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Journal dexterpexter's Journal: Coffee Capitalism 10

Even though I don't drink coffee (I grow it, I don't drink it), I read with great interest the article "Don't Fear Starbucks: Why the franchise actually helps mom and pop coffeehouses."

Do you remember coffee consumption being so prevalent a decade ago? Fifteen years ago, the average person probably never entered a dedicated "coffee house" unless they really needed a cup of coffee (or were painfully artsy college students.) Most coffee was probably carried from home in a thermos, purchased from a breakfast diner or donut shop, or foully brewed in the break room. Sure, people have been addicted to morning coffee for a long time, but the coffee revolution is a recent one in my memory. Starbucks has made it trendy to carry around a branded cup of coffee--I guess that it took a big, commercial entity to market an $8 cup of machine-dispensed caffeine.

Starbucks is omnipresent on the street corners of most major cities in the United States. Conventional wisdom says that smaller coffee shops suffer when massive corporate entities open stores nearby. The article, however, contends that Starbucks has actually been a boon to many mom-and-pop coffee shops. "Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door."

Some snippets from the article:

"Each new Starbucks store created a local buzz, drawing new converts to the latte-drinking fold. When the lines at Starbucks grew beyond the point of reason, these converts started venturing out--and, Look! There was another coffeehouse right next-door!"

"... when Starbucks blitzed Omaha with six new stores in at all coffeehouses in town immediately went up as much as 25 percent."

"...if Starbucks can make a profit by putting its stores right across the street from each other, as it so often does, why couldn't a unique, well-run mom and pop do even better next-door?"

The article (found at the link above, and is about 2 pages long) doesn't completely glorify Starbucks, though. It recounts the techniques Starbucks has used to antagonize competitors, including pursuing competitors' leases!, and describes cases where people were forced out of the market. However, the article contends that this (the coffee shop failure, not the intimidation) is an exception to the rule (the numbers they cite regarding the success of running a coffee shop is impressive, if believable.) It also differentiates Starbucks from chain stores like Home Depot and Wal-Mart, which can have devastating impacts on local markets.

An interesting read nonetheless.

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Coffee Capitalism

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  • I'd read that article, wondering that this was news to anyone. There were hardware stores before Home Depot and clothing retailers before The Gap (both of which had some major shortcomings that are forgotten when they're romanticized) but there was essentially zero market for expensive coffee in the US before Starbucks came along. Everyone else in that business is in Starbucks' debt.
  • My younger daughter works at Starbucks. You don't see a lot of it from outside, but it's a company culture that really seems to respect its employees. For instance, there are not many companies where a twenty-hour-a-week employee has access to health insurance. They do fall short at times, but they have have a much greater commitment than most companies. She recently lent me her copy of Pour Your Heart Into It, by Howard Schultz (the founder of the company that is now Starbucks). It's an interesting re

    • Well, as you can tell I have never paid Starbucks for a cup of coffee, and I suppose I was misremembering someone else mentioning paying as much for a coffee. :)
      • Well, I imagine that one could pay that much if one put one's mind to it. There are a lot of things that you can add. :-) But I like coffee to taste like coffee - and NOT sweet.

        It seems like it's fashionable to look down on Starbucks. They've done some good things, though, and I respect them for that.
        • My regular drink there (tall bold, no room for cream) costs $1.65, if I remember correctly. I am on the very low end of the spectrum, though.
  • Just yesterday, my wife and I passed a Starbucks in a Mall and I commented "If I told you 20 years ago that people would be lining up to spend five bucks on coffee, you'd've told me to have my head examined."
  • We're basically ground-zero for Starbuck's and you can't swing a dead cat without hitting somewhere that serves espresso. There are any number of local chains, independent coffee shops and stands, gas stations, etc with espresso. Not to mention both Tully's (also Seattle based) and Peet's (run by one of Starbuck's founders).

    Really the only places in danger from Starbuck's coming to town are places that serve overpriced bad coffee.

    FWIW my usual coffee drink (16 oz. drip, or 12 oz. americano) comes in at arou

    • As I just mentioned to johndiii, you can tell I have never paid Starbucks for a cup of coffee. :) I remember someone mentioning paying something like $6 or $7 for one, but I could be remembering incorrectly. The next time I am dragged in the vicinity of one, I will pay closer attention to the prices.
  • I'd have to agree with that article as well. I don't remember a lot of dedicated coffee shops before Starbucks really caught on. Anyway... so you grow coffee but you don't drink it? Why do you grow it if I may ask? Inquiring minds want to know. :D

    • Hello!

      They are lovely plants to keep (although I have been a poor keeper when it comes to fertilization.) Even if I were a coffee drinker, mine isn't mature enough to harvest beans from just yet. Raising a coffee plant to yield berries is a many-year endeavor. Call it a weird hobby.

Sigmund Freud is alleged to have said that in the last analysis the entire field of psychology may reduce to biological electrochemistry.