Starbucks and small business
“In fact, Starbucks created the market for the small coffee shop,” says Bryant, whose new book “Everything but the Coffee: Learning about America from Starbucks” is due to be released in October.
Simon argues that 20 years ago you couldn’t find a “good” cup of coffee anywhere, until Starbucks came along and “created a desire and a taste for specialty coffee” that eventually gave birth to the corner specialty coffee shop.
In his column for TheBigMoney.com (Frappuccinos Work for Mom and Pop), Jonathan Weber argues that the closing of a Starbucks store in Missoula, Montana is no cause for celebration by small coffee houses. “It’s dangerous to assume that what’s bad for the chains is good for the mom-and-pops,” writes Weber, who maintains the loss of jobs from the Starbucks closure will hurt local businesses. “In this economy, a store closure is nothing to cheer about.”
A Slate article from 2007, titled “Don’t Fear Starbucks,” details the saga of a small Los Angeles-based coffee chain that discovered the intrusion of Starbucks was actually the best thing for its business.
Yet the perception of Starbucks driving out small businesses endures, as evidenced by a 2006 lawsuit against them by another Seattle-based coffee shop that claimed Starbucks “illegally maintains its monopoly by barring other coffeehouses from prime downtown high-rises in Seattle and Bellevue through exclusive leases with property owners.”
Belvi Coffee owner Penny Stafford, who launched the suit, claimed Starbucks ran her and other local shops out of business by “buying coffee sellers and flooding neighborhoods with new Starbucks stores that even cannibalized the sales of existing Starbucks shops.”
Simon says that while Starbucks was very predatory in the late ’80s and early ’90s, in what he refers to as its “early period,” that this aggression was primarily directed at small chains that operated a handful of stores in big metropolitan areas like Boston, Chicago and San Francisco. “It didn’t care about the mom and pops.”
According to Simon, Starbucks would use its power to get the best location and sign really long leases that would essentially restrict landlords from also renting to competitors.
“While it doesn’t kill the small coffee shop, it leaves them on a side street in a smaller town a little off the main drag where you get the densest amount of traffic.”
Simon believes a lot of the anti-Starbucks sentiment that exists today comes more from a fear of homogenization than from anything Starbucks is doing.
“There’s a long history of anti-chainstore feeling in this country and I think it’s the general perception that Starbucks is everywhere and so it must come at the cost of something else,” he says, pointing to movements in small communities like Benicia, California, which are trying to enact bylaws to make it tougher for Starbucks franchises to operate. “They made the association between seeing it everywhere and not seeing what they thought they wanted (more mom and pops) and blaming Starbucks for that.”
The irony now is that Starbucks is actually closing stores, while the smaller chains and mom and pops are fairing pretty well.
“Starbucks can no longer offer what they initially promised and it’s the small coffee shops that are doing a better job,” says Simon, about appealing to coffee connoisseurs – the same customers that helped them grow so rapidly in the beginning.
Simon points to the Chicago’s Intelligentsia as an example of a smaller chain that is “out-coffeeing” Starbucks by servicing that high-end specialty coffee niche. Last year Starbucks announced it was closing 600 stores in the U.S. and has since made a number of changes to reclaim some of the market lost to independents.
Simon sees this as an attempt by Starbucks to “reclaim that initial authenticity,” as he asserts the chain has been forsaken by its high-end coffee drinkers and is not a destination for people “who are really interested in cool.”
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