During the 1999 World Trade Organization mass protests in Seattle, Starbucks outlets were looted. On Aug. 13, 2003, seven San Francisco Starbucks sites were also vandalized. Store windows were covered with glue and fake “closed” signs, and mock press releases announcing a mass downsizing of the company were placed outside the stores. Meanwhile, a quick Google search turns up hundreds of hate-Starbucks Web sites (though it’s not always clear what it is about the giant coffee seller that has those folks so riled up).
Now, Starbucks is poised to come to Asheville, and many local coffeehouse owners are wondering what the mega-retailer’s arrival will mean for them.
“We watched them move into Austin,” recalls Bob Rhea, co-owner of the newly opened Kismet Cafe & Coffeehouse in Biltmore Village (where one of the new Starbucks is also slated to go). “They opened one store, then another store four blocks away, then another four blocks away. You never see Starbucks in a stand-alone [building]; they’re always near a small guy.”
Still, Rhea says he sees his store — and Asheville’s other locally owned coffee outlets — as offering their customers a unique product and experience. Irene Pyper-Scott, who owns Pyper’s Place in Montford, agrees.
“I’m so busy trying to do what I’m doing and do it well, I haven’t had enough time to pay attention to what someone like Starbucks is doing,” she confesses. “That may be a political minus to me, but we’re all on our own paths. I’m trying really hard here to get what I’m doing right.” Pyper-Scott launched her business back in February.
A company spokesperson declined to comment on final plans and opening dates until the leases have been signed.
A clean, well-lighted place
It could be argued that the coffee business tends to attract folks with a different sort of vision. Consider the case of Howard Schultz, an ambitious corporate executive who grew up in a housing project in Brooklyn. Back in 1985, Schultz opened a small coffeehouse inspired by the cafes he’d seen during a trip to Italy two years before. Schultz’s creation, called Il Giornale (which means “the newspaper” in Italian) was a cramped place in downtown Seattle with a few tall tables and no chairs. Il Giornale offered drinks with names that most folks couldn’t even pronounce — cafe au lait, latte, cappuccino — to a public that still associated coffee with packed-seal cans and greasy diners.
Nonetheless, Il Giornale was an immediate success, as Seattle-ites witnessed the birth of a new American vocabulary — pulled espresso shots, baristas, foam, steamed milk, lattes — that soon made the jump from niche market to television and movies to, now, near-ubiquity. Next to the jargon of the Internet, the coffeehouse culture and its idiom may be one of the great language additions of the last two decades.
The reason you probably haven’t heard of Il Giornale is that it was folded into a more established company — Starbucks, which went on to create both a significant market segment and a new place for Americans to congregate. (According to the National Coffee Association of the United States, there were 25 million more occasional coffee drinkers in 2001 than in 1991, and 8,000 more coffeehouses, of which roughly 3,000 were Starbucks outlets.)
Soon after Starbucks began its breakneck expansion — when Schultz took over in 1987, the company had just 17 stores; today, there are nearly 6,300 worldwide — he found a theory to back up his business plan: Ray Oldenburg’s 1989 book The Great Good Place, which argued for a “third place” in American culture (in addition to home and work) that would serve as the modern-day equivalent of the Viennese cafe or the American tavern of times gone by. Such venues, maintained Oldenburg, are home to both revolutions and the daily niceties of civic life — and they’re hard to find in the suburbs of today. In Schultz’s vision, Starbucks would fill that niche, enabling the company’s stores (all corporate-owned, rather than franchised to others) to become as ubiquitous as cafes are in Europe.
Fueled by this simple idea, a highly structured business plan, and a quality product that boasted profit margins of up to 500 percent, Starbucks grew rapidly. In fact, when adapting odd-shaped buildings to the company’s designs proved too cumbersome, Starbucks created a 5,000-piece building-block set designed to help bring any new location on line quickly and efficiently.
