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Thread: Peak oil? What about Peak Coffee?

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    Cyburbian Cardinal's avatar
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    Peak oil? What about Peak Coffee?

    So the fact that Starbucks is closing 600 stores got me thinking. They are not the only coffee shops going dark lately. A couple independents that opened near me in the last year or so have passed away in the last few months. The rising cost of energy, food, housing, and other essentials is impacting people's discretionary spending. The $4 latte has been a casualty. But even without these influences, have we reached a point where coffee is no longer a growth industry? Are there enough coffee shops? Will the McDonald's Cafe and Dunkin Donuts siphon patrons from the purer coffee purveyors? Has the public simply reached its coffee drinking limit, or perhaps grown accustomed to the novelty of a double-shot, organic, free-trade, shade-grown, decaffienated, skim, no-whip mocha frappachino with a piece of biscotti?

    The answer has implications well beyond the viability of the coffee industry. Just as in the 1970's it was a sign of "civilization" to see a McDonald's, Starbucks, Caribou, and even independent coffee shops have come to be seen as indicators of economic health and some level of culture. Whether it may be an inner-city neighborhood or a rural community, the arrival of a coffee shop - especially a known brand like Starbucks - has been taken as a sign of revival. If this is no longer true, is there a replacement? If not, how long will we have to wait for the "next big thing" to arrive?
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  2. #2
    Cyburbian jsk1983's avatar
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    In the area where I grew up there is a Tim Horton's and a Starbucks within a few blocks of each other. The Starbucks was built as primarily a drive-thru though there is interior seating in a very long and narrow set-up. The last time I went by there must of been 15 or so cars in line at Tim Horton's and one or two at Starbucks.

    Starbucks may have pricey coffe but consider the fact that some people use their stores as an exstension of their home and office and the four dollar latte doesn't seem so pricey. How many other bussinesses let patrons spend so much time while spending so little?

    There was an article in the Chicago Tribune a few days ago that stated that the Chicagoland Starbucks were primarily in African-American communities. I'd post the article but can't seem to get the search function on the Tribune's website to work.

  3. #3
    Super Moderator kjel's avatar
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    I don't think it's a matter of "peak coffee". There's more coffee out there than ever before. Starbucks got away from it's great real estate model they used in the 80s and 90's and started putting them anywhere and everywhere without regard to saturation/cannibalization issues. Perhaps it wasn't so significant a mistake at first but with a tanking economy, inflation, and people reluctant to waste cash as readily as they did not so long ago it has dug into their bottom line more than they would like. They've recently rehired the real estate guru that devised the model in the first place so we will see what they do next after they close down the underperforming stores.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  4. #4
    Cyburbian Flying Monkeys's avatar
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    Coffee is a luxury…there are other luxuries going the same way as pricey coffee. You are right though… it is a sign of the times we live in. Stabucks is ‘so yesterday’. Like the shift from SUV to the tiny cars.

    I think the new indication of economic health will be the newer ‘open air’ malls. Also the urban garden centers….
    What’s in a name? – Your reputation….:)

  5. #5
    Cyburbian TOFB's avatar
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    We are loosing three of about 8 Starbucks here. One was Downtown, and that was big thing, but it was in a poor location and the 4-5 indie stores seem to be doing fine.

    I like coffee, but will not spend $4.00 a cup for it.

  6. #6
    Chairman of the bored Maister's avatar
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    Like others here I'm convinced it's a combination of the poor economy and the specialty coffee market reaching saturation.

  7. #7
    Cyburbian zman's avatar
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    I buy a big bag of coffee at CostCo and drink it at home. Having no coffee places (unless you want coffee-colored water from the gas station...) 'round these parts suits me fine.

    Friends don't let friends drink Starbucks.
    You get all squeezed up inside/Like the days were carved in stone/You get all wired up inside/And it's bad to be alone

    You can go out, you can take a ride/And when you get out on your own/You get all smoothed out inside/And it's good to be alone
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  8. #8
    Cyburbian Planit's avatar
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    I don't drink coffee, so this doesn't hurt me.

