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Head explosions are awesome.
Head explosions are awesome.
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Wait a minute... The guy called his friend Jim Stewart, the founder of Seattle's Best Coffee? SBC was bought by Starbucks in 2003. So his opinion is hardly impartial. Something's fishy.
A Starbucks closed down my favorite coffee shop. They even had a drive thru, just like Starbucks! The people in my area are just too mainstream to support a local establishment.
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My city has four independent coffee shops and no Starbucks. I love it.
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i've heard starbucks uses non-compete clauses when they move into strip malls
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No, I am awesome.
@Petrarch1603: how does that work? make customers sign them? make the existing businesses sign them?
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Sounds logical to me. Starbucks pumps up the marketing making people want a cup of coffee, so they go to the local shop out of habit.
A friend of mine owns a couple of Domino's, he said that when Papa John's came into the area his sells went through the roof.
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My town actually didn't have a single successful independent coffee shop until a Starbucks opened up. We now have three or four, plus Starbucks. There probably is something to be said for the idea that Starbucks encourages the idea of a coffee-house culture.
This is true of a lot of boutique-type stores. I remember reading some time ago that independent bookstores that open next to chains are more successful.
@Petrarch1603: It is very common for leases in retail developments to include language where the developer and/or management company agrees to only lease space to one of any given kind of retailer (only one video store, one coffee shop, one grocery store, etc). This is one reason why retail developers generally don't announce tenants until leases are signed, because they are negotiating with more than one retailer in each category, and don't necessarily want the retailers to know who else they are trying to attract and/or what kind of terms they are offering.
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@DallasDMD:
Nah...they just include it in the lease, so no competing coffee shop can lease in the same development.
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Burger King has been employing this strategy for years: put a stand adjacent to a Mickey D's, and you've got yourself a profitable business.
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But do they have juicy raspberry syrup?
I didn't think so.
I'm going to call Bs on this one. In order to get to the drive thru at the starbucks i used to work at, the local patrons had to drive by the local coffee house. Even with a huge line, and wait times, no one ever chose the local store over the bucks.
I also later talked to the owner, and her business was doing poorly even being open 24hrs vs starbucks 18 hrs.
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I don't think opening a coffee shop next to a Starbucks will result in instant success and profit. Starbucks is really about selling a name brand and image, because we all know the coffee is awful. Independent coffee shops need to sell an image along with their better tasting coffee. They need to spend the time/money/effort in making their store look a little hip and appealing. Because there are people out there that will judge a business by the way it looks. The coffee might be the greatest tasting in the world, but if the place looks like a dump, then no one will want to come in.
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@derherzeleid: The idea that Starbucks helps sales is established as fact in the independent coffeehouse industry. However, it's not quite as easy as the quotes here make it out to be; the owner/operator still has to ensure they're delivering a consistent, quality product served by friendly staff in a welcoming environment. So many cafe owners are tempted to skimp on one or more of those variables, to their own detriment, forgetting that Starbucks is just as adept at shutting out bad operators, too.
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@SteveBMD: I was going to say the same thing... Seattle's Best Coffee is owned by Starbucks now. The reason for this is for people who dislike Starbucks to go to Seattle's Best Coffee, so they get both worlds.
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@DanB: Excellent point. The article doesn't imply I could open \"Jim's Crappy Coffee and Stale Biscuits\" next to a Starbucks and retire two years later.
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THis article is one of the many reasons I stopped reading Slate; dumb ideas and lack of fact-checking.
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Oh, for Peet's to go nationwide and crush these poseurs from Seattle.
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I regularly go to Freedom of Espresso, a small local chain which is just across the street from a Starbucks in Downtown Syracuse. It seems to do a very good business. So does Starbucks.
@DanB: Well said! I'm not a major Starbucks hater, but I try to support a variety of businesses. There's nothing more disappointing than going to a local independent joint that doesn't have its shit together.
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@rouftop: Well, one might argue that whether it's local independent or a national chain, if its shit isn't together it's going to be disappointing.
I favor my local coffee places as much as possible, but leave it to fargon Dunkin' Donuts to put up a new place that's on my commute path to work and in about the most convenient place it could be.
I rarely have Starbucks.. can't stand the coffee. I do have a friend who goes there every day and gets some no-fat blah blah blah drink (no fat, but massive sugar) for around $5. That's insane.
Please! Open more mom and pops near starbucks that thrive. I was sorely disappointed to discover due to the new machines, the baristas do not (cannot) pull a espresso shot short or long. All they have now is a button. :(
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Must admit I prefer the mom & pop over Starbucks, but only when they offer atmosphere and quality. A nasty diner motif won't cut it. It's got to be a place where for the price of my cup of joe I can hang out for at least an hour to unwind while reading.
@grepme: I've seen that too at the newer Starbucks and at their competition. It's a way for them to bypass some of the training and to make sure that each shot of espresso is consistent. It also allows the barista to walk away and multi-task.
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My town had two independent coffee shops before a Starbucks finally moved into the area. One lasted about a year and half before closing and the other stays open but is a shadow of it's former self. Clearly it isn't as cut and dry as slate would like to have us think.
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It's not only for coffee shops…
Where I live, this joint [www.schwartzsdeli.com] is heavily patronized; very often, people will wait 30 minutes in a line outside, even when it's minus 20 degrees.
The people uwilling to line-up simply spill over in this joint three doors further: [www.tabledhote.com], which serves just as good (albeit radically different) food.
See, now here's where the problems start. Some yutz going and saying 'Open next to Starbucks', but not being more specific. In an urban location with mostly foot traffic, absolutely. In a stripmall? No. People stop for their Starbucks or Dunkies, not Skippy's Watered Down Whisky in a Green Tea Bottle. Just sayin'.
