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The Coffee House Crisis

With all the talk lately about the new lending regulations that will apply on April 1st, a similar set of new laws and regulations has been completely overlooked.  I felt it prudent to bring this unsettling situation to light.

As you may or may not be aware, over the past few years there have been quite a few problems “percolating” in the retail coffee business.  It seems that some customers have been over-charged, while others have ordered coffee that was too hot or just plain did not satisfy. This is a serious situation, not only because of the expense involved, but also the very real danger of severe burning.

The House sub-Committee on Agriculture and Imports has been holding hearings into this matter.  They brought a number of new regulations to the full Congress, which were subsequently voted into law and take effect April 1st of this year.  These new regulations govern the coffee purchase transaction within a retail coffee vendor.

I’ve highlighted some of the key components below:

  • The server must be paid (or tipped) the same for all beverages and may not earn more based on the time or effort involved.  (E.g. there is no difference between an Iced Cocoa Cappuccino 1 pump mocha, 1 pump white mocha, non-fat milk with a drizzle on top and a plain black coffee.
  • Customers must pay by credit card or cash, but never both.  If paying by credit card, they may not leave any cash tip for the server.
  • The Coffee House must distinguish between beans grown / brewed in-house and beans that are imported.  With beans grown / brewed in-house, the server must decide what to charge the customer before the customer ever enters the establishment and must then charge ALL customers that exact same amount.  (The server may only change what they charge once per “qualified period”.)
  • If a customer orders a beverage from the grown / brewed in-house selection and pays with a credit card, the server may receive no tip. (For purposes of this section, even the owner of the Coffee House is considered a “server”.)  Instead, they must be paid according to a compensation plan the Coffee House has created.  Said compensation plan must apply equally to every server who works there, despite experience or expertise.
  • If the customer orders a beverage from the grown / brewed in-house selection and pays with cash, the server shall not be tipped or paid at all!
  • If the customer orders a beverage from the imported bean selection, they MUST pay with a credit card.  The server will then be paid according to a pre-arranged compensation plan which differs with each and every particular grower / brewer.  (Customer has no choice but to pay the higher price associated with credit card use.  They are precluded from using cash if they wish to order from the server.)
  • The server must offer each customer 3 beverage menus from other coffee houses for comparison purposes.
  • The customer must sign a disclosure regarding any sugar, cream, cinnamon, etc. that may be a part of their finished beverage, and then wait 3 hours to actually place their order.  (If the coffee house itself offers these ancillary items, they are prohibited from applying different margins – i.e. they must set prices on these items in such a way that their profits will be the same despite supply or demand.)
  • Finally, the Coffee House must separately retain 5% of its profits against any potential future liability stemming from a customer mishandling their coffee cup or otherwise burning themselves.

As clear as all of these new regulations appear, there are still some issues to be decided; Congress will, at a later date, notify Coffee Houses how long they will have to wait before they can enjoy that 5% profit they have been denied.  They will also define what a “qualified period” is at some future time.  Also, Congress has not yet defined what a qualifying cup of coffee is or should be, but will do so soon…

Thank you for your attention to this very serious issue.  With the help provided by our Congressional leaders, I believe we can all feel safer the next time we order a cup of coffee.  Of course it’s quite likely we will pay more due to all the new regulations… and I’m fairly certain I wouldn’t want to be a coffee server… or a lender…

Related posts:
  • Congressional “leadership” on lending policies: What is “crisis-itis?”
  • Realtors in the Coffee Shop and Everywhere
  • Strong coffee

  • 16 comments

    16 Comments so far

    1. Jeff Brown March 24th, 2011 9:08 am

      My understanding is all is not well behind the curtain. What’s your take on this new nonsense being scuttled before April Fool’s Day?

      Also, this post entitles you to a Starbucks visit on my card. Cookie(s) included. :)

    2. Don Reedy March 24th, 2011 10:21 am

      The French existentialist Jean-Paul Sartre was sitting in a cafe when a waitress approached him: “Can I get you something to drink, Monsieur Sartre?”