Amid this explosive growth, however, Schultz maintains that the company hasn’t lost sight of its commitment to employees and to quality control. Even part-time employees are offered health care, and Starbucks uses better pay and stock options to ensure employee loyalty.
Meanwhile, the company has succeeded dramatically as a business — and, in the process, it has helped spread the coffee culture throughout the United States and beyond. Today, popping into a coffeehouse to work or talk for hours while sipping a $2, $3 or even $4 drink is common on college campuses as well as in shopping malls, and thousands of small-scale coffee entrepreneurs have been able to take hold of Starbuck’s ample coattails and build their own successful businesses.
Bucking the trend
But somewhere along the way, some members of the counterculture decided Starbucks was part of the problem, not a solution to the sterility of suburban America.
Groups such as Global Exchange and the Organic Consumers Association have mobilized activists worldwide, pressuring the industry giant to buy Fair Trade-certified coffee and to stop using milk containing recombinant Bovine Growth Hormone and genetically engineered foods, among other concerns.
Many of those issues, however, are industrywide, not specific to one company. Most of the world’s coffee is grown in Third World countries with few protections for workers, who see little of the immense profits made from the ubiquitous bean. Child labor (or even, in the case of Ivory Coast cocoa production, outright slavery, according to a U.S. State Department report) is common. There are also significant environmental and health issues.
And in some ways, Starbucks appears to be a victim of its own success. As a large buyer in an enormous industry (coffee is the second-largest imported commodity after oil, according to Global Exchange), Starbucks — which purchases 100 million pounds of coffee per year — is in a position to exercise considerable influence over markets and labor practices. And with stores seemingly everywhere, the company is also easy to target.
Small local coffeehouses, on the other hand, offer protesters less bang for their buck. And for whatever reasons, these businesses don’t seem to inspire the same vehement feelings, even though in many cases, they’re behaving no differently than Starbucks. An informal survey of independently owned Asheville coffeehouses, for example, found that many weren’t offering Fair Trade coffees — both because of the increased cost and because of concerns about the Fair Trade program (run by Global Exchange). Starbucks, however, does offer Fair Trade coffee at many stores (though it accounts for less than 1 percent of the company’s total coffee purchases, according to Global Exchange).
Starbucks’ Web site projects the image of a company that wants to be a good corporate citizen. Their environmental mission statement (which is separate from the overall mission statement) includes commitments to “striving to buy, sell and use environmentally friendly products,” “instilling environmental responsibility as a corporate value,” and “encouraging all partners to share in our mission.” The site also describes various company initiatives to benefit workers in coffee-producing countries, such as building lavatories at a school in Nicaragua and providing health clinics, day-care centers and schools in Guatemala.
Activists, however, charge that Starbucks has failed to live up to its stated positions. During a rally outside the company’s annual shareholders’ meeting in Seattle last March, Ronnie Cummins, national director of the Organic Consumers Association, said, “Starbucks’ promises are like a cup of coffee that’s sat too long — hard to swallow. We demand action from Starbucks and other coffeehouse chains, not false guarantees and greenwashing.”
David and Goliath?
In Asheville, Starbucks’ imminent arrival has become a sort of symbol for the influx of franchises and corporate-owned stores into an area that was previously relatively chain-free.
The Asheville Disclaimer, a local humor publication, took a jab at the java giant in its August issue with a poster depicting the arrival here of “Death-Star Coffee.” The lampoon logo replaces the Starbucks mermaid with Star Wars villain Darth Vader, suggesting an imminent threat to the Leias and Skywalkers of the local coffee scene.
Yet there are already a significant number of chains in downtown Asheville, from the Mellow Mushroom (45 restaurants in the South) to the Marble Slab Creamery (a Texas-based franchise with 215 stores in the United States) to Port City Java (restaurants in four states and two foreign countries), none of which has sparked same the kind of concern that Starbucks has.
Sweet Heaven Ice Cream & Music Cafe owner Lael Gray, however, says the recent opening of the Marble Slab in Asheville affected her 1-year-old business immediately.
