May 20, 1998
A few months ago, John Casas and Tonya Hintz scanned the shelves of a north Phoenix video store for a decent film to rent. They found The Spitfire Grill -- a 99-cent investment that ended up sending their lives in a whole new direction.
The Spitfire Grill stars Ellen Burstyn as Hannah, the aging owner of a small-town grill in Gilead, Maine. She wants to sell the business but can't find the right person -- or the right offer. In walks Percy Talbott, a young woman hoping to start a new life after spending time in prison. Percy suggests an essay contest to choose a winner: 500 words or fewer, and a $100 entry fee. The contest turns out to be a huge success.
Casas and Hintz are the managers and half-owners of Java the Hut, a neighborhood coffee house in the Glendale Galleria at 59th Avenue and Peoria Road. Java the Hut is less rustic and more hip than the Spitfire. Instead of a can of Lysol in the bathroom, there is a vanilla-scented candle. The coffee house is a hangout for Glendale Community College students, not for the sheriff and a nosy postal clerk.
The Spitfire Grill more than intrigued Casas. He's become obsessed with the idea of giving Java the Hut away through an essay contest similar to the one Percy had suggested to Hannah.
But the Attorney General's Office thinks an "essay contest giveaway" may not be legal in Arizona. And the contest could be scuttled if a cash buyer is found through a broker Java the Hut's owners hired before deciding on the contest.
Still, Casas is convinced that the best thing for Java the Hut -- and for Glendale -- is to give the coffee house to the person with the biggest passion for it instead of the one with the biggest bank account. He's determined to stick with the contest idea.
Casas' contest has slightly different rules than the Spitfire Grill's: 250 words or fewer for the essay, and a cost of only $10 to enter.
"By doing it this way, we can open it up to as many people as possible," says Casas, who likes to call his customers by their first names. "We want to find someone who truly understands the concept of neighborhood and community in a coffee house."
Casas must convince at least 7,000 people that -- for the price of a pound of high-end coffee -- one of them could actually win the coffee house and everything in it. The owners want a minimum of $70,000 for the business; this price, Casas says, would be fair market value. A maximum of 15,000 entries will be accepted.
"We don't want to take advantage of anyone," says Casas. No one would say exactly what the business is worth, only that recent offers and broker assessments have ranged anywhere from $70,000 to $150,000.
The contest began May 1 and is set to end September 30. If there are fewer than 7,000 entries on September 30, the owners have the right to cancel the contest. If that were to happen, everyone who had entered would get back the $10 entry fee.
Additionally, one of Casas' partners, Matthew George -- the original owner of Java the Hut who has retained an ownership interest -- had already listed the coffee house with a local business broker before Casas came up with the idea of an essay contest. The broker, Jim Fulton, says he is still under contract to sell it -- and the contest could end if he finds a buyer. He says he's shown the coffee house to a few potential buyers.
As of this week, the contest had received about 300 entries. There was the entry from the couple whose son had died of leukemia and another from a man whose three goals in life included owning a coffee house.
Casas hasn't advertised the contest yet but expects the numbers to climb as word gets out.
Casas and his partners plan to judge the entries themselves. Casas says he decided against independent judges; in The Spitfire Grill, Hannah's customers get to read the entries. "I want to read who gets my coffee house," Casas says. "How can you convey to a third party what it is you are looking for in something like this? You can't."
The essays will be randomly spread among the four owners, says Casas. Then the four will get together and choose the top 10. From there, they will pick the winner and two runners-up.
The essays will be judged on four themes: appropriateness, originality, creativity and a perceived genuine interest to run a business. The complete rules are posted in the coffee house and on the contest Web site at http://www.digitronix.com/javathehut.
"This is a game of skill," Casas insists. "It's not a lottery or a game of chance."
The distinction between skill and chance is important under Arizona law. It is not clear whether essay-contest giveaways are considered legal by the state Attorney General's Office, which regulates contests and gambling.
