Peter Lynch tells us to buy what we know, and Starbucks (SBUX-NASDAQ) has become the company that anyone in the U.S. can easily get to know – simply by driving somewhere between 10 feet and 2 miles from your front door.
24/7 Wall St. is looking to expand the sample size, reviewing numerous locations between the rush hours of 7:30 AM and 8:30 AM local time in numerous cities throughout the country, to see what kind of trends are forming.
As Howard Schultz, the founder of Starbucks (SBUX), recently wrote to his management: "Over the past ten years, in order to achieve the growth, development, and scale necessary to go from less than 1,000 stores to 13,000 stores and beyond, we have had to make a series of decisions that, in retrospect, have lead to the watering down of the Starbucks experience, and, what some might call the commoditization of our brand."
Today’s Location: Horton Plaza, Downtown San Diego; Time 7:40 AM
We’re back on the West Coast today, in the heart of downtown San Diego, just a few blocks away from the harbor and Petco Park. In this area, a sunny Friday morning makes attracting customers just laughably easy. While downtown San Diego isn’t as business-district divided as say, NYC or San Fran, Horton Plaza is a stone’s throw from what locals would call the “financial district”.
This area of town is surprisingly underserved, as an influx of commercial development in the past five years hasn’t quite been met with an equal retail response. There could probably be a Starbucks on the opposite side of this block and it would be a top-10 earner in the county.
Total Wait Time: 1 minute, 10 seconds. There were two folks in line ahead of me, but it quickly grew to six behind me.
That said, this Starbucks was a dud. While it has great visibility leading into an open-air mall, the store is small and woefully underutilized. About 30% of the square footage is just being wasted – a dead end corner where nobody could sit. Bathroom was…non-existent. The staff seemed efficient enough, and most customers were zoomers – in and out.
Total seating capacity was 12-14, with inventory selection limited to a few overstocked brands of beans and about 1,000 bottles of water. All in all, makes me want to go buy some Folgers, a few cases of water at Costco, and set up shop down the block. But for now, Starbucks is making money there – they are not, however, not promoting their brand.
Overall Ratings (1 to 3, 3 being best): Wait Time – 3, Cleanliness – 2, Bathrooms – 0, Space – 1, Personnel – 2, Inventory – 1, Ambience – 1
We’ve recently kicked the tires down in Texas, and on the East Coast, and look to increase our sample size in the coming weeks.
Ryan Barnes
April 27, 2007
Ryan Barnes can be reached at [email protected]; he does not own securities in the companies he covers.
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