Indepedent coffee houses often tremble and protest when Starbucks, like the Star Wars Empire, moves into town. But, remarkably enough, Starbucks may actually be increasing the business for independent coffee…
Indepedent coffee houses often tremble and protest when Starbucks, like the Star Wars Empire, moves into town.
But, remarkably enough, Starbucks may actually be increasing the business for independent coffee houses. While Starbucks’ revenue continues to grow, so do indies in aggregate, and indies often find that their business continues or increases when Starbucks moves in.
A third of Americans who drink coffee away from home order gourmet coffee from a specialty shop, according to Mintel. Many people believe that Starbucks increases the overall market, attracting new customers to the product who then patronize the independent provider next door. “When a Starbucks opens, it educates the market, expanding it for everyone,” says Bruce Milletto, president of Bellissimo Coffee InfoGroup Inc., a Eugene, Ore., company that provides consulting services to independent coffeehouses.
The coffeehouse may be that rare thing in retailing — a concept that doesn’t heavily favor chains. Never mind that critics of Starbucks routinely compare it with Wal-Mart Stores Inc. Starbucks simply doesn’t enjoy the advantages that have made Wal-Mart the bane of countless Main Street retailers — lower prices, longer hours, wider selection. The Starbucks offering isn’t less expensive or more extensive than the independent’s, and the chain’s hours often are shorter.
This may be why, contrary to popular perception, independents still dominate the industry. Independents and small chains boast a 61% share of the industry, says Mintel. In fast food, by contrast, independents and small chains hold only a 27% share, according to Technomic Inc., a Chicago food-consulting firm. Indeed, the coffeehouse industry boasts only one big chain — Starbucks, with 3,167 company stores in the U.S. Of the countless others that have tried mimicking it, not one has matched its success. The nation’s second-largest chain, Diedrich Coffee Inc., of Irvine, Calif., boasts only 237 U.S. stores.
Frankly, I like Starbucks. And the one by our Safeway is convenient enough that we often grab a (pricy) bite to eat and caffeine to quaff when we go shopping. But I’ve patronized the indies, too, and am glad they’re there. I’ll never be the type to hang out at the coffee shop and blog, or chat with the other regulars. But when I look for someplace convenient, I’m not married to any one brand or logo. If the coffee (or coffee drinks) are good, I’m there.
How many types of coffee do we need at work?