AOL Money & Finance

CoffeePeople posts

Feed

Starbucks quashes the competition? Not in my neighborhood

the starbucks in my neighborhoodI'm an avid follower of all the news on Starbucks Corporation (NASDAQ:SBUX). So when I saw the article in today's USA Today about Penny Stafford's lawsuit against Starbucks claiming that the company is engaging in anti-competitive practices, I yawned. But it wasn't a happy yawn.

I've heard of Penny Stafford and her lawsuit before. And I'm sure she has validity to her complaints -- while the facts of the case are still she said/they said, the concept that Starbucks pays over-market rates for prime real estate, and asks for exclusives in some buildings, is pretty much agreed-upon.

But her claim that Starbucks drives other stores out of business due to market saturation? It's not happening in my neighborhood, even though, in a one-mile radius from my house in the past four years, the market has increased from one chain coffee store (a Coffee People, owned by Diedrich Coffee, Inc. (NASDAQ:DDRX) and recently bought by Starbucks) to two Starbucks and six independent coffee shops. The coffee shops succeed in direct relation to the quality of their products and whether or not the owners manage to create a welcoming, comfortable atmosphere -- the success has nothing to do with proximity to Starbucks or quality of the real estate. Although a neighborhood of 8,000 or so people has been veritably flooded with coffee, all but one of the stores are succeeding (and the failure was clear to me from the moment I peered through the window to see the cafeteria-quality furniture the owner had selected).

And I don't think my neighborhood is unusual, or even one of a handful of anecdotal successes. Whatever you think of Starbucks, the company is just good for independent coffee shops.

Continue reading Starbucks quashes the competition? Not in my neighborhood

Starbucks buys Coffee People stores, hippies mourn

In my hometown of Portland, Ore., Starbucks Corporation (NASDAQ:SBUX) is seen as the interloper, even though the company's headquarters are only a few hours' drive away. Starbucks gets none of the important descriptors. It's not "local." It's not "independent." And it's very, very not "hippie."

Coffee People, on the other hand, has historically received all of those storied monikers. Founded in 1970s as a booth in Eugene, Oregon's Saturday Market (oh you have never known hippy until you've known the Eugene Saturday Market), the owners burst in the coffeeshop scene in 1983 with a store in the very center of hippy Portland hip-ville, NW 23rd Avenue. When I was a teenager, Coffee People was a mecca of caffeine and I, too, sipped Black Tiger milkshakes (full of ground-up chocolate-covered coffee beans) and munched on Hippie Cookies.

In 1999, Diedrich Coffee Inc. bought Coffee People and the hippiness slowly began to drain away. Quality diminished and the chains lost much of their verve. On Thursday, Starbucks announced it had purchased every last one of the Coffee People retail stores, 40 total and 15 in Portland, for $13.5 million. Deidrich is exiting the company-owned retail business entirely, but will retain the Coffee People brand names, including Black Tiger espresso, its Gloria Jean's Coffee brand, and the franchising arm of 168 retail locations.

As it has with so many other acquisitions, Starbucks plans to conduct rapid-fire conversion, keeping all 40 locations open even though it will mean a bit of cannibalization in some neighborhoods. Coffee People stores will be converted to Starbucks in a few months' time and the hippieness will be lost forever. Good thing Coffee People founder Jim Roberts is still hippy-happening at the little Jim & Patty's Coffee in NE Portland. Will Starbucks soon own every single chain coffee store in the U.S.? It seems not a bit unlikely. And the very antithesis of hippie.

Symbol Lookup
IndexesChangePrice
DJIA+44.2910,291.26
NASDAQ+15.822,166.90
S&P 500+5.501,098.51

Last updated: November 11, 2009: 07:23 PM

BloggingStocks Exclusives

Hot Stocks

DailyFinance Headlines

Latest from BloggingBuyouts

WalletPop Headlines

AOL Business News

BioHealth Investor Headlines

Sponsored Links

My Portfolios

Track your stocks here!

Find out why more people track their portfolios on AOL Money & Finance then anywhere else.

BloggingStocks Partners

More from AOL Money & Finance