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Competition for Starbucks


ghostrider
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On a recent trip to St. Louis, I noticed that each of the 3 Starbucks I passed on my daily route while there has a local independent coffee shop open, or about to open, in the immediate vicinity. One Starbucks has a well established competitor less than a block away on the opposite side of the street; one has a new shop that opened earlier this year directly across the street; the third has a shop that's just about to open half a block away.

All of these shops are in well developed mixed-use neighborhoods, where pedestrians who live, work or shop in each area will have their choice of coffee establishments - i.e., we aren't talking strip-mall land.

I realize that 3 shops do not make a trend by any means, so I thought I'd ask whether anyone else has noticed similar happenings in other parts of the country.

Are coffee drinkers getting tired of the sameness of Starbucks, and are entrepreneurs seeing an opportunity by offering a more distinctive product? Or did I just happen to be in 3 neighborhoods that have enough trade to support pairs of coffee shops?

Thank God for tea! What would the world do without tea? How did it exist? I am glad I was not born before tea!

- Sydney Smith, English clergyman & essayist, 1771-1845

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On a recent trip to St. Louis, I noticed that each of the 3 Starbucks I passed on my daily route  while there has a local independent coffee shop open, or about to open, in the immediate vicinity.  One Starbucks has a well established competitor less than a block away on the opposite side of the street; one has a new shop that opened earlier this year directly across the street; the third has a shop that's just about to open half a block away.

I realize that 3 shops do not make a trend by any means, so I thought I'd ask whether anyone else has noticed similar happenings in other parts of the country.

Are coffee drinkers getting tired of the sameness of Starbucks, and are entrepreneurs seeing an opportunity by offering a more distinctive product?  Or did I just  happen to be in 3 neighborhoods that have enough trade to support pairs of coffee shops?

It's becoming a specialty coffee industry mantra that indies do better locating near a Starbucks than locating in a more obscure location. Makes some sense since the SBUX real estate division has already done the market/demographic/traffic research.

The theory is that customers then use the SBUX like GM uses Chevy, as an entry point, and graduate to the Buick or Cadillac (assuming the indie is indeed better, not always guaranteed).

Rich Westerfield

Mt. Lebanon, PA

Drinking great coffee makes you a better lover.

There is no scientific data to support this conclusion, but try to prove otherwise. Go on. Try it. Right now.

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I realize that 3 shops do not make a trend by any means, so I thought I'd ask whether anyone else has noticed similar happenings in other parts of the country.

I've noticed the same thing here in Vancouver, Canada. In fact, one of our best roasters, JJ Bean, recently opened a shop directly adjacent to a Starbucks (Park & Tilford, North Vancouver). I had my doubts about the wisdom of doing so, but I'm told that they're doing good business.

Baker of "impaired" cakes...
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I think in my relatively small city of 60,000, we have three Starbucks and 4 independant coffee shops. But the indies have done a good job of offering an alternative. One is an old mill-type building that has tons of room to sit and play games, read, etc. Others cater to the art crowd, and one has free live music every night. So, I think if they offer something different, people will come.

Incidentally, and I'm no Starbucks cheerleader, the others stink. The coffee tastes like folgers. I think their roasters suck.

“There is no sincerer love than the love of food.”

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Alright...my insight - coming from the heart of the city (Chicago), is that there are many independant as well as other well known franchises opening in the near vicinity of many many starbucks. This is true for the Loop (business district of Chicago), Gold Coast and Streeterville (shopping area's right off the magnificent mile...which is the well known Michigan Ave shopping strip), Near North (think Wrigleyville, Lakeview, Lincoln Park, Old Town, Roscoe Village, Wicker Park), River West, and the like.

I live on the broder of Old Town and Lincoln Park, about 8 blocks north of the WaterTower building/John Handcock building, or 2 miles from the loop. The starbucks closest to me is a mere 2 blocks away, or a 2 min walk. Directly across the street is a wonderful independent coffee shop...also featuring about 8 wonderful icecreams, hot food and sandwhiches (gourmet-ish mac and cheese, baguetts with wonderful salamies and bries, wonderful creamy soups like butternnut squash and lobster-bisque, etc...) and delectible pasteries...MMMMM

The above is true for the other neighborhoods...downtown too expect for downtown the competition seems to be a lot of Carabou Coffee shops...as well as select independent shops... Whereas the non-downtown areas of Chicago (i.e near north, west, south etc...) seem to have most Starbuck competition from independent, downtown its a mix of competition from Carabou like franshises and independent popping up right around the corner from starbucks...

I enjoy both - independent and SB. I cannot resist nor give up my indulgence for SB Frap's (frapachino's...coffee, carmel, mocha...you name it I love it)...but as for straight up coffee I often find the independant shops serve a better cup of joe!

"One Hundred Years From Now It Will Not Matter What My Bank Account Was, What Kind of House I lived in, or What Kind of Car I Drove, But the World May Be A Better Place Because I Was Important in the Life of A Child."

