The Daily Star (Beirut, Lebanon) August 21, 2001

Enter Starbucks, and a Lebanese-American's dream comes to an end "Cafe Europa was our livelihood, they destroyed us"

Tiare Rath

Daily Star staff

SAN JOSE, California: Terry Jarrouche's American dream has turned into something of a nightmare. For the past five years, Jarrouche has worked 14 hours a day, seven days a week, serving Middle Eastern food in her cozy cafe in bustling Silicon Valley.

But soon, the shawarma-maker will come down along with the menu that displays her specialties ? which includes kafta, falafel, fattoush and tabbouleh. The blown-up photos of Beirut in its heyday will be taken off the walls. And the hand-drawn sign reading Cafe Europa will be replaced by the block green letters that have become the signature of Starbucks.

"I really didn't think this would happen in the US," says Jarrouche. "They call it the land of opportunity, but you work for nothing. You sacrifice, and you get nothing. All that matters is the money now." Building a small business Jarrouche, who is originally from Achrafieh, and her husband, a native of Naqoura, purchased Cafe Europa in 1996. They bought the small frozen yogurt shop for $80,000 and shelled out another $120,000 to overhaul the kitchen.

While she paid the owners of Cafe Europa to take over their space, Jarrouche still had to wrangle over the terms of the lease with the landlords of the suburban strip mall where the cafe is located. They offered her five years, but she wanted a longer agreement to avoid the risk of losing the space during renegotiations. "When they saw that I was really concerned," Jarrouche recalls," they said, "Come on, where are we going to find Lebanese food like yours?"

Convinced she was in safe hands, Jarrouche signed on for five years. Almost three years later, just as her business was running smoothly, corporate America stepped in. A San Diego, California-based company called Burnham Pacific Properties bought the strip mall from the local landlord. It was the summer of 1999. By spring of the following year, odd things started happening: A Burnham Pacific Properties employee called and asked Jarrouche how her business was, and she received notice that the company was sending in someone to measure her space. In addition, a contractor came in with drawings and checked out the fire safety system.

"He mentioned that it was going to be for Starbucks," Jarrouche says. Soon after, she maintains, "I was receiving shipments of uniforms for Starbucks. I received mail. I received towels."

The business next door, which was on a month-to-month agreement, did not have its lease renewed. Worried that Burnham Pacific Properties was trying to push her out for Starbucks, which was reportedly willing to pay higher rent, Jarrouche took her property management company to court for trying to break her five-year lease early, and won.

Thinking the worst was over and that Starbucks was out of the picture, Jarrouche called her leasing agent earlier this summer to renegotiate the lease, as the original expired late 2001.

There wasn't much negotiating. She was told that Starbucks still wanted her shop, and was willing to pay three times her $2,400 monthly rent. Starbucks told The Daily Star it does not publicly discuss terms and negotiations for its leases, and did not answer other questions about Cafe Europa. Burnham Pacific Properties sold the property to National Retail Partners in October last year. Both companies did not respond to requests for interviews. Because Jarrouche cannot afford to compete with the rent that Starbucks is reportedly offering, she is giving up her cafe at the end of the year. She is doubtful that she will be able to relocate because her legal fees wiped out her savings, and property values in Silicon Valley have skyrocketed over the past five years.

"I've tried so hard to make it,? Jarrouche says. "And now that I have to give it up, it kills me." The threat of chains Jarrouche?s tale may be sad, but it is not unique.

There is growing concern about the effects of globalization on the Third World, but its power is also being felt in the world?s most prosperous nation, where small business owners are struggling to keep their heads above water.

While the US government's Small Business Administration does not have any statistics on how many small businesses go under due to competition from big-box stores, it is known to be a common occurrence.

"Chains do pose a threat to independent business owners because the chains have the name recognition, the purchasing power to offer lower prices, and the deep pockets to invest heavily in advertising," asserts Norman Scarborough, an associate professor of economics and business administration at Presbyterian College in Clinton, South Carolina, who has also co-authored eight books on small business management. One of the tactics many big-box establishments are known for is taking out their competition by moving in next door.

Under these circumstances, a smart small business owner will "analyze the new competition and shift their strategies to reflect what their customers value but cannot get at the larger, often more impersonal chain stores," says Scarborough. "Independents, for example, might offer personalized service, credit, more in-depth product knowledge, a unique product mix and a host of other factors," he says.

And Jarrouche had used some of those techniques to vie with her competition.

Placed strategically on her countertop is a study asserting that people prefer gyros ? one of her specialties ? over Big Macs. It is propped upright in a plastic holder, so that it faces the McDonald?s that lies about 25 meters away from her cafe.

"I have service that they'll never have." Being a small business owner, Jarrouche had also made personal service an integral part of her cafe. She knows the names of the stockbrokers, policemen, kids and retirees who walk through her doors almost daily. "The sad thing is, I'm not (Starbucks') competition," Jarrouche argues. "I do have coffee, but I also have special food that they would never have. I have service one-on-one with my customers, that they'll never have."

Her customers have rallied around her by signing petitions and writing letters in support of keeping Cafe Europa. One customer, Susan Rossi, put together a binder of photos and materials on Jarrouche and her cafe that she sent to Starbucks with the hope that the company would give up pursuing the property. "I'm a customer of a hard-working family-owned business that?s being wronged," Rossi says. "These big corporates, they come in and run everybody over, and they couldn't care less."

If Cafe Europa is taken over by Starbucks, she vows, "I won?t step foot in their store. Ever." Jarrouche also talks about the situation in an angry tone, but her voice cracks when she discusses her children. She has sacrificed time with her three sons to run Cafe Europa, she asserts, and it has become like a second home to them.

"You know, I lost my baby in here. Right here," she says, pointing to the black-and-white checkered tiles where she miscarried, "because I was working so hard to keep the place going."

Jarrouche says she could deal with competition from Starbucks if they moved in next door. It's the company not paying her for the space that gets to her. Jarrouche paid the previous owners to take over the shop, and she argues that Starbucks, which is worth $6.76 billion, should "compensate me for what I've done and all my hard work."

But she has received "not a dime. Nothing. They're dealing with the landlords. They're not dealing with me."

The probability that Jarrouche will not be able to relocate her business means that she also may have to relocate her family. Her husband sells cars, but his commission is not enough for their mortgage and bills, especially now that Silicon Valley is flirting with a recession.

Cafe Europa "is our livelihood," Jarrouche says. "They destroyed us."

DS 21/08/01