Sunday, July 6, 2008

Did Starbucks' Outsized Reach Help or Harm Small Shops?

Not exactly. But the coffee giant's woes leave aficionados grateful that their shrinking will mean more room for indie operations.

For a slightly alternative view, check out Taylor Clark's 2007 write-up in Slate, which documented how the presence of a neighborhood Starbucks actually meant better business for indie shops located close by. I say "slightly" alternative because, as Clark notes, Starbucks wanted to crush these smaller stores. But the indie stores' cheaper prices, locally produced pastries, and ability to handle the overflow from the nearby Starbucks meant that they thrived rather than died.

Ultimately, the smaller stores do a better job because they produce better coffee. Starbucks isn't known as "Charbucks" for nothing. Indie stores have the flexibility to pick and choose which distributor's beans and roasts produce the best flavored espresso. While shops like Vivace in Seattle buy their beans raw and do their own roasting, Starbucks relies on automatic machines to produce bland output with a button-press. Those machines made employees so coffee-dumb that the company had to close down for three hours recently for some good ol' fashioned Maoist "re-education".

Starbucks' problem now is that it can't improve its offerings or experience without walking back from the large-operation model that is the heart of its business. It can't go back to being a funky little hangout in Pike Place Market.