Starbucked

by Taylor Clark

  The unique thing about the Starbucks backlash is that all of the ethical questions about the company are very much up in the air. In fact, despite the picketing and window smashing, many believe Starbucks is a model corporate citizen. It doesn’t take much investigation to deduce that a Big Mac won’t do your arteries any favors, but can you say with such certainty whether coffee is good or bad for us? Or if a new Starbucks in your area will help or hurt the local economy? As we’ll see, many of the things people commonly assume about Starbucks, the coffee production chain, and the life-giving bean we so worship are dead wrong.

  And one of the biggest misconceptions of all may also be the most widespread. Many proclaim it as if it’s beyond doubt: Starbucks has systematically hunted down America’s mom-and-pop coffee shops and driven them out of business, draining character and cash out of neighborhoods in the process. But while the company’s effect on communities is up for debate, Starbucks’s ubiquity has had astonishing and entirely unexpected consequences for its independently owned competition.

  Green Alert

  Whenever Starbucks announces plans to enter another thriving community, there’s always a subset of alarmed locals who react as though the town were under siege from the Mongol horde. Yet even by these standards, the residents of the Hosford-Abernethy neighborhood raised a considerable amount of hell when the company declared its intent to build a store there in the spring of 2004. As the liberal nerve center of the already hyperliberal city of Portland, Oregon, the community has long been a tough sell for chains; shortly before the Starbucks revelation, the riled-up citizenry had scored a triumph over McDonald’s, which had to scuttle its plans to open nearby because of strong resistance. Now, the locals were fighting Starbucks’s occupation of a marquee space on a multipronged intersection known as Seven Corners. This did not fit with the pro-mom-and-pop neighborhood plan, and people let Starbucks know it in a flurry of protests and pickets. To say that relations between the company and its prospective customers were troubled would be putting it lightly. At one demonstration, a nine-year-old girl with a moss-green hat pulled over her ears took the microphone and announced that Starbucks was a “cancer.”

  The conflict reached its climax one night that May — on the eve of the store’s scheduled debut — when a hooded and masked man, who was later given the folk-hero nom de guerre “The Nightworker,” made a last-ditch attempt to stop the Starbucks from opening: he tossed a Molotov cocktail at the store’s front windows. But unbeknownst to the amateur bombardier, by then the chain had learned to use reinforced glass, so the homemade firebomb just bounced off the building and burned out on the sidewalk without causing much damage.

  One could easily dismiss this act of anticorporate terrorism as an over-the-top anomaly, but there’s a noteworthy point to consider here: some people are so afraid of what a Starbucks will do to their neighborhood that they’d sooner see the store burned to the ground than risk letting it open. Moreover, these worries seem to apply to Starbucks more than to any other similar chain. If that retail space had gone to, say, Bath and Body Works, the opposition to it would never have risen above a few grumbles about what-is-the-world-coming-to and never-thought-I’d-see-the-day. Certainly, no one would have tried to firebomb it.

  When residents resist Starbucks’s advances, they do so out of worry over a unique set of local effects: changing neighborhood character, soaring property values, increasing tourism and traffic — in short, things we usually group under the touchy concept of “gentrification.” To some, the company is inextricably linked with this controversial phenomenon; a 2001 Brookings Institution report on the topic even listed the arrival of Starbucks stores as a sign of gentrification in progress, along with new art galleries, music clubs, and businesses that offer valet parking. Locals also chafe at the idea that Starbucks will bulldoze its way into their neighborhood no matter what anyone says, and they fear that any cash spent at the chain will stream back to its corporate headquarters, sucking the community dry. “I don’t want to be an elitist and say there’s not room for everyone,” Charles Kingsley, who worked on the neighborhood growth plan for Hosford-Abernethy, told me. “I know we can’t be exclusively local. But I also know that with local businesses, money circulates a lot longer in the local economy, which makes a big difference.” Under this logic, Starbucks could endanger not just the identity of a neighborhood, but its very survival as well.

