Starbucks Pursues Aggressive Expansion
Wednesday, October 25, 2006; 9:17 PM
SEATTLE -- The people who work in Seattle's tallest building face a tough decision: should they get their caffeinated indulgence at the old Starbucks on the building's first floor or the new Starbucks, 40 floors up? And, if those lines are too long, is it too far to walk across the street, where a third Starbucks awaits?
Starbucks Corp.'s recently announced goal of having 40,000 stores worldwide isn't just about spreading green awnings through middle America, the Middle East and other areas of the world not yet tempted by easy access to mocha Frappuccinos and pumpkin spice lattes.
The coffee chain's aggressive growth also hinges on what the company calls "infill" _ adding stores in cities where its mermaid logo is already commonplace. In some cases, that means putting a Starbucks within a block of an existing store, if not closer.
While Starbucks knows there's plenty to lure people into their stores, they also recognize that many people can't be bothered to walk very far _ or wait very long _ for an optional and pricey treat.
"Going to the other side of the street can be a barrier," said Launi Skinner, senior vice president in charge of Starbucks' store development.
As Starbucks adds a whopping six stores a day on average, the company says it continues to carefully consider everything from the direction of commuter traffic zipping by a potential drive-through site to how many people are pounding the pavement on a busy urban block.
As of Oct. 3, Starbucks had 12,440 stores worldwide, including 7,102 company-operated stores and 5,338 licensed locations. In addition to choosing its company-operated locations, Starbucks also has a say in where licensed stores will be located.
In Vancouver, Canada, such planning has meant adding stores on either side of a busy intersection. In New York, there are two Starbucks in one Macy's, as well as two in the 49-story Marriott Marquis hotel.
Starbucks also is flooding some smaller cities. In Spokane, Wash., two Starbucks sit across from each other in a strip mall and a grocery store, close enough that baristas could toss pounds of coffee beans at one another if they wanted to.
Despite such saturation _ and plans for much more _ Starbucks insists that it sees very little cannibalization of its existing business when a new store opens. In fact, the company says, one reason would-be customers don't end up buying a Starbucks drink is because the line is too long. One solution is to open up another store nearby.
Starbucks says about 60 percent of stores have a wait time of three minutes or less, but the company doesn't track specifically how long the wait has to be before people decide to pass.
Chief Executive Jim Donald dismisses any notion that the company could experience oversaturation as it continues to plop Starbucks near other Starbucks.