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Starbucks: The Free Market at Its Best


Independent coffee shops everywhere have the Seattle chain to thank.

Editors Note: Welcome to Love It or Hate It, a regular dual-column feature that will capture the love-hate relationship America has with some of its biggest, most controversial companies. For past columns, click here. For the opposing view on Starbucks, see Starbucks: Bad Coffee, Bad Business.

Hate Starbucks (SBUX)? Have you asked yourself why?

Maybe it's because you find the coffee stores bland and generic. Perhaps you don't like that they seem to be everywhere you look.

Or, it could be that you simply prefer your local, independent mom-and-pop coffee shop and show your "loyalty" by "hating" Starbucks.

But guess what? Your local, independent mom-and-pop coffee shops don't hate Starbucks at all. In fact, most of them love it when Starbucks opens a location nearby.

Balderdash? Hardly.

Before two schoolteachers and a writer cobbled together $8,000 in 1971 and opened the first Starbucks adjacent to a farmer's market in Seattle, making coffee was something a busboy did when he wasn't clearing tables.

"Coffee culture" simply didn't exist on a large scale. Starbucks changed all that. And, while the company became more and more successful, the small, beloved coffeehouses whose very existence seemed "endangered" by Starbucks's expansion actually thrived.

"Paradoxically," Taylor Clark writes in his book Starbucked, "the surest way to boost sales at your mom-and-pop café may be to have a Starbucks move in next door."

It may sound like something you'd read in The Onion, but it's absolutely true. Mitchell Wool, whose parents founded Washington, DC's Bean Bag coffee shop, said that Starbucks is the best thing that ever happened to the family business.

"Starbucks single-handedly created a national industry," he told the Washington Post. "It created greater demand for coffee. We rode it."

Another coffee purveyor spoke of bowing down to "the great green god every morning for making all of this possible."

The Specialty Coffee Association of America estimated that in 1989, there were just 585 coffee retailers in the United States. Less than 10 years later, there were nearly 24,000 -- 60% of which were independently-owned.

The fact is, indie shops aren't Starbucks -- and most don't want to be. But, in the not-too-distant past, if you asked someone what a café macchiato was, you'd likely be met with a blank stare. Now, thanks in large part to Starbucks, consumers can choose from a seemingly limitless variety of specialty coffees, not just what happens to be in the pot at the diner.

It's the magic of the free market at its best.
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