The funny thing about Starbucks is it's helped to create a coffee culture filled with a significant number of people who don't actually like Starbucks—which means that, despite conventional wisdom, it's actually a good thing to be a mom & pop coffee shop with a Starbucks nearby, writes Slate. Instead of stealing your business, you get the spillover from their store. "They'll do all of your marketing for you, and your sales will soar."
That's certainly how it worked out for Hyman. Soon after declining Starbucks's buyout offer, 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.
We've noticed that Starbucks has had another "positive" effect on the coffee house industry—it's trained consumers to willingly pay over $1.50 for a cuppa joe no matter where they're buying it. Maybe this is why "Just over the five-year period from 2000 to 2005... the number of mom and pops grew 40 percent, from 9,800 to nearly 14,000 coffeehouses," and "the failure rate for new coffeehouses is a mere 10 percent."