All of the Starbucks in town have very small seating areas with only the small cafe tables. With the exception of the Barnes & Noble one. They are cramped and not somewhere you would hang out for long.
The two indie coffee houses in town have big seating areas with comfy chairs and couches. The Caribou and Dunn Brothers locations are much larger and all have fireplaces and sofas and chairs. A couple of these do music on Friday nights. Caribou has free wifi.
The non-Starbucks locations are doing rather well and you see them rather crowded most days. Around here Starbucks is becoming more of the coffee on the go type of place.
Around my little town we have a Starbucks but it doesnt do so well. There ARE a lot of coffee drinkers here and there is another mom and pop store downtown but it does not do to well either. Both fail to realize all we want here is a REGULAR cup of coffee without all that crap thrown in it and not have to pay $4 and up for it. Places like the local diners and McDonalds are cleaning house here. You get MUCH better tasting coffee, cheaper, and....omgwtf...FREE REFILLS?
Starbucks may have helped to create a coffee culture filled with a significant number of people who don't actually like Starbucks, but even more impressive is that they helped create a coffee culture filled with people who don't like coffee.
\"Starbucks Coffee\" is one of the biggest misnomers around. All their sales and profits largely center on milk and syrup. Coffee actually has little to do with it. Their genius stroke was in making people think they liked coffee, where obviously their greatest successes have been at making converts of people who would otherwise avoid the stuff.
I think it's one of the rules of business that it's always a good idea to open near your competition. Perhaps the mom-and-pop coffee shops are doing well next to a Sbux because of all the haters. It seems like a good plan for the little guy. Hate large corporations? Your answer is right next door in helping out the little guy. Do a good deed and get coffee w/out having to hear Paul McCartney.
Dutch Brothers coffee ... puts Starbucks to shame.
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@DallasDMD: I'd imagine making the property owner (which is generally one person, whom all the stores rent from (did I use whom right? probably not!)) sign to not allow competition.
@ceejeemcbeegee: How's that working out for them? Half the BKs in the Chicago area closed in the last few years.
@smallestmills: *IF* you offer a better product. Otherwise, you want a captive audience. Do you think anyone would eat Sbarro if there was a decent pizza place nearby?
@coren: Yes, non-compete from the landlord. Retail leases are far more complicated than residential.
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This tactic would only work in heavily populated areas. No way in hell is a local Starbucks going to boost mom and pop shops in my area. The lines are always small or nonexistent at either of my local Starbucks.
Now the one located inside the local mall did and is doing so well that Starbucks opened a second one! In contrast, there is a no name shop on the top floor and it appears to do well. But it did well before Starbucks was there, so I can't say Starbucks helped generate sales.
It seems almost like an IQ test for the local population as a whole-- got brains? or got venti latte? sBucks is such a YUK experience. No seating. Bad music.
Y gotta give em credit though: I do think that it was pretty clever to re-market extremely high calorie milkshakes as 'coffee.' Fatties rejoice-- there's a sBucks on every corner.
Hmmm ... this has already happened in Kansas City. One of the first Starbucks in Kansas City is slated to close it's doors within the next couple of months. RIGHT NEXT DOOR is a \"mom & pop\" coffee house ... and THEY literally forced the Starbucks closure with better service, better product, and better prices.
Caribou right down the road. Starbucks up the road, smaller, not as friendly.
That actually makes sense. When the Starbucks is too busy to justify a wait, or their premium \"coffee\" concoctions are too pricey, or their regular coffee sucks too bad, people will look for an alternative. If the alternative is easy to find, they'll try it out. Starbucks are usually in convenient locations, so this fact helps guide recurring business to the nearby competitor.
Very clever.
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@skippywasserman: Good point, I think. The Starbucks in my hometown was on Main Street--best approached by parking somewhere else and walking there. No real lines, but you passed local coffee places on either side, so there was always the option. It was nice, because you could go to any of them, made life more interesting. And if there was a line, as the piece says, you could decide to go elsewhere.
I'm sure it wouldn't have worked nearly as well if the Starbucks had had its own parking lot. Or if they'd been on a highway and not a street that does tons of pedestrian traffic.
At this point, could you even open a coffee shop and not be next to Starbucks? I'm in a modestly-sized suburb in Connecticut, and there's 42 of 'em within a 30-mile radius. Saturation much, Howie?
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Sounds like my neighborhood near Boston. Two very successful local breakfast places with lines out the door every weekend. One moves next door for more space and, lo and behold, the landlord takes the vacant space and makes a new breakfast space! Stealing the people standing in line in the rain is a time-honored business practice.
Yes, being able to open next to a Starbucks doesn't guarantee success. Living in the rural midwest, I've had the misfortune to try out several coffee places where the brew is sub-gas station quality. It's easier to say that the Beast of Seattle shut you down than to admit that you barely knew how to boil water.
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@drjayphd: Guy: Can I help you?
Bart: I'd like to get my ears pierced!
Guy: Better make it quick, kiddo, in five minutes this place is becoming a Starbucks!
@just_paranoid: I know, right? I honestly don't live in a tiny city though, its weird. Can a city council give sBux the finger if they wanna move in? Because if they can, and if thats what they did...then I'm gonna go hug my mayor.
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Let's be honest with ourselves here. $2 (w/ tax) for a cut of venti coffee is not expensive. Those food stands sell coffee for $1 and the cups are really small. I personally drink a lot of coffee, so Starbucks is a bargain. Let's not forget their free refill.
Great Post. I love Starbucks and competition two powerful forces in business.
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*overprimed head explosion*