Mom 'n' Pop Coffee Stores Take On Starbucks

June 01, 2008 12:42 PM
by findingDulcinea Staff
A Slate article arguing that the presence of a local Starbucks can boost trade for independent coffee shops prompts disbelief and angry responses. Does Slate's claim hold up against the evidence?

30-Second Summary

Slate reporter Taylor Clark interviewed owners of independent coffee shops who all stated that a Starbucks in the vicinity did not deter business. Against expectations—and to the chagrin of the ubiquitous franchise—the appearance of a Starbucks increased demand among its competitors.

Clark speculates as to the reasons for this phenomenon. Starbucks, he writes, “is often more expensive than the local coffeehouse, and it offers a very limited menu; you'll never see discounts or punch cards at Starbucks, nor will you see unique, localized fare.”

In another article, Reason Online quotes a Cleveland store owner to similar effect: “While Starbucks was there … our business grew by 20 percent a year. We’ve been grateful the corporate giant moved in, since its presence had a magnetic effect on the caffeine crowd.”

It is not only Slate that has noticed this trend. Bloomberg reports that, for the first time since April 2005, investment firm Bear Stearns & Co. lowered Starbucks' stock rating “on concerns that customers are buying cheaper coffee elsewhere while higher food and labor costs cut into profit.”

In October 2007, Judith Crown of Business Week explored the statistics behind coffee drinking and found that while young adults, eighteen- to twenty-four-year-olds, drink less coffee than their parents, the coffee they drink is mostly on the go.

Coffee drinking has moved out of the home and onto the streets, and Starbucks does not have the monopoly on take-out coffee that many imagine it enjoys.

Headline: Starbucks pass the cheer

Background: Starbucks' stocks sink; independent stores flourish

Reference: Trends in coffee consumption

Related Links: The evolution of coffee


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