    My brother is a starbucks addict. I feel so bad for him sometimes...
    "Whatever beer I'm drinking, is better than the one I'm not." DMLW
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  9. #9
    Cyburbian Mud Princess's avatar
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    kjelsadek makes a good point. The market is completely saturated. And what's the point of a Starbucks in the suburbs? It may be a big deal in a downtown environment, where it makes for a nice meeting place, but not here. They just built a drive-through Starbucks about a mile from my house, and it's closing after about a year. It probably didn't help that there are several Dunkin' Donuts franchises and even a few independent coffee shops within a three-mile radius.

    Personally, I think Starbucks coffee is overrated and way overpriced. I drink Green Mountain Coffee at home; if I'm on the road, it's Dunkin' Donuts or the Newman's Own at McDonalds (the only thing I buy there ).

  10. #10
    Cyburbian WSU MUP Student's avatar
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    I agree with kjelsadek in that it seems more like Starbucks has just deviated too far from its original business plan and real estate strategy.

    Ten years ago (or even five years ago in more areas), getting coffee at a Starbucks was not really about going in getting coffee and then taking it out with you right away. Going to a Starbucks was an actual experience:
    • The stores used to have a distinct smell from each store grinding all of their own beans as they were needed - now most stores have the stock that they use ground before it arrives.
    • There was an article a while back talking about Steve Shultz saying that Starbucks would never operate stores with drive-throughs.
    • Years ago, many of their stores had in-store events that would promote local artists or community events as well as helping to drive sales but because of the hugh increases in the number of the stores, now relatively few do that sort of thing.
    • Originally, all stores were corporate owned and their larger marketing and promotions budgets/teams to ensure that each store was slightly unique but still maintaining the consistency of their product that would build brand loyalty; now many locations are operated by third parties inside hotel lobbies, Target stores, mall kiosks or are sold as franchises which have turned the Starbucks into carbon copies of each other.

    While I am not a huge Starbucks fan (I do drink it occasionally and do walk there on Sunday mornings to buy my NY Times), I think they just totally lost sight of what was important to their core customers and that explains why they are shutting down so many stores.
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  11. #11
    Cyburbian boiker's avatar
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    Quote Originally posted by Flying Monkeys View post
    Coffee is a luxury…there are other luxuries going the same way as pricey coffee. You are right though… it is a sign of the times we live in. Stabucks is ‘so yesterday’. Like the shift from SUV to the tiny cars.

    I think the new indication of economic health will be the newer ‘open air’ malls. Also the urban garden centers….
    I and quite a few others would not consider coffee a luxury. However because money talks, cheap coffee will begin to rule again as budgets are pinched and people will make changes in their budget to allow them their "luxury" of coffee.
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  12. #12
    Cyburbian wahday's avatar
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    I am not a fan of Starbuck's but my sister-in-law is the new VP of Media Relations (or some such title - she delivered the bad news about the stores closing...) and as such gets ALOT of free coffee, some of which she sends to us. A pound a month...

    I love my coffee (I'm drinking one right now...). I don't love Starbuck's coffee, but free is better than Chock Full of Nuts on discount, so I'll take it...
    The purpose of life is a life of purpose

  13. #13
    Cyburbian CJC's avatar
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    I don't see this as peak coffee at all, but rather Starbucks simply straying from what it knew worked. I have yet to see any stories about Peet's, Coffee Bean, Caribou, or Tully's closing stores. Even Starbucks is still opening quite a few stores while it closes others. I think it's simply a case of the market finally maturing for the Starbucks brand, just as the same happened with McDonald's, Burger King, or KFC before.

    In my city, there are two stores closing - and in BOTH cases, there is at LEAST one other Starbucks within 100' (that's right - 100 FEET). Starbucks is already starting to rely more on the international market for growth, the same way that every successful American food chain has before - nothing new here from what I can see.
    Two wrongs don't necessarily make a right, but three lefts do.

