Off the Dime : New Tax Forces Restaurant to Raise Coffee Price--to 11 Cents

At Philippe’s, the 10-cent cup of coffee was a trademark--just like the sawdust on the floor and the long tables crowded with Chinatown merchants, blue-collar workers and downtown bureaucrats.

But no more. An era is over. Because of the new state sales tax, the last dime cup of java in Los Angeles has skyrocketed to . . . 11 cents.

“It’s outrageous,” joked building contractor Steve Granach, 31, who, like scores of others at the restaurant near Union Station managed to cope with the increase on Friday morning. Shelling out an extra 10%--an extra penny--was not really so difficult, regulars agreed, despite the recession.

In fact, a number of double-fisted guzzlers were still buying two cups at a time and bestowing 114% tips on harried waitresses at the deli counter. After years of such largess, Philippe’s employees were visibly blase about the over-tipping--in this case, a quarter on a 22-cent bill.

“You can’t go wrong,” insisted crane operator John Henry, 64, of Pico Rivera, who was dining on ham and eggs with a coffee cup in hand. No penny price hike was going to keep Henry from his regular workday breakfast at the historic sandwich shop, founded in 1908, when a cup sold for a nickel. “This is a good deal.”

Though coffee is pretty much a giveaway item at the eatery, which specializes in French dip sandwiches, the latest increase was all but mandated by a state tax law that took effect in July, said co-owner Richard Binder. The law requires Philippe’s to charge a penny tax on 10-cent dining tabs that previously fell below the tax threshold.

“I felt kind of bad about it,” Binder said with a shrug, pointing out that tax collectors get nearly all of the additional revenue. “We just turn it over to them.”

The money does add up. On a typical day, Binder said, Philippe’s dispenses 84 gallons of coffee--enough to fill 11,760 cups. With the eatery’s no-free-refills policy, the state ends up with a daily windfall of about $118.

No one much seemed to mind.

“Eleven cents doesn’t strike me as outrageous for a cup of coffee,” said Patrick McLaughlin, an assistant U.S. attorney who was downing a cup, as he does two or three times a week, with a couple of doughnuts.

James and Sarah Piraino, who were visiting from Boston, could not recall seeing a better price. Neither could Carol Nichelini, who was in town with friends from the San Francisco Bay Area to see “Phantom of the Opera.” In Marin County, Nichelini said, a cup of java runs a buck or more.

“I paid $2 at Trader Vic’s in San Francisco,” said her friend, Luigina Stephens.

Art Tolentino, 33, of Torrance, had brought along two friends who had never been to Philippe’s. He promised them good, really cheap coffee, and he wasn’t disappointed.

“We had four doughnuts and three coffees for $1.83,” said Steve Lounsbury, 24, of Long Beach, who ended up springing for Tolentino’s tab. “That’s a pretty good deal.”

“The coffee’s been 10 cents for about 100 years,” Tolentino added.

Actually, the price went from a nickel to a dime in 1977, said co-owner Binder. That increase was much more difficult than this one, he said. Members of the Binder family, who have owned the shop since 1927, wanted to hold to the traditional nickel cup but found themselves under pressure from soaring worldwide coffee prices.

“It was the only time all (eight) family partners got together to discuss a price increase,” he said. “It was such an important issue.”

Today, many patrons still recall the days of the nickel cup.

Emerson Costa, 76, said he has quaffed “thousands” of cups of the bargain-basement coffee since he became a regular in the 1930s. After building himself a “small real-estate empire,” Costa could afford to do his sipping in a more fashionable setting--say, the Polo Lounge, or Pacific Dining Car.

But he was carrying a tray with two 11-cent cups, looking contented.

“I’m kind of a cheapskate,” he said.