Starbucks has so many locations because it's desperate, says author
Author, magazine columnist and former World Bank official Tim Harford says: "If I walk across town, five blocks, I pass six Starbucks shops. Is this a sign of Starbucks's power? No. It's a sign of Starbucks's desperation. Imagine instead you're talking about the DMV. You don't pass five Department of Motor Vehicles offices in five blocks. The DMV doesn't come to you; they really do have scarcity power. They can make you show up. You have no choice. There's one office. They don't need to be convenient. [Yes, you're required by law to visit the DMV; the government doesn't order you to visit Starbucks. Big difference. -- Starbucks Gossip webmaster] Imagine Starbucks had magical coffee, and no other coffee would do. Whatever the reason was, they had coffee to die for. They can do the same thing the DMV does. Everyone would drive down, get the coffee, drive out. But they don't have that. They have same thing as everyone else. It's a sign of weakness. It depends on location; they don't trust you to go out of your way to buy their coffee. Starbucks has to pay for the location by renting or buying property. The people who are really profiting from the coffee are the property owners." (Smart Money)
Look soon for the 'Magical Frap' at your local Starbucks :-)
Posted by: Josh Hallett | December 22, 2005 at 06:07 PM
Oh my gosh, this article was so silly it made me giggle. Former World Bank official, and he writes for "Smart Money", and aparently has absolutely no concept of basic capitalism. What does he say about McDonalds? Or selling Coca-Cola products at every 7-11, gas station, restaurant, etc, etc. They should just sell Coke in a few places in each city and we can all drive more to get basic items. Brillant idea! Of "COURSE" Starbucks is desperate. And my store does 45K a week. Despairingly desperate!
Posted by: B Barista | December 22, 2005 at 07:06 PM
Is a cinnamon spice latte even on offer? Was it ever? I think it was a cinnamon spice mocha. That was -- what -- maybe three years ago?
Posted by: cornfrost | December 22, 2005 at 08:08 PM
What a strange article. It's like he has no idea what he's talking about. First comparing Starbucks to the DMV, and then referring to "magical coffee." Does it not occur to him that there are so many locations because there is a demand? Starbucks doesn't open locations for fun. They open them to serve an overwhelming demand for their product.
Posted by: Fat Little Pug | December 22, 2005 at 08:15 PM
Look, the guy was the president of the World Bank...doesn't that say enough?
Posted by: -m | December 22, 2005 at 10:23 PM
Starbucks likes having on store being a billboard for the next. Thats part of the reason why there are so many. I don't think Starbucks is weak at all, at least it wouldn't appear that they are.
It is possible however for Starbucks to grow too big for its britches? This affect can be seen in things like the organizing drive in New York and customers that claim they get a better drink at one Starbucks compared to the other.
Howard Schultz wants all Starbucks to be the same but God created them different. Thats where the weakness is. Not in growth but in naturally occuring change and an unwillingness to accept and embrace change.
If you are uncompromising in your principles then your principles must be infalliable. How does the idea that your principles are infalliable translate into any sort of growth?
Posted by: blah | December 23, 2005 at 07:15 AM
It's not demand that he missed, it's capacity. I don't have to go to the DMV to renew my license every day, and neither do the other hundreds of thousands of license holders in my area. If that were necessary, there would be lots more DMV offices, just because you couldn't simply enlarge the 4 offices in my area and have everyone drive to them every day.
Capacity is why it makes sense for a single strip mall to have a free-standing sbux shop and an sbux stand inside the supermarket (i.e. from one parking space I can walk to both).
Capacity is why sbux has four units (counting one inside a supermarket) in the same area (same street) that McDonalds has two. I think I can concede that McD could be doing similar or greater volume without completely contradicting myself, too.
Posted by: Supposed Eric | December 23, 2005 at 10:22 AM
When was the last time you were happy to go to the DMV? When was the last time you met someone at the DMV? When was the last time you left the DMV happy? (and not relieved to be out of there)
No wonder they need more starbuxes than DMVs.
Posted by: Spaz Cadet | December 23, 2005 at 03:45 PM
I also like the Q&A on page 2 about "short cappuccinos" and why you can't find them on the menu board. No Tim, the reason why "short cappuccino" isn't on the menu board isn't becuase starbucks is so greedy it doesn't want customers to know about it, it's because those menu boards aren't very big and there's a lot of drinks that just have to be left off.
Posted by: Austin | December 23, 2005 at 07:50 PM
you know, i was doubtful for a while, but this article confirmed it: people just LOVE to hate on Sbux.
if you're an upstart and successful, you're applauded, get too successful, they try to tear you down. Glarkware was right: American IS scary.