  14. #14
    Cyburbian ofos's avatar
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    I only drink black coffee and I survived Army coffee, the lowest bar standard extant. So I'm pretty ambivalent about Starbucks or any other boutique coffee shop going under. Face it, the best part about coffee is the smell, not the taste and you don't have to pay big bucks for that. As long as it's hot and caffeinated, I'm good. Hell, I'll even drink it cold if I have to.
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    Cyburbian boiker's avatar
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    Quote Originally posted by ofos View post
    I only drink black coffee and I survived Army coffee, the lowest bar standard extant. So I'm pretty ambivalent about Starbucks or any other boutique coffee shop going under. Face it, the best part about coffee is the smell, not the taste and you don't have to pay big bucks for that. As long as it's hot and caffeinated, I'm good. Hell, I'll even drink it cold if I have to.
    I didn't have the fortune of having army coffee, but I do like my coffee black. I love the smell, I love it hot, cold, lukewarm,.
    Dude, I'm cheesing so hard right now.

  16. #16
    Cyburbian rcgplanner's avatar
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    Starbucks went away from it's core market too much in the last year. Starbucks used to sell coffee and pastries. Recently it began to expand to everything from sandwiches and CD's. Starbucks also had to complete with places like McDonalds and even some gas stations, where you can get an okay cup of coffee for less than $1.50, without having to wait 5 minutes for them to make it.

    Plus I think they had just expanded to much. Starbucks used to only be in 'nice' parts of town, b/c it was they only area that could support the cost of $4.00 coffee. Recently, they had expanded to less 'trendy' areas. Here in Indianapolis a lot of the Starbucks are closing, in less 'trendy' parts of town.

    In the town I went to college in, they are closing both Starbucks, one less than 18 months old, and one less than 4 months old which was right across from a main pedestrian entrance to the University. In MN , people seem to support Caribou more, since it is a MN company. Both Caribous in town are still open, last time I heard.

    From a planning standpoint, what happens to some of the Starbucks buildings? Many of them were built for Starbucks set up, who only need a small foot print. Too small for most fast food uses, and with a slowdown in the coffee market I can't see them filling up with other coffee sellers. Will they just sit vacant, and be an eyesore to the community?

  17. #17
    NIMBY asshatterer Plus Richmond Jake's avatar
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    Off-topic:
    Where are ya'll buying coffee? Friday I bought a Venti coffee at Starbucks and it cost me $2.06. Am I missing something here?

  18. #18
    Cyburbian Cardinal's avatar
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    Quote Originally posted by rcgplanner View post
    ...From a planning standpoint, what happens to some of the Starbucks buildings? Many of them were built for Starbucks set up, who only need a small foot print. Too small for most fast food uses, and with a slowdown in the coffee market I can't see them filling up with other coffee sellers. Will they just sit vacant, and be an eyesore to the community?
    That is a simple answer. Cell phones. We can never have too many cell phone shops, can we?
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  19. #19
    Cyburbian rcgplanner's avatar
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    Quote Originally posted by Cardinal View post
    That is a simple answer. Cell phones. We can never have too many cell phone shops, can we?
    Hmm, true. Cell phone stores don't need much room. And we all need an AT&T/Verizon, etc. store, even if there is one of the same company a half mile down the road.

  20. #20
    Cyburbian CJC's avatar
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    Quote Originally posted by rcgplanner View post
    From a planning standpoint, what happens to some of the Starbucks buildings? Many of them were built for Starbucks set up, who only need a small foot print. Too small for most fast food uses, and with a slowdown in the coffee market I can't see them filling up with other coffee sellers. Will they just sit vacant, and be an eyesore to the community?
    I've never seen a building built specifically for a Starbucks. What are these like? Are these primarily drive-thru locations with little seating? Every Starbucks I've seen is one part of a larger building (be it ground floor retail in an urban setting, strip mall, mall, airport, etc).
    Two wrongs don't necessarily make a right, but three lefts do.

  21. #21
    Quote Originally posted by CJC View post
    I've never seen a building built specifically for a Starbucks. What are these like? Are these primarily drive-thru locations with little seating? Every Starbucks I've seen is one part of a larger building (be it ground floor retail in an urban setting, strip mall, mall, airport, etc).
    We've got one entitled here. It is similar to a Rally's or other drive-through only type of fast food joint, although I think the Starbucks model does have a small seating area. I'm not sure about whether our Starbucks intends to build, given their retrenchment.

    A Rally's that closed here was later a Greek carry out, then a sandwich carry out, then a used-car dealer (that never opened) and now a tax preparation office.
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