Friday, July 18, 2008

Stupid is As Stupid does

The longer I own my own business, the more I realize that nonsense corporate business decisions are usually temporary aberrations brought on by too much available cash. We'll often stand around scratching our heads wondering why corporations do the things they do. Take the Starbucks ridiculously broad and fast expansion for example. They've got stores in the middle of nowhere, stores across the street from other Starbucks locations, stores in insanely expensive shopping malls. How do you profitably do that? You don't. 600 stores now closing....


  1. If you're a manager, and the boss measures your success in "market share", then you want your stores to be ubiquitous.
    I guess the idea is, that once you've driven everyone else out of business, you can rape your customers by charging some outrageous sum (like $5 or more) for something as simple as a cup of coffee.

    Oh, wait, Starbucks already overcharges for coffee...

    Market share?


    Some perverse and twisted plot to take over the world?

  2. Surprisingly, Starbucks actually helps existing coffee shops from the articles I've read and shop owners I've spoken to. They're a kind of cheerleader for coffee that also conditions customers to accept pretty insane prices for a cup of joe.

    I go to Starbucks; there I admit it. Why? Consistency of experience. I will always get a hot cup of Americano made the same way every time, regardless of what Starbucks I walk into. There are certainly better coffee chains, especially in SF, but without the Starbucks ubiquity I mentioned.

  3. Having worked for Starbucks at the coporate level, I can say that their expansion was right in line with the way the country was expanding at the time; albeit on borrowed money. The cost of doing that is now the closing of underperforming stores.

    Informationally, a cup of coffee is almost never over 2 dollars; it is the other fancy stuff that costs more. The Americano that Gary, and I, get is only like 2.50 for the biggest. You can say that is overcharging if you want, but for all the things that are ubiquitous, i.e Starbucks, Wal-Mart, McDonalds, how many offer as consistently good a product?