Posted by: CuteBarista! | December 24, 2005 at 06:27 AM
LOL @ people thinking this is newsworthy enough to copy.
Posted by: | December 25, 2005 at 12:27 AM
Does anyone know where in the UK I can buy "Chai Latte" that tastes anything like the Starbucks chai? Or even better, does Starbucks UK sell it?
Posted by: Marion | December 26, 2005 at 09:03 AM
Marion,
Try www.Tazo.com
This is the company that we get all of our teas from.
Posted by: -m | December 26, 2005 at 07:46 PM
Starbucks owns Tazo
Posted by: | December 26, 2005 at 09:05 PM
Don't buy Starbucks. But if you do, ask for Free Trade Coffee. It's not advertised because Starbucks makes less of a profit from it. But it supports the farmers who get ripped from coffee companies.
Posted by: Joe | December 27, 2005 at 06:13 AM
waahh.
Posted by: | December 27, 2005 at 07:48 AM
Advertised? What coffee other than the seasonals does Starbucks ever advertise? Fair Trade (which tastes like ass IMHO) gets the same shelf fronting and sign placement as Verona. In fact Fair Trade gets more thanks to Sbucks Fair Trade challenge.
Get a life, bathe instead of patchouli and inform yourself before saying silly things.
Posted by: deusx | December 27, 2005 at 01:46 PM
Starbucks pays the highest price per pound of coffee in the world, and it doesn't always go to middlemen. I think it's great that you care for the farmers, but it's sucky-ass for us working-poor folk and the 28 customers in line behind you when we have to stop everythng and make a freakin' french press for your hippie-ness.
Posted by: | December 27, 2005 at 06:01 PM
This article was pretty "lame" to say the least. I'm biased, of course, since I am a Starbucks partner... but I just dont see how multiple locations makes sbux "desperate." Maybe Sbux would be desperate if it had all these locations and no customers, but that is not the case.
It really irks me when people comment on the quanitity of Starbucks locations... Look at Dunkin' Donuts. I'm from New Jersey and there are more than twice the Dunkin Donuts around here than Starbucks. As a matter of fact, within a 10-mile radius of where I live, there are 39 Dunkin' Donuts and 15 Starbucks.
Though I'm not a DD fan, I'd hardly say they are "desperate" yet they have tons of locations... These locations are more of a competition than a sign of desperation.
And besides, if Sbux was so desperate - wouldn't they air commercials on television? I'm not much of a TV watcher, but I have never seen a Sbux commercial.
=)
Posted by: dee | January 01, 2006 at 04:11 PM
Acutally, I have seen TV ads for Sbux. :) Most of them are for the doubleshot can... or the bottled frapps. BTW: The guy that wrote this article can't have much business sense, with the way he's blurting out ignorant phrases. The comparison of the DMV to SBUX is a joke. And BTW: most people WON'T go out of their way to get a coffee... this INCLUDES CROSSING THE STREET. Many of my customers come to my store on the way to work, and another on the way home...even though we are less than 1/4 mile from eachother! If customers aren't willing to go very far for coffee, then yes, you need to go to them (to a certain extent) to get the sale...and look at how well that's working! Profit up...desperation down...
Posted by: Aaron Reymann | January 22, 2006 at 07:06 PM
I am trying to get all starbucks fans to band together and stop malaria.
http://www.MadnessAgainstMalaria.com/starbucks
Posted by: lance laifer | December 12, 2006 at 12:20 PM
You can't argue with success. Starbucks has been successful and give people what they want. I do prefer Peet's coffe but dislike their service (long lines, slow...they think you should wait for the honor of getting their product). Starbucks has excellent service and a good product. Those liberals who knock it should .... drink tea at home.
Posted by: sweet justice | September 06, 2007 at 10:50 AM
starbucks has the most awful coffee i have ever tasted.It must be trendy to be there, that is the only reason most people go there.I had to wash my mouth out with water to get rid of the taste of their coffee.
Posted by: drake | November 10, 2007 at 05:28 PM
Just the other day i had to see what all the craze was about starbucks coffee. I had my first cup of coffee at starbucks could not even finish it. It was burnt bitter nasty. It must be trendy to be there , I know there not there for a good cup of coffee.
Posted by: coffee breake | November 10, 2007 at 05:43 PM
Dee, I live in New Jersey too, and there are way too many Dunkin' Donuts....I agree. They are everywhere! And their coffee gives me a headache. I'll take Starbuck's por favor.
Posted by: | April 10, 2008 at 05:40 PM