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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.

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Starbucks quashes the competition? Not in my neighborhood originally appeared on BloggingStocks on Wed, 20 Dec 2006 16:38:00 EST. Please see our terms for use of feeds.

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