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Starbucks: Getting Cornered

What does the increasing presence of Starbucks in U.S. cities indicate about American consumers?

February 23, 2002

What does the increasing presence of Starbucks in U.S. cities indicate about American consumers?

A few months ago, a Starbucks outlet opened only half a block away from The Globalist’s offices in Washington D.C.’s McPherson Square. Now, another Starbucks is planned in a corner building on our own block — replacing a now-defunct sandwich shop. Thus, within less than 100 yards, two Starbucks will serve hot coffee to office workers.

These days, in major U.S. cities, Starbucks shops don’t serve specific neighborhoods. They literally serve individual blocks. Up and down Manhattan’s major avenues, coffee lovers can find a Starbucks every three and a half city blocks or so.

It’s no wonder. Americans comprise only 5% of the world’s population, but they consume about 20% of its coffee. That’s 370 cups a year per person.

This astounding consumption level adds up to $18 billion — and Starbucks gets a big chunk of it. More than half of the company’s 5,000 outlets are located in the United States, generating a turnover of $2.2 billion a year.

What makes these facts even more astonishing? As recently as 10 years ago, finding a decent cup of coffee was a treasure hunt in most major U.S. cities.

So, with a Starbucks on almost every corner, one wonders whether all of them can stay in business. The answer might be found on the scales. It’s a well-known fact that over 50% of Americans are overweight — the result of a poor diet and/or lack of exercise.

Thus, if the next filling station for a freshly brewed cup is not conveniently close by, many U.S. coffee lovers might choose to do without. Thus, a key component of Starbucks’ business strategy could be to take advantage of the national weight problem — and sheer American laziness.

Such amazing success, however, isn’t necessarily good news in the long run. For instance, just look at McDonald’s — and its worldwide 25,000 locations. One can argue that overweight U.S. society’s demand for hamburgers and French fried has now been oversaturated. After all, even overweight Americans can eat only so much.

Starbucks’ customer base will reach its eventual limits as well. As soon as the first coffee outlets go out of business on their block, U.S. customers will face a grim choice: walk — or go back to instant coffee.