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Taking on Starbucks, one cup at a time

Size doesn't always matter.

Yes, Starbucks has more than 20,000 stores in over 65 countries. And yes, it has 400-plus locations in New York City alone. But that hasn't stopped Stumptown Coffee from opening its two Manhattan locations and taking a bite out of the biggest name in coffee.

James Simmons, coffee educator at Stumptown coffee and Joe Bastianich of CNBC’s “Restaurant Startup.”
Liza Hughes | CNBC
James Simmons, coffee educator at Stumptown coffee and Joe Bastianich of CNBC’s “Restaurant Startup.”

Stumptown started as a single retail store in Portland, Oregon, and slowly spread eastward, opening a roasting facility in Brooklyn and a cafe in Manhattan's West Village in 2009. A second cafe opened in 2013 and quickly became a favorite of restaurateur Joe Bastianich. The owner of nearly a dozen restaurants in New York City, he knows it's not easy—or cheap—to become a giant-killer.

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"I look around and I see a lot of people using your Internet for free," he said to Stumptown wholesale account manager James Simmons. "I see a lot of people using your electricity for free, I see a lot of people using your air conditioning for free and I see a couple of cups of coffee. … If I look at dollars spent in this room, it probably wouldn't get me a cab ride to the Upper East Side right now."

What can Simmons do to make Stumptown a force to be reckoned with? According to Jonathan White, executive vice president of coffee roaster and distributor, White Coffee, small, independent shops can survive in an environment with a Starbucks on every corner by offering something a retail chain can't—a personal touch.

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"Smaller coffee producers can compete by creating unique products and by customizing their offerings to meet customer needs," he told CNBC.com. "In addition, the level of service, including marketing support, can also be a value differentiator."

While Stumptown certainly has no problem positioning itself a provider of a great cup of coffee, Simmons said it's more than that.

"We are a roasting company, first and foremost," he said. "So we find farmers that we can work directly with to get the best possible quality of coffee, and then we try to bring that to fruition and roasting, and then eventually brewing."

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Bastianich said he sees Stumptown as more than just a coffee shop as well. He sees it as an integral part of the neighborhood.

"Being a long-time business owner in this neighborhood, and having seen this spot sit empty for a while, it's a real privilege and a pleasure to have Stumptown here," he said. "It's a new and welcome stop for me as I walk between my restaurants."

—By CNBC's Liza Hughes

"Restaurant Startup" is on a quest to discover, invest in and launch America's next generation of epicurean superstars. Tuesdays at 10 p.m. ET/PT.

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About the Hosts

  • Joe Bastianich

    Author, reality television personality, and triathlete.

  • Tim Love

    Tim Love has a freewheeling personality that’s as bold as the signature, western cuisine he serves at his famous Texas restaurants.

  • Waylynn Lucas

    Waylynn Lucas is a pastry chef who gives each of her fabulous dessert creations a modern twist.