A Starbucks question

This morning, as I passed a “Coming Soon” sign for another Starbucks coffee house, I realized that I can, with little effort, walk to one of 7 Starbucks stores from my office.

There’s three right here on my city block: SW corner, center (hotel lobby), and the NE corner.

I know McDonalds Franchisees (sp?) have a guarantee that there will be no other McDonalds resturants within a certain distance - many stores are like this.

What’s the poop on Starbucks? Are they franchised? Do they make any guarantees on proximity to other stores? How can they open a store within a block of another store and not just split the business between the two?

This seems like poor business - there’s got to be a limit on how much coffee can be consumed by an office block.

Since we have places in DC where there are three Starbucks within two blocks of each other, I don’t think there is any kind of territoriality issues at HQ. I suspect that they operate on the principle that demand drives supply, and if one coffee bar at the corner of 22nd & Goober Street is making a mountain of money, the market could probably support another one at the corner of 23rd & Goober.

This is the CVS method: Let the stores grow like weeds, and close up the ones that don’t survive.

My house has five within 1/2 mile. It does seem to be a case of suppy driving demand, in that if it’s available and convenient, I’ll stop in. If it weren’t, I wouldn’t make a special trip. It does seem like overkill, but hey, they’re getting over $3 a drink, and they must think the system works.

Here in Seattle, not only do we get our homegrown Starbucks on every corner, but their metoo-and-sometimes-better competitors comprise half the storefronts in-between.

Legal drug addiction knows no bounds.

Uh… What’s a “CVS”?

cvs is a drugstore. i’m not sure what their regional boundaries are.

they branched into the metro-detroit area a year or two ago. they took over all of the arbor drugs, raised all the prices, and made you get a damn “cvs card” that you need to use in order to make use of their coupons. :mad: needless to say, i’m irritated.

Astor Plaza in NYC, you can stand in front of a Starbucks and see how long the lines are at the other Starbucks half a block away.

Hell, I go to the deli…

According to this URL, http://www.starbucks.com/customer/faq_qanda.asp?name=common

Q: Does Starbucks franchise?
A: No, Starbucks does not franchise to individuals. However, in situations in which a master concessionaire or another company controls or can provide improved access to desirable retail space (such as an airport), Starbucks may consider licensing its operation.

I had a good friend who had been a district manager for a fast food chain. They operated two burger joints across the street from one another, and during peak times they did in fact have lines to the door of people waiting for food. These stores were downtown in a major Northeastern city.

A good experiment would be to monitor all of the adjoining stores you mentioned to see how busy they stay during peak coffee hours.

I am aware of other instances of Starbucks on all 4 corners. Starbucks is not owned by fools, and I’d be willing to bet that the return on investment from operating all 4 stores is greater than the return on investment would have been on not opening them and as a result they chose to open them.

I’m wondering how Starbucks will do in the future. It seems that we are past the “age of the coffeeshop” although certainly they’re still going to be able to sell to people who come in for a ‘good’ morning cup of cofee.

Term of the Day: “Everlasting Gobstopper”

When I was in business school we studied this type of situation in a strategic marketing class. At the time, we were looking at a chain of restaurants not out here on the West Coast called ‘Au Bon Pain’ which apparently does the same thing in certain areas of the US. Basically, for certain low cost items, if they are convenient you will stop in and get something, so it pays to have lots of them in an area. It also increases presence of mind to the exclusion of competitors.

It’s basically a varient of the phenomena called ‘competitive clustering’ Ever wonder why hotels tend to locate next to one another as do car dealerships and furniture stores? The answer is because studies have shown that collectively they will bring in more customers and get more business then they would if they each located as far away as possible because they would have to spend more to convince customers that driving to see them was ‘worth their while’.

Here, the product is exactly the same (Starbucks coffee vs. Starbucks coffee) from the competitive standpoint, but then again, so is gasoline, and you tend to see gas stations on opposing street corners all the time. It works for coffee too.

About a year ago (I don’t know if they’re still there), a couple started a business selling high-quality coffee out of a van (a la an ice-cream truck), which they parked directly across the street from the main Astor Place Starbucks. They also sold their coffee for considerably less than Starbucks did, and were generating quite a buzz b/c of it (just FYI non-New Yorkers: you can also easily buy cheap-ass coffee from ubiquitous carts and delis for less than a buck, usu. w/ a bagel or donut; this was coffee of a different caliber, though).

The NYT asked ths mgr. of Starbucks if he was concerned by the competition across the street.

“No,” he said. “We’ve found that people won’t cross the street to buy coffee.

So, on the face of it, a few more Starbuckses around probably won’t hurt the others.
On the other hand…

Keep in mind that Starbucks is also a national corp. with a strategy, and that strategy includes crushing all competition. Starbucks’ questionable store-saturation policy recently proved itself a winner after it drove rival coffee chain Timothy’s out of business.

My wife works in coffee here, and has managed for Starbucks in the past. She’s seen the books (Astor Place) and talked to managers from other strores, and says that NONE of the Starbucks stores in Manhattan are making a profit. A loss-leader strategy, I would presume, and when Starbucks is the only gourmet game in town, they’ll likely close enough shops to make things profitable (a la the aforementioned CVS).

I’d like to make three comments about Starbucks, although only the first replies to the OP’s question about why there’s a Starbucks on every corner.

First, as has been pointed out, Starbucks Corporation is only interested in making as much money as possible, as fast as possible. Any other considerations are secondary. What’s wrong with this? Well, it is understandable to me for a company to wish to provide a good product to the public and to make a reasonable profit in the process. But I believe it to be another matter altogether for a company to intentionally try to fleece the public of as much money as possible while providing only a marginally passable product. (Another example is Microsoft.) What astounds me is why such a large segment of the general public is willing to indulge such practices. People seem to dismiss this as, “that’s the way business works”, and leave it at that. They don’t try to change the way businesses do business by refusing to support companies that behave this way. I feel people should take more responsiblitily for the way things are, and try to change those things that they recognize as inappropriate.

Second, I don’t like Starbucks as much as I enjoy Barnies coffee. I find Starbucks to be overrated. If I have to give $3 for a cup of coffee, it had better be the best damn coffee I’ve ever tasted! Starbucks just doesn’t provide that experience; at least not for me. I find it to be crappy coffee at an outrageous cost. Barnies coffee has a better price and a much better flavor. As for the idea of being seen at an “in place”, well I just don’t give a care about that. I go to a coffe shop for the coffee not the status.

Third, have people forgotten about Starbucks’ 9/11 price gouging?! Don’t people remember the incident of a Starbucks store greatly overcharging the NYC firefighters on Sept. 11 when the firefighters needed bottled water for their rescue efforts? This might have been dismissed as merely an isolated incident of an unscrupulous manager if it hadn’t been exacerbated by the president of Starbucks, himself, dismissing the matter as unimportant, even when called on it by the mayor of NYC. Starbucks was completely unrepentant and uncaring until the incident became widely publicized and the Starbucks PR department became concerned for their image; only then did they apologize and refund the ill-gotten gains back to the NYC fire department.
(For more info see <http://www.snopes2.com/rumors/starbuck.htm>)

Personally, I don’t care to patronize an establishment such as Starbucks.

And you know, when I visited fam out in southern Ohio just over a year ago, I asked if there was a Starbucks or some other coffee joint nearby where we could get mochas. My aunt’s response was, I shit you negative, “Star…bugs? Star-wha? What’s that?”

And she was serious!

Apparently, the coffee craze has skipped the Appalachians.

(BTW, an espresso drinkat “Starbugs” is $3. Coffee is $1.50…still not McD’s 49 cents, but thought should be clarified.)