  Anxieties about gentrification and corporate strong-arming have launched many communities into full-blown civil-defense mode. Thousands have signed petitions to keep Starbucks out of cities from Santa Fe, New Mexico, to Athens, Georgia. (Taking this a step further, the town of Excelsior, Minnesota, turned its antipathy toward the company into a tourism slogan: “Secede from Starbucks nation.”) Sometimes, the sheer volume of a community’s collective loathing is enough to turn Starbucks away. In 2002, for example, the chain called off plans to construct a store in London’s posh Primrose Hill neighborhood after local authorities received thirteen hundred letters of objection, including one from the actor Jude Law, who lived in the area. The emotional trauma of having a Starbucks open nearby can even reopen age-old psychological wounds. “They should not come at all,” one resident of San Francisco’s Japantown community told the San Francisco Examiner about the chain’s plan to build a coffee-house there. “We’ve been through too much, the Japa-nese people.” A small army of four thousand petitioners cajoled Starbucks into abandoning that proposal as well.

  Schultz denies the charge that his company disregards the feelings of local residents, offering a counterexample: “There was a community in Westchester County, New York, called Katonah that didn’t want Starbucks, so we said ‘fine.’ We don’t want to go where we’re not wanted.” Some doubt his sincerity, however, because outcomes like this are so incredibly rare. Constant hostility from neighborhood activists has given the company such thick skin that things have to go horribly, firebombingly bad before it considers backing down. Starbucks reacts to local opposition with practiced cool, always playing up the advantages of having an outlet nearby. After all, it declares, we’re trying to build community. Did we mention we just got back from a four-day retreat about “human connection” and never even thought of mentioning money? * Oprah loves us. How could we be bad? “It’s a fine balance to know where you’re wanted, where you’ll be accepted, and where you should wait,” Arthur Rubinfeld, the former real estate chief, told me. “Obviously people fear what they don’t know, right? They didn’t know what was going to happen. This was not the Wal-Mart-ization of the American landscape. This was the communal integration of the American landscape, driven by the coffee-house.” (In a characteristic touch, he added, “That’s a pretty good one. You even smiled at that one. You can use that in your book.”)

  When the Starbucks-as-Shangri-la approach falls flat, the company sometimes delves into psyops. Scott Bedbury, the marketing veteran, says one effective strategy is to ask innocently at community meetings whether any independently owned local businesses offer benefits like stock options and health insurance for part-timers — both of which Starbucks, to its credit, has long provided. Since very few mom and pops do the same, then comes the crushing blow: the suggestion that Starbucks is too enlightened for this backward-thinking neighborhood. “It surprises me,” Bedbury writes in his book by way of example, “that a community as progressive as this one would rather have businesses that don’t offer these benefits to the people who work here.”

  But often, Starbucks just grits its teeth and plunges forth despite the hostility, knowing the opposition will likely need to change local laws to negate the company’s right to open a store. “We would say, ‘We respect your opinion, but we’ll go with the zoning — can we come in here or not?’ ” Rubinfeld said. Sometimes the answer would be no, and the company would still do it. For instance, the Ocean Beach, California, planning board asked the company not to move in, but since the request wasn’t legally binding, Starbucks did anyway. The company ha
s figured out that it’s only a matter of time before the tides change and the furor blows over. In fact, the day after the Portland firebombing attempt, reporters spotted several black-clad protesters sitting under the plywood-covered bank of shattered windows at the Seven Corners store, their signs flat on the ground. The picketers’ hands were otherwise occupied — with Starbucks drinks, compliments of the store’s staff.

  A Tale of Two Cities

  So let’s say your petition has failed, the protests you organized weren’t strident enough, and the carefully constructed leaflets you sent out — perhaps featuring a cartoon of a mermaid spanking a cute puppy — didn’t sway public opinion. Now a brand-new Starbucks sticks its green tongue out at you from within a cluster of charming restaurants and antiques stores. What can you expect, other than the sinking feeling of defeat? Will this tentacle of the great coffee monstrosity drain the life out of your neighborhood, or will it actually enhance the community?

