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Starbucks and the Global Financial Meltdown

October 26th, 2008 | by Tom Harper |

Turns out you don’t need no steenking stockbroker. Let Starbucks be your financial guide.

Basically, the greater the concentration of Starbucks’ in a country’s financial capital, the more likely it is that this country is reeling from the financial crisis. Coincidence?

In the U.S., Starbucks is hopelessly intertwined with the real estate and credit markets that have crashed and burned. Out of all the jillions of Starbucks locations, most of them are either in the newest developments of America’s suburbs and exurbs, or in the business districts (especially the financial center) of large cities. (And of course if you have a favorite local coffeehouse with that certain intangible vibe you can’t find anywhere else, a Starbucks will spring up next door and put them out of business.)

Most large investment banks have a Starbucks on their ground floor. And the Starbucks nearest to the former Bear Stearns headquarters has already closed.

The author of this article, Dan Gross, says:

“Like American capitalism, Starbucks, fueled by the capital markets, took a great idea too far (high-quality coffee for Starbucks, securitization for Wall Street) and diluted the experience unnecessarily (subprime food like egg-and-sausage sandwiches for Starbucks, subprime loans for Wall Street). Like so many sadder but wiser Miami condo developers, Starbucks operated on a ‘build it and they will come’ philosophy. Like many of the humiliated Wall Street corporations, the coffee company let algorithms and number-crunching get the better of sound judgment: If the waiting time at one Starbucks was more than a certain number of minutes, Starbucks reasoned that an opposite corner could sustain a new outlet.”

Now let’s look at some other countries. South Korea (253 Starbucks locations), England (256 Starbucks’ in London) and Spain (48 Starbucks’ in Madrid) are all reeling from the financial meltdown.

On the other hand, Italy (number of Starbucks’ in the entire country: ZERO) hasn’t had any major bank failures. The entire continent of Africa has 3 Starbucks’ and no major bank bailouts. Ditto for Central America.

Argentina (one Starbucks) is doing relatively well in this crisis. There’s hardly any Starbucks presence in Holland and the Scandinavian countries, and their banking industries are also holding up.

The article closes with:

“And so, if you’re looking for potential trouble spots, forget about the Financial Times or the Bloomberg terminal. Just look at the user-friendly Starbucks store locator. The next potential trouble spot? I just returned from a week in Istanbul, Turkey, a booming financial capital increasingly tied to the fortunes of Western Europe. It has a storied coffee culture, yet I gave up counting the number of Starbucks stores occupying prime real estate. It turns out there are 67 of them. Watch out, Turkey.”

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  1. One Response to “Starbucks and the Global Financial Meltdown”

  2. By steve on Oct 26, 2008 | Reply

    In downtown Sactown there are like 40 of these things

    In Salt Lake City, a down town area about the same as Sacramento there are like 5

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