This is an aside, but my how far has Starbucks fallen at the hands of profit optimization. A Starbucks used to be a great place to spend time. Today the interior of almost every Starbucks is cold, beat up, and (intentionally?) uncomfortable. (In the stores where they even still have seating, which another commenter pointed out.) The quality of the product is barely a step above a gas station.
On the other hand, my area has a few excellent locally owned options that are so important to me. When I think about Starbucks vs. one of those locally owned shops, it reminds me just how much a rich tapestry of small businesses in a neighborhood can transform it for the better. Starbucks had that going for a it for a short while.
It depends on the location and competition from other local businesses.
The Starbucks where my parents live is nice to sit down and have a conversation with someone - it's bigger and has more space. Why? It's a small town and there isn't much competition from other local coffee shops.
Compare that with the Starbucks's of Manhattan - usually very cramped, little seating, and meant to be more of a "to go" place than a place to sit down.
For some of the locations that have been takeoutified, they used to have chairs and tables but these were purposely removed. The room is awkwardly empty so they stuff it with random chochkys like insulated mugs to fill the void.
I think there’s some truth to the notion that they’ve done this in markets and stores where they are more likely to have a problem with homelessness and non-paying customers. I’ve seen first hand how much time and energy some Starbucks employees have to put in to waking people up who are sleeping in the store, cleaning themselves in the bathrooms, or trying to bring in a cart full of their belongings. Goes without saying (in my opinion) that it’s sad and a failing of society, but it also has to be a real problem for Starbucks.
Most businesses just take care of that with a security guard. I'd think an $84 billion company can afford a $25/hr guard at some of these locations. McDonalds has figured out how to deal with the issue without ripping out their interiors.
They are connected.
More shops (including coffee shops) compete for the relatively well-off public walking around Manhattan, so they compete by agreeing to a higher rent, too. If you can't afford $50 / sq.ft., a few other bidders may.
What seems weird is that with the massive number of Starbucks closures I've seen smaller indies and local chains open up in the exact same locations and somehow make a go of it- how does that work?
Naively, a small shop only needs to pay on-the-ground workers and direct owners who may be a subset of the first group. Starbucks has to pay the regional managers and their bosses and the shareholders, etc. Also, at the mom-and-pop, no one is screaming “Why is the fourth derivative of profit increase not higher??”
I think that is, indeed, rather naive. Starbucks has an extremely efficient supply chain which ensures its raw ingredient costs are lower than what the small shop can negotiate, even moreso when delivery to the store is factored in. After raw wages, it can also offer health insurance and benefits to its employees at significantly lower per-employee costs than the small shop. It can often get a better deal on real estate, because landlords know that Starbucks adds prestige and enables them to raise rents on surrounding units. And of course, while mom & pop have to spend money advertising to the neighborhood with flyers, direct mail, coupons, etc, the Starbucks just posts that green mermaid logo and lots of people flock to it (and often are willing to pay more for the product).
It's not naive; both posts have correct points. It's the classic little-company vs. big-company scenario. Little companies can move faster and adapt quicker, they don't have the same profit expectations or overhead costs as big companies (upper manager and CxO salaries), however the big company has big advantages with economies of scale, name recognition, and access to capital. Some things for the big company may work against it: some people may go out of their way to avoid Starbucks (or other big name-brands) due to some bad experience ("it tastes burnt!") or association or simply disliking bigger companies, for instance.
Your post - which at least attempts to list some of the advantages of a small shop AND some of the advantages of a mega-chain - demonstrates why kevinventullo's post is, in fact, naive - because he only mentions the disadvantages that Starbucks might have, without considering any obvious advantages it has, like scale and brand recognition.
If you want to be pedantic about it, the post I was responding to was asking how a mom-and-pop might survive when Starbucks didn’t. Thus, I only felt compelled to name some possible advantages on the one side. It was not intended as an overall analysis. Obviously Starbucks has some other advantages over a mom-and-pop, or else they wouldn’t be everywhere.
Different types of business owners want different kinds of return on their investment.
Small business entrepreneurs might be perfectly happy just turning a profit a few years into the venture. In contrast, a stock trader only turns a profit when the business gets more valuable, which requires growth. The business has to make more profit than it did last year. A third place might turn a profit but not provide growth for investors, so they're not going to fund it, they're going to destroy it.
This gets even crazier with private equity, because the fund managers are incentivized[0] to spike growth as quickly as possible. If you ever notice a business rapidly deteriorating, it's because private equity is sucking the blood out of the company. Run.
[0] The split between fund investors and fund management changes once the fund meets its hurdle: an arbitrarily-set amount of profit. After the hurdle is met fund management gets every penny.
Starbucks reacted to the covid-19 lockdowns by closing many of their non-drive through locations, regardless of their potential profitability when no longer in a lockdown.
It seems like everyone's experience is highly localised. Even within 3km of my place I have 4 starbucks. 1 is amazing, 2 are not great, and 1 is the takeaway variant. Which one is the true measure of "Starbucks"? It's the same for local cafes too.
Also what's with the "they just want to make a profit" argument going round here? Why wouldn't they? They literally have a legal duty to do so. Should we instead incentivise cafes to not make a profit?
I think the “just” is the key word here. No one is going to get up in arms over modest profits. It’s the chasing growth at all costs even when it means sacrificing what should be the core value(s) of the business.
A lot of franchises just end up as soulless real-estate/marketing plays that siphon money out of local economies and compete on axis other than actual value/quality.
The Reserve stores are absolutely fantastic (and twice the price.) The Seattle location was the first one I had ever been to. Sadly it seemed to me like they stopped growing the concept... the one in Palm Springs is really just an ordinary Starbucks despite being branded as a Reserve, and they pulled the plug on an intended opening in Boston a few years back.
do they? when i want to work, ill go to the big one. if im late for work and feel like coffee, the takeaway one is quicker and less chaotic without the tourists/campers/families
im not usually one to defend a company, and i dont know what's best for starbucks the company and brand. but what i see isn't necessarily or obviously bad
I don't have a problem with profit motive at all, but I think it's completely valid to point out situations where it's taken to an extreme that destroys the brand or puts it in a vulnerable position, which is arguably being done to Starbucks in my opinion.
On the other hand, my area has a few excellent locally owned options that are so important to me. When I think about Starbucks vs. one of those locally owned shops, it reminds me just how much a rich tapestry of small businesses in a neighborhood can transform it for the better. Starbucks had that going for a it for a short while.