  It depends. Taking the usual approach to this question, we’d want to examine the existing research into how chain stores and locally owned independents each affect a local economy. Without fail, these studies have found that more cash recirculates locally when customers patronize an independent, because mom-and-pop business owners hire local accountants, buy merchandise from local vendors, blow through their profits at local strip clubs, and so forth; chains just funnel the proceeds to some distant corporate bank account. One such investigation, conducted in Chicago’s Andersonville neighborhood by the firm Civic Economics, found this discrepancy to be quite significant. After probing the books at ten chain stores and ten independents, the researchers discovered that for every $100 spent at a mom and pop, an average of $73 of that recirculated in the local economy, while the figure for chains was just $43. Which makes sense; strictly speaking, the whole purpose of a chain store is to tap into a community’s cash pool and reroute the funds to company investors.

  According to Stacy Mitchell, author of The Hometown Advantage: How to Defend Your Main Street Against Chain Stores and Why It Matters, we also need to bear in mind that chain stores can undermine a community by making it more bland. “People want to visit a neighborhood because of its uniqueness and charm,” she explained. “There’s a danger if you’re an urban neighborhood or downtown, and you’re not offering anything that can’t be found at a mall, where there’s weather control and plenty of parking. You risk losing that advantage.”

  But the typical approach doesn’t quite work with Starbucks, because it’s not like other chain stores. Sure, its profits flow straight to Seattle, but some believe this bloodletting is justified by the benefits that the Starbucks stamp of approval confers on an area. Let’s look back for a moment at the main gentrifying effects that accompany a new Starbucks, which the Brookings Institution report lists as follows: changing neighborhood flavor, increased tax revenue, displacement of poor residents, escalating property values, and fresh commercial activity. Flourishing places like Hosford-Abernethy in Portland might shudder at the thought of these forces altering a neighborhood they already love as is, but literally thousands of depressed towns and communities salivate over them. Fundamentally, their government leaders and planning boards are seeking out gentrification, with all of the new development and skyrocketing income it entails. For every community that starts into the usual rending of garments at the prospect of a new Starbucks, ten more are begging the company to build a café and give their town an aura of affluence. So when we’re attempting to measure the local impact of a new Starbucks store, we must first figure out whether the company really does have the power to change an entire community’s fortunes, for better or worse.

  Some, especially those in more prosperous locales, openly scoff at the idea that Starbucks wields so much influence. Knowing that a Starbucks has little to offer them besides cookie-cutter predictability, these thriving communities often look down their noses at the chain. For example, a Waltham, Massachusetts, city councilor told the Boston Globe that when it comes to Starbucks, “Not to sound like I’m bragging, but Waltham is above such trivial concerns.” For good measure, he added that any town looking to Starbucks for validation “must have some sort of inferiority complex.” During the company’s hard-fought (and ultimately victorious) 2006 battle to enter Palm Beach, Florida, America’s third-richest community, a typical letter from an irate local read, “I find it inconceivable that . . . an influx of T-shirted coffee drinkers, slopping down the Avenue, dropping their paper cups who-knows-where would be a panacea — or even a help — for any Palm Beach store or resident.”

  But if you doubt that Starbucks really affects a city’s image either way, consider how damning it can be not to have them. When Schultz visited Detroit in 2006 to give a speech, local reporters pressed him to explain what it meant that the city had only five Starbucks stores — even the Detroit Metropolitan Airport had more. (“It means Detroit is still ghetto, that’s what it means,” one local explained to the Detroit News, which ran a story arguing that the dearth of Starbucks was a symbol of the city’s economic struggles.) Baltimore mayor Martin O’Malley triggered a widespread sense of indignation among his constituents after he allegedly begged Starbucks to build a coffee-house in his city. (O’Malley later claimed he “just ran into them,” and it was all a misunderstanding; still, Baltimore got its first stand-alone Starbucks soon thereafter.) We could even formulate a makeshift Mermaid Index: the number of Starbucks a city has per hundred thousand residents happens to be a fairly accurate gauge of its quality of life. San Francisco proper, with seventy-five outlets for its 744,000 inhabitants (score: 10.1), rates highly; Cleveland, which has just nine of them for its 478,000 people (score: 1.9), not so much. And Detroit (score: 0.4) might want to have its mayor put in an emergency call to Seattle.

