Starbucked: A Double Tall Tale of Caffeine, Commerce, and Culture
By Taylor Clark
Little, Brown and Company, 304 pp., $25.99

In the hilarious 2000 movie “Best in Show,” a couple discusses how they first crossed paths. “We met at Starbucks—not the same Starbucks. We saw each other at different Starbucks across the street. I knew you’d be at one Starbucks, then I’d be at the other Starbucks, but then I’d think maybe I should go over to the other Starbucks, and then you’d be at the other one.”

This was a parody, of course, but it is not uncommon in real life to see two or more Starbucks stores located on the same intersection, in the same shopping mall, or within a block or two of each other. Twenty years ago, only 585 coffeehouses existed in the entire United States. By the end of 2007, the country had more than 7,000 Starbucks stores—less than a third of the 24,000 Starbucks locations worldwide. The company plans to establish another 16,000. The goal, according to Starbucks chief strategist Howard Schultz, is to make it the biggest chain on Earth.

How Starbucks promoted an international coffee-by-the-cup craze and grew to dominate the industry is chronicled with wit (and surprising fairness) by Taylor Clark in his new book Starbucked. The Starbucks company was launched in 1970 by three Seattle-based friends—Gordon Bowker, Jerry Baldwin, and Zev Siegl—who, ironically, wanted to start a small business that would release them from their capitalist careers. Bowker, a gourmet coffee enthusiast, had been making monthly trips across the U.S.-Canadian border to Vancouver to secure top-notch roasted beans. He soon began taking orders for his American friends, which gave him the idea to start his own gourmet bean store for home brewers. Bowker convinced Siegl and Baldwin to sign on, and the trio opened their first store a year later. They named it Starbucks, after the first mate in Moby Dick.

By 1981, it had caught the eye of Howard Schultz, a salesman in New York whose housewares company had been supplying Starbucks with specialty drip coffeemakers. Schultz contacted the owners and talked them into giving him a job as a strategist. He quickly started pushing for big changes, such as selling individual cups of coffee and also adding specialty drinks, such as lattes and espressos, to the menu. In 1987, Schultz took over the entire Starbucks Corporation and began to franchise it.

Trying to prove that Starbucks could thrive outside the Pacific Northwest, Schultz opened several Chicago stores in late 1987—and almost ruined the company. Knowing little about the Windy City, Schultz situated his stores facing the street rather than in the lobbies of buildings. But Chicagoans had little interest in braving the wind and cold just for a cup of coffee; and their taste buds were not yet accustomed to Starbucks’s signature ultra-dark brew. Investors began to lose faith. In response, Schultz hired wunderkind marketer Howard Behar, who crafted a new image for the growing chain that made Starbucks less about dispensing snobby coffee and more about a providing a low-key, cozy atmosphere with comfortable chairs and mellow house music, where people could read, study, enjoy a first date, and spend a few dollars on an affordable luxury. 

‘Mom-and-pop stores are generally thrilled to have a Starbucks move in nearby. Each new Starbucks cultivates a coffee-drinking clientele who, once hooked, will start experimenting at other stores.’

With its new emphasis on atmosphere, Starbucks became a destination where people could hang out, which separated it from, say, traditional fast-food outlets. (“People don’t go to Taco Bell or Wendy’s to just chill,” one insider told Clark.) Schultz added 11 stores in 1988, 20 more in 1989, 30 in 1990, and 32 in 1991. When Starbucks arrived in Los Angeles, The Los Angeles Times pronounced it “the best coffee in America.” At the opening of its first Manhattan store, Starbucks had to hire crowd control.

It has long since become clear that Starbucks is not just another fad (as some had predicted). The average Starbucks consumer visits a store 18 times a month. Lest even its faithful supporters get bored of the selections, Starbucks now offers more than 50,000 different drink options (tall latte with skim milk, double tall latte with soy milk, etc.).

Like any corporate behemoth, Starbucks has attracted its share of critics. Upon hearing of plans to create a new local Starbucks, the residents of one affluent neighborhood in Portland, Oregon, staged public protests—and at the height of the anti-Starbucks demonstrations, someone even threw a Molotov cocktail at the store’s front window. (By then, Starbucks had learned to use reinforced glass, and the makeshift explosive merely bounced off the door and burned out on the sidewalk.) The protesters’ chief gripe was that a chain store would ruin the local economy.

At the other end of the spectrum, Clark writes, long-struggling communities often “react to the arrival of Starbucks the same way some citizens of developing countries react to getting indoor plumbing.” City planners in Alhambra, California, for example, tried to lure Starbucks with the promise of $136,000 in public redevelopment funds and a break on the rent. Elsewhere, a councilman in Franklin, Massachusetts, remarked that, “We want better education, performing arts, things like that. This town is ready for Starbucks.” Indeed, as a 2001 Brookings Institution paper observed, the arrival of Starbucks into a community indicates gentrification.

What of the claim that Starbucks is destroying locally owned coffeehouses? In fact, mom-and-pop stores are generally thrilled to have a Starbucks move in nearby. Each new Starbucks cultivates a coffee-drinking clientele who, once hooked, will start experimenting at other stores. “They’ll do all your marketing for you, and your sales will soar,” says one Seattle coffee shop owner, referring to Starbucks. As a former editor of the specialty coffee trade magazine Fresh Cup puts it, “Anyone who complains about having a Starbucks put in next to you is crazy.”

While Starbucks created the market for a $4 latte, its stores don’t have the same competitive advantages as many smaller coffee shops. Starbucks stores tend to close on the early side and offer a relatively small selection of food. Locally owned coffeehouses, by contrast, can stay open later (drawing students and night owls) and usually offer a much wider (and tastier) variety of sandwiches, salads, and baked goods. “You have the ability to produce a better product, and you can design and market your coffee bar to your community,” says one coffee consultant.

What about the accusations that Starbucks sells sweatshop coffee and pays the growers just a few pennies per pound? In response to such charges, Starbucks paid an average of $1.42 per pound for its coffee in 2006—roughly 16 cents higher than the so-called Fair Trade price, which shifts a higher-than-market price to the consumer in exchange for a higher profit for the grower. Whether this arrangement actually helps developing-world farmers is highly debatable, and Clark devotes a whole chapter to dissecting the Fair Trade campaign. (One British grocery chain was found to be adding an extra $3.46 per pound to its Fair Trade coffee.) Whatever its economic or social benefits to impoverished Latin American growers, Fair Trade coffee is known to have a sour, acrid taste, and Americans have been reluctant to embrace it.

Fair Trade aside, the biggest service Starbucks performed for developing-world farmers was to make coffee snobs out of average Americans. This has spurred a fierce competition to sell top-quality coffee, and it has encouraged retailers to pay more for a good supply of beans. As Clark emphasizes, “Starbucks has never voluntarily done much to help struggling coffee growers.” The company is hardly a paragon of corporate social responsibility. But it did unleash a series of free-market forces that, ultimately, had a salutary effect.

So if you really want to help the coffee growers, follow Clark’s advice: “Just indulge your inner spoiled brat and demand the best-tasting coffee you can get.”

Rachel DiCarlo Currie is managing editor at the Hudson Institute.