LIFES PHILOSOPHY: Love, Live, Laugh

hmmm - as it appears if you are eating good food with the ones you love you will be living life to its fullest, surely laughing and smiling throughout!!!

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Are coffee drinkers getting tired of the sameness of Starbucks

Don't count on it. With about 8,000 stores now, they are expanding at quite a clip. I think that Shultz says he wants over 15K locations in another 2 years. And I have yet to go to a Starbucks that wasn't busy busy busy...

They have flaws, they are not great, but they are good. And yes, you know what you are getting there.

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It's becoming a specialty coffee industry mantra that indies do better locating near a Starbucks than locating in a more obscure location.  Makes some sense since the SBUX real estate division has already done the market/demographic/traffic research. 

The theory is that customers then use the SBUX like GM uses Chevy, as an entry point, and graduate to the Buick or Cadillac (assuming the indie is indeed better, not always guaranteed).

This formulates what I was thinking. It does make sense, assuming you have enough trade that wants to distinguish itself as non-Starbucks.

What intrigued me about the St Louis places was the in-your-face locations of the competitors. In the areas I travel here in Jersey, I generally find the independents in the same town as a Starbucks but some distance away.

It'll be interesting to see how they all fare.

Thank God for tea! What would the world do without tea? How did it exist? I am glad I was not born before tea!

- Sydney Smith, English clergyman & essayist, 1771-1845

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IIRC, Wendy's was accused by McDonald's of placing stores near a McD's. McD's apparently does a lot of feasibilty research- which costs $- and Wendy's just followed the tracks. I am no Starbuck$ fan-I do not drink special coffee drinks. Just plain black coffee or espresso which I find Starbuck$ to be bitter. I will always try the independent first to give it the business. It is a hit or miss.

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Megan sandwich: White bread, Miracle Whip and Italian submarine dressing. {Megan is 4 y.o.}

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There was a 2002 Wall Street Journal article saying that Starbucks was good for independents. The mega-chain grew the market and drew customers to the area.

I can only find an abstract of the article, so I can't provide hard numbers.

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IIRC, Wendy's was accused by McDonald's of placing stores near a McD's.  McD's apparently does a lot of feasibilty research- which costs $- and Wendy's just followed the tracks.  I am no Starbuck$ fan-I do not drink special coffee drinks.  Just plain black coffee or espresso which I find Starbuck$ to be bitter. I will always try the independent first to give it the business. It is a hit or miss.

Same here. Don't like the taste of Starbuck's but also can't justify going to an independent with crappy coffee and poor service. In cases like that I'll just drink it at home

If my office is in the centre and there are three blocks on all sides (a 3 x 3 block in other words) there are 4 starbucks on each corner of the square, plus two additional starbucks ( one in my building and the adjacent buidling). There are 8 independent coffee shops in the same 3 x 3 square, however 50% of them have changed ownership in the last two years. The other 50% though are still going strong and part of their success is due to the morning coffee/bagel crowd, having limited smoking areas and outside patios, and very reasonable prices that depend on quantity to turn a profit.

Interesting that Starbucks is credited with upping our taste for high-quality java, and now some folks think they've done sucha piss-poor job with standard brewed non-specialty coffee that people are seeking out the indies for that stuff.

We have a chain of fair trade coffeeshops here that is doing a good business, and that I think more recently is starting to do business for reasons beyond the ethical consumer. The store environment is favourable, the brewed coffee is good and cheap, and the sandwiches and baked goods are mostly made in-house (that which is not i.e. croissants and scones is brought in from an artisan baker).

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There was 2002 Wall Street Journal article saying that Starbucks was good for independents. The mega-chain grew the market and drew customers to the area.

I can only find an abstract of the article, so I can't provide hard numbers.

There was a similar article about Portland, OR, in the Willamette Weekly. Some eGullet discussion of it here.

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A lot of the issues being brought up here were touched upon in another discussion in the eGullet Coffe & Tea forum:

"Starbucks: Good or Evil?, A divided coffee nation speaks."

As said in this related discussion, if Starbucks has done one thing it's raised the bar as to what is considered drinkable coffee by the average consumer. It's also had the effect of increasing the coffee competition (or absorbing it, as in the case of Seattle's Best).

If an independent coffee house goes out of business these days, it's more likely due to having been poorly run as opposed to having been driven out of business by Starbucks.

 

“Peter: Oh my god, Brian, there's a message in my Alphabits. It says, 'Oooooo.'

Brian: Peter, those are Cheerios.”

– From Fox TV’s “Family Guy”

 

Tim Oliver

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It's interesting how it's so rare on Eg to find anyone who admits to liking Starbucks coffee. (I like it!) I have been to scores of them all over the East Coast, and have yet to find one that wasn't very busy with lots and lots of customers.

