5-Hour Energy: A Success Equal Parts Caffeine, Chemistry and…
Suddenly, Amazon Doesn't Love Its Moms Anymore
The Seattle Times floated an interesting theory: People use coffee shops and bookstores as offices. No overhead. Easy access to a cup of Joe and a sandwich. WiFi, too, for that matter.
And, what better place to meet a customer? Especially if you don't have an impressive office. "Let's just have coffee."
A lot of theories floated in the press are full of steam and latte. But, this one may account for part of the success of Starbucks Corporation (NASDAQ:SBUX) and the shops it has in bookstores like Borders Group, Inc. (NYSE:BGP).
Keeping an office can easily cost $1,000 a month, if not more. Phone, rent, reception. Heat. Big money.
With a subscription to T-Mobile and a cellphone, Starbucks provides a bathroom, a power outlet, a clean setting, and, some people simply think it is too cool. The fact that the company raised the price of a cup of coffee by $.05 notwithstanding.
Starbucks probably does not even know how many people use the company's stores as "offices" and spend the better part of the day there. But, it's a good bet that they buy more than one cup of coffee.
Douglas McIntyre is a partner at 24/7 Wall St.
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 1 of 1)
10-23-2006 @ 11:05AM
Tom said...
yep - very true...
10-23-2006 @ 11:42AM
sarah gilbert said...
It's interesting that this topic comes out of Seattle, as I work nearly every day in one of the many coffeeshops of the Pacific Northwest. But never in Starbucks. The reason? Most coffee shops in Portland and Seattle and, increasingly, in small towns all over the West Coast, offer free wi-fi. Why pay T-mobile a ton each month when you can get it for free from the independent coffeeshop -- that often serves better coffee (and seldom leaves the timer beeping for the coffee brewers, throwing me out of my reverie and into high-pitched annoyance)?
I think the "coffee shop as office" strategy has certainly been carefully and long considered by Starbucks, and Barnes & Noble and Borders, for that matter -- why else did they add cafes in the heart of stores in so many high-rent cities, if not to encourage people to come in and stay a (long, long) while? The "third place" is a fantastic place for client meetings and it's so much easier to give directions to a local coffee shop than your strip mall office. But I don't see Starbucks as the winner in this market.