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Does Starbucks Actually Hurt Mom-n-Pops?


DonRocks

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You read all these horror stories about Starbucks moving in, and forcing independent businesses to shutter, but you rarely hear it from the businesses themselves. I'd be very curious to hear about this type of thing from someone who has actually endured it.

Same goes with Panera Bread, etc.

It *does* seem like in expensive rent districts, these are the types of places you wind up with - why, exactly, is this? Are they actually making money, or are they loss leaders used for advertising?

To Joel about Peet's (who is elbowing their way into town) - you're right, the coffee here is nothing special. It's "less bad" than Starbucks, I'll give it that, but that's about all I'll say.

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The first thing that comes to my mind when you bring up this topic is Walmart. I'm certain they've destroyed mom and pops with their immense buying power, low prices, low wages, and just generally soul-sucking impact.

But prices aren't low at Starbucks. And they're not selling cheap products that have been around forever. Coffee, on the other hand, has been a booming industry and Starbucks has managed to weave it into our culture like it never has before. As a result, it seems there's plenty of room in the marketplace for competitors.

As the late Ward Barbee, the founder of the coffee trade magazine Fresh Cup, put it, "Anyone who complains about having a Starbucks put in next to you is crazy "¦ You want to welcome the manager, give them flowers. It should be the best news that any local coffeehouse ever had."

One of my favorite movie quotes was from Best in Show.

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Here are my thoughts, even though I am not a restaurateur. I think there is an industry serving coffee that is lower priced than Starbucks whose business may have been affected by Starbucks.  These people also sell other things i.e. the diner, the cafe, the street vendor and those places in or near office buildings serving the work crowd.  But how much of their business has been affected by Starbucks I am not sure because as stated above Starbucks is expensive and I think the people who really like it are not the same people who like independent coffee shops THAT much.  I for example don't buy coffee in general, if I am going to drink it I usually get it free at work.  If I do purchase something from Starbucks, which I probably do about once a month or every two months maybe I want a coffee or tea drink.  If Starbucks wasn't around I would probably purchase a bottled beverage of some sort like tea, unless there was an independent shop nearby with something interesting.  When I worked in Annapolis at legislative services we went to City Dock coffee because it was closer and they have tasty things, if there was a place as close I might go somewhere else.  But where I work now I am not close enough to a place that makes the types of drink I want, so I would probably just not buy that product.  Although when I worked at Farragut I would often get Dicky's Custard instead of a Starbucks because I kind of think of them interchangeably as a treat.  Then there is someone like my Dad, he lived in a rural area, he liked to have coffee and something to eat every morning, even if there had been a Starbucks he wouldn't have gone.  My Mom doesn't like Starbucks coffee and likes a drive thru, she frequents McDonald's and Dunkin Doughnuts for a morning coffee on the way to work.  When she lived by City Dock in Annapolis she would go there if we were doing something but she wouldn't alter he normal morning routine for that as it was more expensive and she just likes regular coffee.  My In-laws really like Starbucks and go often, but if Starbucks weren't in existence I think they would just make coffee at home.  My sister in law likes Starbucks but she doesn't really want just plain coffee there.  Again if Starbucks didn't exist she probably just wouldn't get those drinks and drink something else. Obviously the people to whom Starbucks was either a threat or who saw an opening in the market created by Starbucks for new products was McDonald's, Krispy Kreme and Dunkin Doughnuts as they have altered their menus to address these items.

So I am not sure who it would hurt exactly.  Perhaps independent places that were a little bit further away, but still walkable?  I feel like Starbucks created a new customer, in some ways.

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The first thing that comes to my mind when you bring up this topic is Walmart. I'm certain they've destroyed mom and pops with their immense buying power, low prices, low wages, and just generally soul-sucking impact.

But prices aren't low at Starbucks. And they're not selling cheap products that have been around forever. Coffee, on the other hand, has been a booming industry and Starbucks has managed to weave it into our culture like it never has before. As a result, it seems there's plenty of room in the marketplace for competitors.

As the late Ward Barbee, the founder of the coffee trade magazine Fresh Cup, put it, "Anyone who complains about having a Starbucks put in next to you is crazy "¦ You want to welcome the manager, give them flowers. It should be the best news that any local coffeehouse ever had."

One of my favorite movie quotes was from Best in Show.

I think the Fresh Cup story is quoted in this article, a little dated, but still with some decent facts.  http://www.slate.com/articles/news_and_politics/hey_wait_a_minute/2007/12/dont_fear_starbucks.2.html

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Speaking as a professional who owns a coffee shop across the street from where a Starbucks recently opened (inside a new Safeway), our experience is pretty neutral. I can absolutely say that Starbucks has not helped us. They probably have mainly sucked up our casual neighborhood clientele, but foot traffic has grown substantially in the months before and after they opened, making it difficult to correlate any changes to the Starbucks itself.

I would take anything written up in Fresh Cup with a giant grain of salt The few articles not actually written by marketing departments, are heavily influenced by them. I know that Starbucks likes to promote research showing that independent coffee shops do better where they open stores, but that seems like a specious interpretation of the data. In reality, Starbucks doesn't open a storefront in any neighborhood that hasn't already reached a critical mass of customers, at which point those indies are already doing better.

From my own experience, we invested and struggled in Petworth for years until the neighborhood reached the point that it could actually sustain a coffee shop, while Starbucks smartly waited for the right moment to move in. Our business picked up significantly about nine months before they opened and you can bet they have all the market data they need to anticipate the right moment. In that sense, DarkStar is correct that indies are always years ahead of Starbucks, which just means Starbucks can wait until we figure things out then steal all our best ideas.

Joel

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Speaking as a professional who owns a coffee shop across the street from where a Starbucks recently opened (inside a new Safeway), our experience is pretty neutral.

...

From my own experience, we invested and struggled in Petworth for years until the neighborhood reached the point that it could actually sustain a coffee shop, while Starbucks smartly waited for the right moment to move in. Our business picked up significantly about nine months before they opened and you can bet they have all the market data they need to anticipate the right moment. In that sense, DarkStar is correct that indies are always years ahead of Starbucks, which just means Starbucks can wait until we figure things out then steal all our best ideas.

Joel

No doubt Starbucks has teams of people constantly researching and analyzing coffeehouse trends to inform their own strategies but a company that size simply will never be able to offer the quality and authenticity of product and experience that great independents can. Of course, SBUX will always pick off the "casual" (aka, price sensitive more than quality sensitive) customers making it critical for independents to differentiate as much as possible in all facets of the business. DC is currently supporting a growing independent community which is great to see.

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