BOOK REVIEW: BRODY SWEENEYtakes a look at Starbucked: A Double Tall Tale of Caffeine, Commerce, and Cultureby Taylor Clark; Spectre; 304 pp; £12.99 (€16.50)
I am not ashamed to say I hate competition and in particular I hate Starbucks - because they compete with us at O'Briens. Given that, I approached Taylor Clark's new book on the American retailing giant with a pretty closed mind. Any company that calls its boss chief global strategist is setting itself up for a fall, in my opinion.
Despite my prejudices, this humorous and largely factual book was fun and enjoyable to read. Written in a "don't take me too seriously" style, it is packed full of fascinating insights into the business of coffee, without managing to lay a glove somehow, on America's latest example of cultural imperialism.
After reading the book I was left with a feeling of wasteful emptiness, from the avaricious and ruthless way Starbucks builds its business around the world.
The numbers around Starbucks' legendary growth are dramatic. This has been the fastest expanding retail chain we have ever seen. Entering the Toronto market in Canada for the first time, they opened six stores on the same day, followed by another six on the same day a month later. They paid more than a million pounds a store for a 50 store chain to gain a foothold in the British market, and then lost another £50 million (€63 million) trading it before they turned a profit. They have 250 stores trading on Manhattan Island in New York alone.
As a businessman competing against the company, the slickness and professionalism of their retailing machine is scary. The section on their property selection left me - a seasoned acquirer of retail properties - flummoxed.
Clark describes brilliantly simple techniques like trying to find locations on the same side as the majority of traffic entering a city - mornings being their peak trading period - on the basis customers won't want to cross a line of traffic to reach a store. Their strength with landlords means they get offered unbelievable deals, not really available to other retailers.
Starbucks have a fantastic business model, which many of us in the same business struggle to emulate, and with nobody - including ourselves - really managing to lay a finger on them.
Starbucks growth has apparently been built on the loneliness of American consumers, and their desire to be lonely in company.
In other words you can sit in a Starbucks, sipping your coffee and working your laptop, and people won't think you're a sad loner with no friends.
This phenomenon, which Starbucks have coined a phrase for - the "Third Place" - a place between home and work, where it is safe to congregate, is actually a sad reflection on our modern lifestyles. With our "oh so busy lives" we have lost our sense of community and togetherness, which we can now only get from paying through the nose for a milky coffee.
The fact Starbucks can sell such awful coffee is a testament to the power of branding. For in truth, the quality of the coffee is not the reason people shop there, it's because it's cool, and convenient, and they have tapped into the "third place" social phenomenon - and they are brilliant marketeers.
My feeling of emptiness comes from their unwillingness to confront in any serious way the disgraceful inequities that coffee farmers face.
Starbucks marketing suggests they are the great white hope of coffee-growing communities but the facts - as quoted in the book - fly in the face of that.
According to the book, the farmers end up with literally 1 per cent of the retail price of a large cappuccino in a store like Starbucks.
The company, according to the book, accounts for 2 per cent of all the coffee sold in the world. Given that coffee is the second most traded commodity in the world after oil, that's a serious figure.
They are in a position to radically change the way coffee is traded, without materially affecting their profitability. They need to face up to that moral responsibility.
Brody Sweeney is the founder and chairman of O'Brien's Sandwich Bars
