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Does Starbucks hurt small cafes?
 

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Ever since the Phoenix Coffeehouse in Cambridge, Massachusetts closed down a decade ago, I've been lamenting the rise of Starbucks. Around the time it moved into the neighborhood, two independent coffeeshops moved out. But there was an interesting article in Slate last week that said Starbucks actually helps small independent coffee shops.

Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door. ... Just over the five-year period from 2000 to 2005—long after Starbucks supposedly obliterated indie cafes—the number of mom and pops grew 40 percent, from 9,800 to nearly 14,000 coffeehouses.

Why? Unlike, say, Wal-Mart, Starbucks doesn't offer lower prices than its competitors. The food isn't all that great. And sometimes, the coffee isn't any better, either. Starbucks raised the bar for java, and expanded the market. But many cafes have caught up or even surpassed it, and they reap the benefits when Starbucks moves in and local palates become more refined. In other words, a rising tide of good coffee lifts all boats. That's true in my current neighborhood, Union Square in New York. Whenever I have time, I go to Joe's, which has the best latte you've ever tasted, the occasional really cute , taller-than-he-looks-in-the-movies celebrity customer, and, unfortunately for me, a really long line. Now that I think of it, the Phoenix's demise may have been related to the crazy people who hung out there all day. Or the awful poetry slams.

Last updated: Jan 2, 2008




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