The Starbucks Scale

Starbucks Scale

Oakland Mayor Jerry Brown has said that a measure of progress in revitalizing Oakland could be the number of hours Starbucks stays open. Each additional hour into the evening would be an indication that more life was returning to the struggling city.

Economic development offices in communities throughout the United States work hard to attract the attention of the Seattle-based bean peddler trying to convince them that the main street in their town is the perfect place for a trendy green awning. Still, the people on the main street have mixed feelings about whether chains are a sign of health or an invasion into the rightful markets of small business.

Starbucks Scale

As far as chains go, Starbucks does a lot right. They fit into neighborhood communities well, adapting to blend into historic storefronts and encouraging pedestrian traffic. In small towns lucky enough to have a Starbucks, it is welcomed as the only coffee shop in town. Before there was Starbucks, the only brew came from a convenience store.

Still, in many areas Starbucks has been accused of finding a successful, local, mom-and-pop brew and setting up shop next door. For the caffeine-needy pedestrian, the choice may be one of taste or convenience. Many say chains are for the most part bad for a neighborhood business district.

There is some truth to this. Say you buy a cup-a-joe at Starbucks, some of the money stays in town, paid to local employees who spend it in local stores. Some go to distributors, local and regional, but some also go to Seattle. The employees who spend the money they made at Starbucks will also be sending a portion of that money out of town.

Starbucks at Night West Village DallasIf you instead buy your coffee at a local joint, owned by people who live in town, a larger percentage stays in the local economy. The only ways to grow a local economy are to make at home what you otherwise would have imported, or export something to other places. When a local coffee shop is replaced by Starbucks, the opposite is occurring; you are importing what otherwise would have been made at home.

Coffee is, of course, something that’s usually imported from somewhere else, Vietnam or Columbia. No matter where coffee is purchased, a percentage of the purchase price leaves the local economy and goes somewhere else. (Of course, globalists say this is good since we are growing economies which will eventually be able to support a Starbucks and send money back to Seattle). If we trace the coffee back to its roots from the mom-and-pop store, it’s not likely the path will be much different than if it’s traced back from Starbucks.

The difference is not in the coffee; it’s the profit from the coffee. If, for example, the retail cost of a cup of coffee is $1 and 25 cents of that is profit (after rent, supplies, operating expenses, employee wages, etc.), a greater portion of the 25 cents will be returned to the local economy if it’s purchased from a mom-and-pop or even local chain than if it is purchased from a national chain. In the case of Starbucks, the 25 cents would go to Seattle.

Starbucks, on the other hand, isn’t interested in many retail districts because they just don’t have enough foot traffic to support a store. If Starbucks wants to buy into your neighborhood, it can be considered an indication of its health.

When we shop, we aren’t thinking about the local economy. We want lots of stores and choices, in a place where there are lots of other people walking around. These places have lots of housing nearby, a good transit system to bring people in, pedestrian amenities such as walk lights, narrow, pedestrian-friendly streets, benches and some barrier, be it parked cars, trees or bushes, separating sidewalk traffic from automobile traffic. Rather than spending money chasing Starbucks and trying to convince them to move into town, these are the things cities and economic development offices can provide that will benefit both Starbucks and local stores.

We buy something because it’s more convenient or we like it better, not because we want to support one thing or another. Not too long ago Starbucks bought out a local San Francisco chain and created much resentment in my neighborhood and others. Many stores posted signs urging consumers to “boycott Starbucks.” The popular local location underwent a remodeling, and sure enough was more crowded than ever upon reopening. It was simply a good location, and a business would probably need to be really bad not to survive there.

The bottom line for any business person is that consumers will choose the product they feel has the best value–real or perceived. It is up to the business to offer that value, and the ones who do will win and successfully compete–even against Starbucks.

There are hundreds of local and regional coffee shops in San Francisco. They are supported by the great numbers of people who walk San Francisco’s streets, passing by, smelling the aroma, and stopping inside for a brew. When Starbucks goes scouting for locations, they look for places with considerable foot traffic.

Starbucks Scale, Artigiano in Vancouver, Canada

The bottom line for those trying to help businesses and neighborhoods is that any business is better than no business and the goal needs to be to encourage the street traffic that comes as a result of housing, transit, density and amenities to make life as a pedestrian pleasant, and thus enticing to business.

In that sense, when Jerry Brown says he will use the hours Starbucks stays open as a measure of the health of the city, it is a good one. If Starbucks stays open longer, that means there are more people on the streets during later hours. That’s what needs to be encouraged and fostered, a healthy street activity that will supply customers for local coffee shops, coffee chains and a variety of other local, national and international retail outlets which feed off of each other and collectively bring customers to the area.

It’s easy to say Starbucks is hurting local businesses. It’s a little harder to decide you have to invest in your neighborhoods to make them more attractive to all kinds of businesses–but that’s what we need.

About Eric Miller

Rick and I started this web magazine as The New Colonist back in 1999. I was in San Francisco, and he was in Los Angeles. We had a common interest in sustainability and city life. We're still at it. Today I am happy to have lived in both New York, San Francisco and Pittsburgh and to now reside in Dallas. Find more at ericmiller.me