Why is Starbucks so Successful?

There are lots of answers to this question already out there.  As business models go, Starbucks is a pretty attractive candidate for analysis.  It exploded overnight, it’s completely ubiquitous, and it has a relatively positive public perception.  But why?  Is it the coffee?  The atmosphere?  It seems that a lot of what’s written about the corporate culture (and a lot of what comes out of the mouth of Howard Shultz, the CEO) attributes the success to good service and attention to detail.

“We have a competitive advantage over classic brands in that every day we touch and interact with our customers directly.  Our product is not sitting on a supermarket shelf like a can of soda.  Our people have done a wonderful job of knowing your drink, your name, [and] your kids’ names.”  - Shultz

The golden calf... or decalf, if you prefer.

Success in business seems to be an emotional beast to Shultz.  In his book, Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, he writes extensively of the company’s feel-good intangibles: strong values, running with inspiration, etc.  I’ve spent a lot of time in his franchise over the past 6 months, and I have to admit the relationships I’ve built with employees have been genuinely refreshing (shout out to George at 21st St!). Still, I think it’s naïve – or maybe just aggrandizing – to attribute such global dominance to a friendly staff.  I recently sat down with a tall Pike Place and really thought about what made Starbucks so appealing.  Here’s what I came up with. 

First off, one of the most important attributes of Starbucks – as with any chain – is consistency.  There’s no guessing what the product will be or how much it’ll cost.  What’s more, you can be sure there’ll be seats, outlets, and free WiFi (this last bit has really been the basis of my relationship with the giant).  People are pretty averse to surprises – at least in their purchasing behavior.  Chains work for a very specific reason: they eliminate chance.

But Starbucks exists as more than a chain – it’s a communal meeting place, it’s a home away from home.  The urban sociologist, Ray Oldenburg, defined this kind of unique environment as a third place.  It’s not home, but it’s not quite work either.  In a society, Oldenburg argues that third places foster communal relationships, collective identifications, and even democracy.  In his own words, “All great cultures have had a vital informal public life and, necessarily, they evolved their own popular versions of those places that played host to it.”  Is Starbucks the embodiment of the 21st century community?

Maybe, but that’s not necessarily a compliment.

There’s no doubt that a cup of Starbucks coffee is best enjoyed with a willful suspension of disbelief.  The couches, the lighting, the B.B King – it all does a very good job at alluding to genuine atmosphere (and a trendy, relevant community), but it doesn’t create it.  Instead, Starbucks most likely achieves what the sociologist Philippe Ariès would describe as a “postmodern simulation of a by-gone communal ethos”.  It packages the idea of community, and sells it to an isolationist culture that consumes, rather than engages, its surroundings.

That’s the distinction with Ariès’ view: to him, patrons go to third places like Starbucks to feel connected, rather than to be connected.  What’s important about this is that it assumes that people act on impulse rather than thought – a trip to Starbucks isn’t entering a social conversation, it’s scratching an itch.  It’s Pavlovian.  The question now becomes: what does Starbucks have that keeps us coming back?

For sure feeling like a part of the community comes into play, but I think it’s more basic than that.  To me, the real genius of Starbucks is recognizing just how hedonistic and impulse-driven our society is.  Have you been to a Starbucks lately?  There are almost no rules:  Stay as long as you like.  Spend as little as possible.  Use the bathroom for free.  Bring outside food, outside drinks.  Be loud, be creepy, be gross.  It’s all good.  This same hedonism permeates the menu.  Hesitant to spend $3 on coffee?  Don’t be – you want it.  But why settle on coffee?  Why not make it a coffee milkshake?  Sure it’s a little unhealthy, sure it’s an extra couple of bucks, but hey – you want it.

It’s beautiful.  Somewhere along the way, Starbucks took a bet on just how self-indulgent and self-deceptive consumers could be.  They gambled that anyone with a little cash would be willing to spend more of it, to consume more calories, and to crave more caffeine, and they won big time.  Better yet – and what differentiated them from other pleasure-palaces like McDonalds – all it would take is a few nods to higher culture to grant their products moral immunity.  Fair trade coffee?  Humanitarian water?  They’re honorable concepts, no doubt, but they don’t drive business at Starbucks – they rationalize it.  The Frappucino is what’s really behind the wheel.

I know this analysis may come off as damning, but it’s really not meant to be. Starbucks has helped to shape modern hedonism, but it’s mainly just recognized a cultural reality that was already in place.  By doing so, it’s been able to market genuinely positive concepts – responsible industry practices, third world development – to an audience that wouldn’t otherwise be listening.  Though Shultz and others like to draw our attention to the bright-eyed optimism of the business culture, it’s the realistic take on the human condition that’s really impressive.  By learning from Starbucks’ model, I think a lot of worthwhile ideas could be given a fairer shot at success.

Lure the body and placate the mind, not the other way around – that’s their recipe for success.  Next time you’re at Starbucks, don’t feel embarrassed to succumb to indulgence.  Be thankful there are people out there that get you, and say hi to them.

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2 comments on “Why is Starbucks so Successful?

  1. Burnsy says:

    you should read Everything but the Coffee: Learning about America from Starbucks by Bryant Simon

  2. [...] where brewpubs were as ubiquitous as today’s coffee shops and served the same role as third place to the [...]

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