      Sartre replied, “Yes, I’d like a cup of coffee with sugar, but no cream”.

      Nodding agreement, the waitress walked off to fill the order and Sartre returned to working. A few minutes later, however, the waitress returned and said, “I’m sorry, Monsieur Sartre, we are all out of cream — how about with no milk?”

      Sean, I’d like to reply to this with no nonsense, but I feel the tenor of your post does not allow me to do so. How about, then, a reply with no common sense?

      Call me to join you when you take Jeff up on his cookies adventure to Starbucks. And by the way, all this would be funny if it’s weren’t so not funny.

    3. Brian Brady March 24th, 2011 10:49 am

      A brilliant analogy of the micro-managing nonsense, this Reg Z amendment is.

    4. Brian Brady March 24th, 2011 11:06 am

      But Sean, coffee isn’t the most important financial transaction of your life. Anybody can buy coffee but a house is simply too important to trust the free market. People can’t be trusted to make good decisions for themselves…OR

      Coffee is a luxury item but housing is a necessity . That’s why “there oughta be a law”…OR

      Coffee will need these regulations when the greedy Wall Street bankers get involved

      I could probably go on for days with more nonsense but I thought I’d give you a preview of the Rotarian Socialist arguments coming

    5. Tom Vanderwell March 24th, 2011 11:54 am

      All I can say is this:

      Sean – very well said.

      and I’m so glad that I’m not a lender any more……

      Tom

    6. John March 24th, 2011 12:08 pm

      Non-sense doesn’t even begin to describe it. I will be laughing tomorrow morning when I drink my morning cup of Maxwell House. Just glad I don’t have to leave myself a tip…. or do I?

    7. Sean Purcell March 24th, 2011 3:01 pm

      @Jeff – much of this is already in place. There are still issues and aspects being “clarified” and litigated? but I wouldn’t hold my breath. Coffee and cookies sound great, but we better move quick before prices change on April 1st…

      @Don – love that story. Who better than Sartre to make all of this understandable… :) (For Starbucks and cookies, see above. Can’t wait to sit down with you so let’s make it soon.)

    8. Jeff Brown March 24th, 2011 3:03 pm

      I’ve available Saturday afternoon if you are.

    9. Sean Purcell March 24th, 2011 3:12 pm

      @Brian – People can’t be trusted to make good decisions for themselves AND housing is a necessity are both terrific examples of the absolute fallacy of government think.

      Coffee will need these regulations when the greedy Wall Street bankers get involved. Bankers? Who’s more greedy than those evil Corporations?

    10. Sean Purcell March 24th, 2011 3:14 pm

      @John – enjoy your coffee and your laugh… while it’s still funny. :)

    11. Al Lorenz March 25th, 2011 11:40 am

      Sean, maybe you can arrange “home bartering” instead.

    12. John March 25th, 2011 11:59 am

      @Sean – Agreed. Sometimes humor is the only way to deal with craziness…

    13. Sean Purcell March 25th, 2011 1:26 pm

      Jeff (and Don, and …) – Saturday is great, but we’ll have to meet at my “office”… I have Little League games 9:00am and noon. I’m managing the game at 9 but I’m a spectator at noon. Hot dogs and baseball anyone?

    14. Jeff Brown March 25th, 2011 1:29 pm

      La Mesa National?

    15. Sean Purcell March 25th, 2011 1:49 pm

      Yes, LMNLL. (Inlookers, this is far afield of the post, but then the post was pretty far afield too… :) )

      9:00 game is at the Minors field, back of Lemon Ave school. 12:00 game is at the Majors field on University. At either game look for the slim, good looking guy, then ask him if he knows where Sean is…

    16. Jeff Brown March 25th, 2011 1:52 pm

      Bada boom! More likely than not, I’ll be there at noon game.