Will Starbucks Invade Italy?

When I walk to Sericciolo for my coffee in the morning, I have the choice of two nice bars to have it in. I can expect to get my coffee in about 30 seconds—less if the bar isn’t busy. The coffee will taste good. It will come in a proper cup, heated over the machine.

Starbucks wants to bring the “Starbucks Experience” to everyone on earth at some point during this century. (The Starbucks Experience Going Global)

This means that when Starbucks comes to Sericciolo, I will have to wait about three minutes for my coffee. That’s the Starbucks standard. But worse yet, I will be forced to drink that mediocre coffee from a lousy paper cup.

Honestly, I don’t see how you people who prefer bleached wood pulp touching your lips along with coffee can stand it, but that’s beside the point.

You’ll notice I wrote “when Starbucks comes to Sericciolo.” You might be surprised I said that. It’s inevitable; it’s the economy of scale.

From Coffee and Tea: “The company is engaged in a veritable European blitzkrieg, planning to open 650 stores in at least six countries in the next two years. On average, the company is opening three to four stores a day, serving over 16 million customers a week. By 2005, the company projects a total of 10,000 stores worldwide, with an eventual goal of 20,000 some time in the unspecified future.”

From Rueters: “U.S. coffee shop giant Starbucks Corp. (SBUX.O: Quote, Profile , Research) said on Tuesday it eventually plans to have at least 40,000 stores, half of which will be outside the United States.”

You’ll notice the progression: 10,000 then 20,000 then 40,000. The relentless march toward mediocre coffee in cookie-cutter shops continues unabated.

It’s not that Starbucks is bad. Even Chairman Howard Schultz has misgivings about this march. But he can’t stop it.

Why is it unstoppable? Because Starbucks, like McDonalds, is marching toward the endgame publicly traded companies all will face when they get large enough. It’s grow or die.

Don’t get me wrong. The stock market is a great way to reward innovation—in the beginning. What’s not to like? You have a good idea, you float some shares, you get money to expand your idea. The number of your shops expands from 1 to 2 to 4. People love your concept. You get praise from the press.

It’s all good.

But then, when everyone is swilling Starbucks coffee in the US, the company has to expand to the rest of the world. It’s inevitable because the system demands sales and revenue growth, and you can’t get that by saying “gee, we’ve captured a niche market and we’re just gonna keep that little market to ourselves.” That’s what we want “responsible” CEOs (like Bill Gates) to say but it would be the death knell for companies to allow such foul talk.

Why? Because if a company stops growing, people dump the stock. There’s no use holding the stock of a company that doesn’t increase revenues. When the stock price falls to a level where the total float is worth less than the real assets of the company-the stores, the espresso machines, the brooms, etc.-just about anyone can convince a bank to put up the easy money to buy all the stock and liquidate the assets. Then it’s all over.

Grow or die. The endgame.

There’s another black side to all this growth. I like to think in terms of toasters. Let’s say you have an idea that results in a great toaster. It hits the market and people gobble it up because it’s the world’s greatest toaster at a reasonable price. Then you tweak it and now it’s even better and you can charge more for that betterness. Then you go public. That gives you the money to start making 10 million toasters a year. Suddenly, by lopping off 3 feet of cord so nobody can plug them in, you save hundreds of thousands of dollars at a few cents a toaster. People complain, but you hire a firm to tell them you’re doing this all for their safety. After all, you might trip over a longer cord and start a fire. Of course, the company you hire to put out this vile propaganda conveniently ignores the fact that the cord is now too short to plug in, and the shortest extension cord is six feet long, so it’s required that there will be a long and dangerous cord, but at least the company didn’t have to pay to supply it.

Economies of scale.

In any case, if you’re thinking of moving to Italy, do it soon. The traditions are dying fast, but there’s still some residual hope that the inevitable can be pushed back long enough to get a couple good years of good coffee from locally owned shops. Still, the Starbucks are moving in. People do get used to drinking swill out of paper cups. There’s profit in it.

Will Starbucks Invade Italy? originally appeared on WanderingItaly.com , updated: Dec 17, 2020 © .

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