Nickel and Dimed: Horn & Hardart Gilt Edge Coffee

Creators
Diana Bowers, Andrea Hansen, and Kelly Kubiak Fish

Transcript
In 1870, Frank Hardart was working in a small café in New Orleans, a city that appreciated good coffee. He learned how to make delicious coffee with the French drip method when most of the rest of the country drank boiled coffee, sometimes even clarified with eggshells. He noticed how much his customers enjoyed their coffee (and how much money they spent on it). He dreamed of moving to Philadelphia and bringing New Orleans coffee to the rest of the country. Eventually he saved enough to make it there in 1886.

At that time, Joe Horn was considering using his $1,000 inheritance to open a restaurant. He had the business smarts, but needed a partner familiar with the industry. He placed a newspaper ad for an experienced restaurant worker to which Hardart replied. So began the Horn & Hardart Empire, which would last for almost a century. Its founding principle was simple: affordable, high quality coffee for the masses. That idea expanded into an entire restaurant chain, helped along by newfangled automatic dining machines from Germany. Soon, the automat was ubiquitous in Philadelphia.

In 1912, Horn and Hardart decided to go for the big fish: New York City. The automat proved just as popular in New York as in Philadelphia, if not more so. Locations proliferated across Manhattan, with an automat every few blocks in Midtown. It was a staple of New York life, and soon became a tourist attraction. There were even postcards of automats, including one depicting the flagship Times Square location at 1557 Broadway, with its sumptuous glass façade. And, in the top right, the automat’s crowning jewel: the 5-cent cup of coffee.

Pouring out of the famous “dolphin head” dispensers, this warm comfort provided for the myriad residents of the city that never sleeps was the mainstay of Horn and Hardart’s business. In-house documents declared this time and again, noting every small change in the coffee production, and referring to coffee as (quote) “the most important feature of our business.” (unquote)

Unfortunately, in 1951, the company had to double their price for coffee from 5 cents to 10. New Yorkers were outraged and the company was crestfallen. If the price could have gone to 7 or 8 cents instead, costs would have been covered, but the automat coffee machines could only take nickels. Thus, it was the groundbreaking automat technology that had made the business such a success that ultimately contributed to its demise.

The January, 1952 letter to stockholders demonstrates the deep regret with which the price change decision was made: “The most important news of the year, if not in our history, was the increasing of the price of our coffee from 5 cents to 10 cents. I want you to know that this step was taken most reluctantly and only after every effort had been made to hold the price. But the unprecedented rise in prices of all commodities, including coffee and cream, made it impossible to continue at the same price and still maintain the quality of Horn & Hardart famous Gilt Edge Coffee.”

Within the first year of the price change, coffee sales dropped from 70 million to 45 million cups. And it wasn’t just coffee: overall sales went from being down 2% in 1950 to being down 12% in 1951. Though ten cents was a reasonable price for a cup of coffee at the time, and many competitors were priced the same, Horn & Hardart customers took the automat’s price change personally.

The change in the price of coffee was seen as a fundamental one for the company, and, as it turned out, one from which it could not recover. The price jump spelled the beginning of the end for Horn & Hardart automats. Throughout the 60s and 70s, location after location closed. All that can be seen today at the well-known 1557 Broadway location is some plasterwork on the ceiling and the elegant brass stair-rail, now half-hidden under the wares of the souvenir emporium that has taken over the space. At most other locations, there is no trace at all.

The last automat held out until 1991, but the automat truly died 40 years earlier, when New Yorkers lost their beloved 5-cent cup of coffee.

Bibliography and credits
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