Starbucks: The Best News Any Local Coffeehouse Ever Had

Commercialization, the lament often goes, is killing our culture! Mom and pop stores are closing down. Main street USA is losing its character in a flood of impersonal national chains. Wal-Mart! Starbucks! If you’ve paid any attention to the debates over retail during the last decade or so, this should all be familiar.

But as so often happens, the familiar story isn’t the most accurate one. Wal-Mart has already been called "a progressive success story" by the Washington Post’s Sebastion Mallaby for saving Americans more on food each year than any federal food-assistance program — more than $50 billion a year. And now Slate notes that Starbucks, that oft-maligned behemoth of corporate coffee, actually boosts the business of small coffee shops.

Soon after declining Starbucks’s buyout offer, [local coffee shop owner] Hyman received the expected news that the company was opening up next to one of his stores. But instead of panicking, he decided to call his friend Jim Stewart, founder of the Seattle’s Best Coffee chain, to find out what really happens when a Starbucks opens nearby. “You’re going to love it,” Stewart reported. “They’ll do all of your marketing for you, and your sales will soar.” The prediction came true: Each new Starbucks store created a local buzz, drawing new converts to the latte-drinking fold. When the lines at Starbucks grew beyond the point of reason, these converts started venturing out—and, Look! There was another coffeehouse right next-door! Hyman’s new neighbor boosted his sales so much that he decided to turn the tactic around and start targeting Starbucks. “We bought a Chinese restaurant right next to one of their stores and converted it, and by God, it was doing $1 million a year right away,” he said.Hyman isn’t the only one who has experienced this Starbucks reverse jinx. Orange County, Calif., coffeehouse owner Martin Diedrich started hyperventilating when he first heard a Starbucks was opening “within a stone’s throw” of his cafe, yet he reported similar results: “I didn’t suffer whatsoever. Ultimately I prospered, in no small part because of it.” Ward Barbee, the recently passed founder of the coffee trade magazine Fresh Cup, saw this happen scores of times. “Anyone who complains about having a Starbucks put in next to you is crazy,” he told me. “You want to welcome the manager, give them flowers. It should be the best news that any local coffeehouse ever had.”

This is what the "small and local" crowd  often seems to forget: Retail isn’t a zero-sum game, and big corporate chains can create network effects that spill over into local business.  Meanwhile, there are ever-more options for all of us consumers to get our morning caffeine fix.

Reason’s Michael Moynihan recently covered a similar topic in a long feature for the magazine that’s reprinted here.