worked summers at Water Mill-based Hampton Coffee Company. In between serving coffee to celebrities, farmers and locals, he and Pepe Martinez, the cafe's manager and coffee roaster, joked about how they would grow the company if they owned the place.They weren't kidding.

In 1999, the Hampton Coffee Company was for sale, and Martinez, still a company employee, called Belkin with the news. By then, Belkin, after a stint as a News 12 producer, had opened a public relations agency. We decided to take a chance, said Belkin, who borrowed the money to purchase the firm, which posted $300,000 in annual revenue at the time. By 2004, Belkin and Martinez grew the company to a $1.2 million operation, and opened additional locations in East Hampton and Westhampton Beach. They also built up the company's wholesale and mail order business.Even though Hampton Coffee has to battle the ubiquitous Starbucks, it isn't retreating.Instead, the company repositioned itself to develop new markets. But there was a caveat. Belkin wanted to open new sites and run them with his wife Theresa. Martinez, however, wasn't ready to expand the company.So in March 2005, Belkin sold his share to Martinez. They created an agreement in which Martinez became the licensor and Belkin the sole licensee so that he could open additional locations. In the arrangement, only Belkin and Martinez can open stores. Belkin buys the coffee directly from Martinez. Both parties use the same vendors, for brand consistency, Belkin said.They closed the Westhampton Beach branch - It was hidden in a courtyard and there were not as many customers as hoped - and sold the East Hampton site, which turned out to be a fortune to run, only drawing crowds in the summer, Belkin said. Martinez, now busy running the Water Mill store, mail order and wholesale business, said he has no immediate plans to open additional locations. But the Belkins are moving forward. In January, they opened another cafe in the Bridgehampton National Bank in Westhampton Beach. This Westhampton Beach site is at a bustling six-corner intersection, Belkin said. The nearby movie theater, he said, generates additional traffic.The Belkins also opened a shop in Bergen County, N.J., in September 2005. Though New Jersey is a distance from the Hamptons, Belkin liked the site, located at a busy Exxon station. Belkin discovered it through a trade magazine. He already had customers from the Hamptons that live nearby, Belkin added. And the train station across the street attracts commuter traffic. Still, Belkin said there are challenges he hadn't anticipated. Though the company has regulars, Belkin thought there'd be more. I probably could make more money if we sold chips and maps, Belkin said. But because the company built its name serving freshly baked goods and homemade soups, in addition to coffee, Belkin won't stray from the concept.He is considering new strategies to build a New Jersey following, including teaming up with local business and offering cross promotions to get new foot traffic. He also offers coupons to visitors who fill out customer comment cards.Ultimately, Belkin hopes to open four or five stores, including one at Long Island MacArthur Airport, and one on the Upper East Side in Manhattan, where a good number of vacation-home and mail-order clients live.As for growing in the face of Starbucks, Belkin isn't deterred. Mike Ferguson, chief of staff at the Specialty Coffee Association of America, a trade organization in Long Beach California, said independent coffeehouses report increased revenue when Starbucks opens nearby. Belkin found that's the case in East Hampton and Water Mill. Thanks to Starbucks, a new Latte drinker is now 'born,' Belkin said. When they're on Starbuck's side of the street, they'll go in to Starbucks. But, if they're on our side of the street, they'll go in to our espresso bar.