People seem to assert that Starbucks is some sort of evil conspiracy bent on driving other coffee shops out of business. The point above, about Starbucks having moved such coffee shops from a fringe business into the mainstream in modern cities, is well taken. Additionally, there is a major factor that deserves attention.
Starbucks coffee is better:
Say what you will about monopolies, there is nothing to stop other people from setting up competing coffee shops. Why, then, if there is such hostility to Starbucks as a global rather than a local institution, do people choose to go there? One major factor is the obvious superiority of Starbucks coffee. I have consumed a lot of coffee in my recent time as a university undergraduate and nothing you can buy on the street exceeds the brew which can be reliably acquired from the chain named after Captain Ahab’s first mate.
That very consistency is another selling point. In an unfamiliar area, you can count on the level of standardization in a Starbucks location as an indicator that the coffee will consistently be good. Once you’ve learned the Starbucks lexicon, you can order more-or-less the same Venti Mocha Frappuccino in Vancouver, London, Washington, Tokyo, or wherever in the western world you happen to find yourself.
Why is Starbucks coffee better? Firstly, they train their employees extensively. I have personally worked in a local coffee shop that gave me precisely zero hours of training before setting me to the task of making coffee. The three month training period for Starbucks baristas probably contributes to the continuously high quality of their java. The benefits to part-time employees mentioned above, coupled with the high rate of employee satisfaction do contribute to the quality of the product and to the generally pleasing nature of the atmosphere and the attractiveness of the company itself.
Coffee is a fairly demand inelastic good. I hesitate to call it a commodity because, while in many cases it does behave like one, in the case of really excellent coffee, it is a luxury good. That is why demand is relatively weakly correlated to price (addicts can get all the caffeine they want from cheap coffee, making the argument that trimethylxanthine addiction leads to high Starbucks prices faulty). Starbucks, due to the quality of their staff, product, and environment earns economic rents.
Starbucks also benefits from imperfect information because, like all brands, it creates a familiar marker of consistency and quality in uncertain environments. I know that if I am in Calcutta and I keel over from a cup of Starbucks coffee, I can sue Starbucks international – and put a nasty tarnish on their international image. Admittedly, it’s highly unlikely that the aforementioned ‘mom and pop’ coffeehouses would lay me low in such a manner, it is pretty likely that I might get a pretty bad cup of coffee from them. Maybe that denotes an unwillingness to immerse myself in local culture, but I have a certain appreciation for the emerging global culture. I see Starbucks as part of the progression from narrow nationalism to something more interesting.
Another major point in Starbucks' favour: as well as having better wages than almost all entry level service jobs, they are generous with providing stock options and actually provide health insurance to all of their employees in the United States. This is largely due to Howard Schultz's personal moral commitment to do so. As explained in The Economist:
For Mr Schultz, raised in a Brooklyn public-housing project, this health insurance—which now costs Starbucks more each year than coffee—is a moral obligation. At the age of seven, he came home to find his father, a lorry-driver, in a plaster cast, having slipped and broken an ankle. No insurance, no compensation and now no job.