Karie Dozer, a public information officer with the AG's Office, suspects that the contest may not be legal. She hasn't reviewed the rules of this one, and can only talk generally about contests, she says.
Still, this kind of contest could be considered giving away a business through a raffle, Dozer says.
"You're still buying a chance," she says. "It's just like playing the lottery."
In Arizona, anyone holding a contest with an entry fee is required to register it with the AG's Office. Casas says he has already done this; Dozer says the AG's Office has nothing on file from Casas or Java the Hut.
A handful of other people around the country have tried holding essay contests to sell their businesses -- a pizzeria in South Philadelphia, a bagel factory in Oregon, an Internet cafe in Michigan, even a fast-food gyros restaurant in Florida. Some contests were successful; some are still in progress; and others reverted back to a more traditional method of sale after not receiving enough entries.
Frank Maimone owned the pizzeria in South Philadelphia. After discovering early last year that he had the baker's curse (an allergy to flour), Maimone decided to try the essay contest with a $100 entry fee. Maimone, who needed at least 350 entries to break even, canceled the contest after receiving only 160 essays. He returned the $16,000 in fees he had already received.
"People love to win things," says Maimone. "They're willing to take a risk, but they're not necessarily willing to take a risk for something they'll have to work real hard at."
Maimone has moved from pizzerias to cars. He has a new essay contest posted on the Internet, this time to win a brand-new BMW roadster convertible: $100 and 100 words, with a minimum of 500 entries.
Java the Hut is spacious but cozy. A puffy, oversize, blue couch greets customers as soon as they walk in the door, and a WebTV glows in the front corner. The large-type menu above the counter lists sandwiches, smoothies and at least a dozen different espresso drinks.
Performances by local bands are a big draw. Wednesdays and Sundays are chess nights with a regular crowd plus drop-ins and spectators. A local artist's black-and-white paintings hang from the interior walls. Customers -- who range from college professors to students to foreigners who like to use the WebTV to check their e-mail and write letters -- sit at the counter and talk with whichever 20-somethinger happens to be working that shift.
Casas and Hintz, who used to be district managers with Starbuck's in Los Angeles, are adamantly opposed to anyone taking over Java the Hut with the idea of turning it into another "corporate coffee house." They moved here eight months ago when George, Casas' former college roommate, gave them half-ownership in exchange for managing the coffee house.
"You walk into Starbuck's, you wait in line, they give you your drink. They don't ask if it's 'for here,'" says Hintz. "They just assume you're in to get a coffee and out the door. It's like a subtle hint that you need to get going.
"When people come into Java the Hut, we always assume that if they order a drink they're probably going to have it here," Hintz says. "We want people to come in for the experience of hanging out. That's why we have a counter where people can sit and talk to us."
May 22, 1998
Update: The idea of passing Java the Hut to a new owner via an essay contest has been squashed now that the owners of the Glendale coffee house have received a letter from the state Attorney General's office stating that the contest could violate Arizona law.
"In essence, they're selling it," says Karie Dozer, a public information officer with the AG's Office. "They're taking money for chances, and you can't do that."
Casas could give the coffee house away to someone who writes an essay, says Dozer, but only if there wasn't an entry fee. "You cannot attach the money to it, because it becomes buying a chance," she says.
Under the contest rules, anyone over 18 could submit a 250-word (or fewer) essay and a $10 entry fee. The idea was to give the coffee house to the person who best expressed an understanding of "community and neighborhood in a coffee house," according to Casas.
On Thursday, Casas received a hand-delivered letter from the AG's Office, stating that the contest could violate state gambling and consumer fraud laws.
Casas was out of town today and unavailable for comment. But partner Matthew George confirms that the contest has been canceled as of this morning.
"We wanted to do the right thing, so obviously were going to return the money, and back out of this deal," says George. The approximately 300 essays and $3,000 in entry fees received so far are being returned today, he says.
George doesn't expect any problems selling Java the Hut through more conventional means. "We know we can do that," he says. "It's just not exactly the way John (Casas) had in mind."
Photo by Liz Garone
Hanging out in Glendale.