“They opened in early June. We felt the impact of that right away,” notes Gray. “People in Asheville are so underexposed to chains that they didn’t recognize that it was a franchise, and people from out of town recognized it as a chain and went there.”
Gray, a former graphic designer, says a lot of folks have also mistaken Sweet Heaven for a chain because her store and logo look so clean and professional. But there’s more than just aesthetics or personal preferences at stake. Shopping locally can have a big impact on local economies as well. According to the U.S. Small Business Association, 60 cents of every dollar spent at a locally owned, independent store stays in the community, compared to 20 cents in a franchise and 3 to 6 cents in a mass-market, corporate-owned store.
“I don’t know how to identify ourselves as an independent without being obnoxious about it,” says Gray. The Marble Slab, she points out, advertises “that they’re locally owned and operated, which as a franchise they can do. I don’t want to politicize my shop that much.”
But competing against a franchise is difficult, especially for new businesses, Gray maintains.
“They have help. They have a system, customer loyalty, brand identity. In most cases, they have figured out how to reduce the cost of their product to such an extent that the quality is not as good. That’s what you’re competing with. There’s lot of muscle in that experience.”
All of which is markedly different than Gray’s own situation.
“For us, we’ve never done this before,” she said. “The last year we’ve been in business has been this new learning curve.”
Voting with your feet
Even small competitors are businesspeople, though. And as such, many say they can appreciate the commercial success of Starbucks and similar companies.
Like Marble Slab, Starbucks brings a different sort of competition to businesses than, say, a Wal-Mart or Lowe’s, because it competes not on price — in fact, the company often charges more than locally owned coffee outlets — but on quality and on the overall experience offered.
Kim MacQueen, who started Gold Hill Espresso & Fine Teas in 1995 and had tried other coffee ventures before that, says she respects the coffee giant.
“I think Starbucks had the idea first. They grew smart, and they have beautiful marketing materials,” she observes. “Howard Schultz is really a genius, because he saw a potential for something that wasn’t happening and made it. I just have a hard time despising Starbucks — they’ve done so much for the coffee industry.”
That includes introducing such concepts as lattes, mochas and cappuccinos, which are no longer exotic, foreign head-scratchers to American coffee drinkers.
“The number one question we got when we opened is, ‘What’s the difference between a cappuccino and a latte?’ I bet [Gold Hill gets] that once a year now. I think we can credit Starbucks for that,” notes MacQueen.
Current Gold Hill owner Alvy Alvarez says his savvy customers can distinguish even minute differences between similar drinks.
“Between the coffee and teas, our customers have a more fine palate, especially for espresso drinks, lattes and mochas,” asserts Alvarez. “Customers will tell us that they went somewhere else [to get a specialty drink] and couldn’t find it or didn’t like it as much.”
And just as Schultz envisioned, coffeehouses like Gold Hill are now established social gathering places. (Ironically, this may be less true for Starbucks itself. One marketing study Schultz cites in his 1997 book Pour Your Heart In It found that although customers come to Starbucks in part for a social experience and a sense of belonging, less than 10 percent actually talk to someone other than the barista.)
“It is like the local tavern,” says Alvarez. “We do know the regulars. Instead of being a double bourbon, it’s a double latte. They come in and we have it halfway ready by the time they get to the counter.”
And MacQueen, who’s now the chair of the Asheville Downtown Association, emphasizes that Starbucks or no, customers will still have their choice of coffeehouses.
“If you don’t like them, don’t go there,” she declares. “There are so many other options. The beauty of the free-enterprise system is that people vote with their feet.”
Alvarez, meanwhile, says that while he’s well aware of Starbucks’ pending arrival, he’s not consumed by fear of losing his customers.
“I’m concerned about the Starbucks, but I don’t want to be in a panic,” he observes. “I’ve got my regulars; let them go try some Starbucks coffee. They’ll probably be back — I know they will.”