Is this one of those Yogi-isms??

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Madison has long had a fairly well developed independent and small-chain coffee market. Starbucks only recently made a tepid attempt to enter the market here, opening just a few stores. Their strategy here seems to be to pick a few niche neighborhoods towards the perifery, and saturate them with stores.

They seem to be afraid to open stores closer to the center city.

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I already said (above in my post) that I like them, that I LOVE them for fraps....not for reg coffee though. I mean yes, they will do, but I find thier straight up coffee a tad bitter, for me tonge at least :)

"One Hundred Years From Now It Will Not Matter What My Bank Account Was, What Kind of House I lived in, or What Kind of Car I Drove, But the World May Be A Better Place Because I Was Important in the Life of A Child."

LIFES PHILOSOPHY: Love, Live, Laugh

hmmm - as it appears if you are eating good food with the ones you love you will be living life to its fullest, surely laughing and smiling throughout!!!

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Actually, the research shows that indies do better, not worse, if there is a Starbucks (or Caribou Coffee -- another large franchise) nearby.

Personally, I never get brewed coffee at Starbucks. It always tastes burnt. I stick to the espresso drinks.

We cannot employ the mind to advantage when we are filled with excessive food and drink - Cicero

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Around here (and by that, I mean the subruban areas of far north Dallas and the nothern suburbs), there doesn't seem to be much competition. It's pretty much all Starbucks. Before that, there was pretty much nothing. I don't think Dallas had much of a coffee culture. Maybe there were a few places closer into the center of the city. But for the most part, Starbucks single handedly created the market for pricey, fancy coffee drinks. I go to Starbucks. I always get one of those epsresso based drinks with steamed milk and some other flavorings. Or maybe one of the frozen drinks or an iced tea drink. I think I've only purchased a regular cup of coffee at Starbucks ONE time.

Out in Los Angeles, I see competition. But for the most part, it's from another big chain (Coffee Bean and Tea Leaf). Where do I go when I'm in L.A.?? Starbucks? Why? Because I don't have to cross the street to get there. It's on the same block, same side of the street as my office. If the locations were reversed? I think I would probably go to Coffee Bean and Tea Leaf (yeah, I'm pretty damn lazy).

I can see why other companies want to locate near a starbucks. It makse sense. Especially if there is a lot of foot traffic. Just think of all the people like me who don't want to wait to cross the street. :)

Jeff Meeker, aka "jsmeeker"

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Personally, I never get brewed coffee at Starbucks.  It always tastes burnt.  I stick to the espresso drinks.

That makes two of us, Brad, and I'm sure we're not alone, given that some have been calling this chain "Charbucks" for years.

In Philly, Starbucks locations seem to follow the competition as much as they lead it. They were the first to open at 16th and Walnut (a bank, of all things--ING Direct Café--followed them one block west some years later), in the 1200 block of Market (I don't count Old City Coffee in the RTM as direct competition given the market's hours; Dunkin' Donuts one block down--right at the entrance to Market East Station--and one block up came later) and at 10th and Chestnut (no followers yet), but they were entering already colonized territory when they opened at Broad and Pine (the Last Drop Coffeehouse, a Gen-X shop popular with the art students, opened one block east some three years before), and they will do the same when they open up 12th Street from me at Walnut (catty-corner from a Così that's been in business for five years) within the next month or so.

Coffee-wise, the big news locally is that Dunkin' Donuts plans to increase by more than a third the number of stores it has in the larger Philadelphia region (Atlantic City to Reading, Trenton to Dover, Del.), to about 670, or about as many stores per capita as they have in their home market of Greater Boston.

Sandy Smith, Exile on Oxford Circle, Philadelphia

"95% of success in life is showing up." --Woody Allen

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I have to admit it, I LIKE Starbucks! I am Syrian, and grew up drinking dark roasted brews, so perhaps I am immune to that 'charred' resonance that some people have of Starbucks.

I DO notice that in Miami, where a lot of my friends are Latino born, Starbucks isn't considered 'charred' at all, and that in NJ, where I live now, and many of my friends are European ancestry but American for 3-5 generations, these people tend to prefer Dunkin' Donuts coffee, which I find abysmally weak.

edited by me to add: forgive me for this abysmally poor bit of writing, my mind is addled by the radiation, I swear! :laugh::laugh::laugh::sad:

Edited by Rebecca263 (log)

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Here in Seattle, our second biggest coffee chain named Tully's does follow Charbucks around and opens shops as close as they can to Charbucks locations. While it's not great coffee, it's certainly better than the bitter brew at Charbucks.

“"When you wake up in the morning, Pooh," said Piglet at last, "what's the first thing you say to yourself?"

"What's for breakfast?" said Pooh. "What do you say, Piglet?"

"I say, I wonder what's going to happen exciting today?" said Piglet.

Pooh nodded thoughtfully.

"It's the same thing," he said.”

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