  Consequently, long-struggling communities often react to the arrival of Starbucks the same way some citizens of developing nations react to getting indoor plumbing. When one finally opened in Lexington, Kentucky, in 2002, a local business owner was actually quoted as saying, “Hallelujah!” There’s something almost delusional in the way people talk about their new Starbucks. When the company debuted in Muskegon, Michigan, for example, the president of the local chamber of commerce crowed, “Having them locate in Muskegon is a symbol that we are a community of the future.” To Robert Vallee, a councilman in Franklin, Massachusetts, a Starbucks store is nothing less than a magic key to new prosperity: “We want better education, performing arts, things like that. This town is ready for a Starbucks.”

  To win one, city planners have dangled incredibly generous incentives in front of the company’s real estate department. In one case, the Los Angeles suburb of Alhambra gave Starbucks $136,000 in public redevelopment funds and pledged that the company would get a deal on rent — essentially paying half of the store construction costs and ensuring easy money for a company that reported a profit of well over half a billion dollars in 2006. Such offers flow into the company’s regional offices every day, and Starbucks often waits for the deal to sweeten over time. The people of Clearwater, Florida, bargained with Starbucks for two years before scoring one: “Now the rest of the world may sit up and take notice,” a city planner proclaimed afterward. Sharon, Massachusetts, negotiated for five years to get one.

  In effect, these communities are banking on the idea that a Starbucks store will help produce the gentrifying effects they covet — new investment and tourism, higher quality of life, and the rest. So is there a payoff? According to Carol Hilsenkopf, of the Cornelius, Oregon, chamber of commerce, her town’s new Starbucks had an immediate impact. “We’re absolutely thrilled,” she told me. “People look at that and say, ‘This is a place to be.’ Since Starbucks came, we’ve had four or five new businesses locate nearby.” A sparkling Starbucks store can also make a historically bleak place seem that much more livable — to the point where real estate agents in Hyde Park, on Chicago’s South Side, include the distance to a new Starbucks in their home listings. Arthur
Rubinfeld boasted to me of having received stacks of letters from thankful homeowners who credit a nearby Starbucks with boosting long-stagnant property values. Even Ray Oldenburg, the father of the “third place” idea who later refused to endorse the chain, offered surprising praise for Starbucks’s ability to help revitalize a depressed town. “To their credit, they brought Naperville [Illinois] back to life single-handedly, and now it’s one of the five most livable cities in the country,” he said.

  One might ask if the company is really causing all of this, or if Starbucks is just smart enough to piggyback onto a community at the right time. In other words, is Starbucks the horse pulling the gentrification cart, or, as the Brookings Institution researchers imply, is it merely a symptom of gentrification already in progress? No one contests that a Starbucks can give a neighborhood a more boutiquey, affluent appearance, but for the most part, the company’s stores seem to be an effect of gentrification, not a cause. Though Starbucks has sometimes cooperated with the basketball star Magic Johnson to open coffee-houses in historically blighted urban areas, it generally targets communities that are either well-off or going in that direction. As one real estate agent who has closed more than one hundred Starbucks deals told me, “Starbucks rarely comes in and says, ‘We’re going to save the day.’ They’re looking for neighborhoods that are on the up.” The company uses a very sophisticated real estate formula to find the best locations for its stores, and it’s difficult to imagine that Schultz would put profits or his closely guarded brand at risk by building cafés in communities that weren’t firmly headed toward prosperity.