(sugarpond/flickr)

NEW YORK, NY June 18, 2007 —Running an independent coffee shop in New York is a challenging business proposition. You're competing with Starbucks, you've got rising rent, and you operate in small change, selling 1 to 2 dollar coffees all day. WNYC's Lisa Chow finds out who these shops are up against and how some are trying to make it work.

REPORTER: Take the pillows away, start table service and set rules for customers.

AVITAL: Basically you cannot close your eyes and you cannot stay overnight.

REPORTER: Shmul Avital manages the 24/7 Esperanto Café in Greenwich Village. It’s been in business for eight years and he says customers started treating the café like a hostel.

AVITAL: I had people who had on the table an alarm clock, a flower. Actually, you see that guy sitting outside on the chair over there. So he was one of those guys.

REPORTER: A middle-aged man with dyed blond hair sits in a beach chair on the sidewalk. He’s wearing headphones. When I approach him to talk to him, he points to a small a piece of paper. It conveys a message. He speaks only when compelled. I should not ask questions. In the East Village, café owner Clemente Valguarnera deals with his own problem customers.

VALGUARNERA: He always comes here. He reads his own newspaper, brings his own water, stays a couple hours and then he leaves, without buying nothing. So I went over to the guy and said, excuse me sir, do you know that this is a counter service. Oh, really, it's a counter service? Like he didn’t know. And he did me a favor to go and buy a coffee. I mean, please.

REPORTER: Then, of course, there are those who sit with their laptops all day long. Valguarnera says, forget hiding the electrical outlets. It doesn't work.

VALGUARNERA: Some people going behind my kitchen to plug the phone, to plug computers, to plug anything they can because they think they are entitled to do it. When they come into a place like this they don't think they are the customers, they think they are the owner.

REPORTER: Anas Muwais is a writer who's been coming to Café Pick Me Up for two years. He stays for about six hours, almost every day. He believes he more than pays his keep.

MUWAIS: I actually bring business into the place. I have tons of friends who come by. They visit. They like the place. They start hanging out. So it's actually kind of narrow minded if you conceive of my economic value as 10 dollars a day.

REPORTER: He's about 170 pages into an existential comedy he's writing. And that's not all he's accomplished in this space.

MUWAIS: I also wrote a 425-page philosophy book at this coffee shop. Between the 10 dollars a day, which actually comes up to 300 a month, and the friends, I don’t feel guilty at all.

REPORTER: On the other hand, there’s Mike Wolraich.

WOLRAICH: Yes, I do feel guilty.

REPORTER: He’s also had a productive run at Café Pick Me Up.

WOLRAICH: Maybe 15 websites and a couple of startups.

REPORTER: That's what this software consultant has done in the eight years he’s been coming here.

WOLRAICH: One way I rationalize it is that I'm here any time of day, when it's dead, when it's hot, when it's raining and when the place is empty. So I'm contributing at those times.

REPORTER: The two do spend more money than the typical customer, who spends $2.50. The café owner says revenues were down 15 percent this year. And he worries about losing his lease, which is up for renewal in two years.

VALGUARNERA: I had to go and open another business to be able to sustain the coffee shop.

REPORTER: The manager at the other café says serving lunch and dinner has brought in more money.

AVITAL: The next step that we're going to go will probably be alcohol, which is wine and beer. It's a kind of evolution for the coffee shop.

REPORTER: He’s optimistic. New Yorkers are not about to give up coffee. And there will always be those who avoid Starbucks and seek out more bohemian spots that inspire creativity. The issue for the cafes is how to make that creativity move a little bit more quickly. For WNYC, I'm Lisa Chow.