I find Starbucks an interesting company to read about, I’ve talked before about the economics of Starbucks an almost entirely corporate owned empire compared to the fast food empires that tend to be franchises. Well, the newest article of interest on Starbucks I’ve come across is in Slate and discusses the subject of whether Starbucks coming into your neighborhood actually helps the local coffee shops that Starbucks is aiming to kill. Here in Columbus there are several places where Starbucks is right across the street from other shops, often Cup of Joe’s a local chain. (Some were upset when Starbucks opened in the Short North across from Mo Joe (Cup of Joe coffee shop w/ a bar as well) – I wasn’t because I don’t fear Starbucks and while I hadn’t seen the information this article is based on I thought that Mo Joe was different enough and had a nice enough setup to still draw folks).
Indeed according to this article Starbucks often serve to create a ‘coffee Mecca’ where people know they can get coffee and some days they might decide to go to the other shop. In fact the effect has been so large that some coffee shop owners target Starbucks, that’s right, they choose to open near the Starbucks (in downtown Columbus there is a new Cornerstone Coffee 50 yards from a Starbucks – too bad I haven’t been real impressed w/ their coffee). Why is Starbucks different then Wal-Mart that serves to drive out others and kill the market? Well as the article points out Starbucks isn’t cheaper, people learn that it isn’t necessarily the best and can be competed with(they don’t offer much food so there is room to compete with them on that as well) and lastly Starbucks creates new customers who haven’t been $4 latte swillers before and now you got someone who might now come to your locale.
Soon after declining Starbucks’s buyout offer, Hyman received the expected news that the company was opening up next to one of his stores. But instead of panicking, he decided to call his friend Jim Stewart, founder of the Seattle’s Best Coffee chain, to find out what really happens when a Starbucks opens nearby. “You’re going to love it,” Stewart reported. “They’ll do all of your marketing for you, and your sales will soar.” The prediction came true: 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! Hyman’s new neighbor boosted his sales so much that he decided to turn the tactic around and start targeting Starbucks. “We bought a Chinese restaurant right next to one of their stores and converted it, and by God, it was doing $1 million a year right away,” he said. “Don’t Fear Starbucks Why the franchise actually helps mom and pop coffeehouses.”
Filed under: Business, Columbus, Drink, Economics | Leave a Comment »
So I’ve been accused of being a hypocrite before, being a ‘flip flopper’ or the like and I say yeah, well I think thats really not that bad a thing. What does it mean? it means that I don’t become so entrenched in my view that I am not willing to change when events change or I learn new information (maybe our politicians will learn from me?) (you may also remember some rants on product (red) stuff but when confronted with christmas card choices I opted for that, so at least I am consistent in my inconsistency?)
