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May 26th, 2004 Taylor Clark | News Stories
 

Thoroughly Starbucked

The world's biggest coffee retailer gets no respect from PDX. Should it?

     
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When Tracy Morgan found herself in need of work not long ago, she picked up a counter job at the Pioneer Courthouse Square Starbucks. The 28-year-old University of Oregon art graduate found it a relaxed enough endeavor that she had energy to pursue her real passion--charming up homes as an interior designer--on the side.

There was just one problem--one her friends never forgot to remind her about: She worked at Starbucks.

"People gave me crap about it constantly," she says. "There's a level of shame that comes with working there. The worst was when I called home to tell my parents I got the job, and my own father told me, 'Jesus Christ, you sold out!'"

Starbucks. Like death, taxes and emails pushing Viagra, you just can't avoid it. As the company keeps slapping its logo on more surfaces in Portland and around the world, the opposition against it is growing as well.

On May 4, just before 11 pm, someone attempted to smash through the windows at a brand-new Portland Starbucks and plant a Molotov cocktail inside. The store, on the corner of Southeast 20th Avenue and Division Street, had been widely opposed within the neighborhood. Thanks to the reinforced glass, the makeshift firebomb did little damage.

Though this incident wasn't as inspired as the November 2003 episode when a monkeywrencher filled the locks of three Portland Starbucks stores with glue, the botched firebombing underscored just how far the art of Starbucks-bashing has come.

There are the bumper stickers ("Friends don't let friends go to Starbucks"), the websites (www.ihate-starbucks.com, www.starbucked.com), and the vandalized stores across the country. There are the cities--like Ocean Beach, Calif.--that have adopted laws banning chain businesses specifically because Starbucks attempted to move in.

And while it's tempting to dismiss Starbucks-bashing by pointing out that all chains receive an icy reception from some, when was the last time you heard of a Bed, Bath & Beyond getting firebombed?

Many view Starbucks as the ultimate corporate colonialist, and foes have leveled some substantial charges at the chain. To wit, they claim that Starbucks (1) preys on independent coffeehouses, (2) buys coffee at slave wages from farmers, (3) mistreats its employees, (4) ruins local economies and (5) perpetuates the homogenization of the universe through its virus-like expansion.

But take a hard look at these claims, and one comes to the politically incorrect conclusion that the company doesn't deserve much of its bad rep. There may be reasons not to set foot in the mermaid's domain, but they're more aesthetic--and less moral--than many think.

To see how Portland has really been affected by the growth of the green monster, we need to review the charges and see what actually sticks to the wall.

CHARGE #1: STARBUCKS KILLS ITS LOCALLY OWNED COMPETITORS.

VERDICT: NOT GUILTY.

One recent post on Portland.Indy-media.org--an Internet haven for local activists--sums up a bit of conventional local coffee wisdom.

"Remember Portland about 15 years ago?" the poster asks. "Before Starbucks exploded there used to be small, locally owned coffee shops all over this city."

In other words, Starbucks muscled its way into the market and drove scores of coffeehouses out of business.

It's a nice argument, but it's simply not true. In fact, Starbucks created a market where none existed before and has actually helped indies stay afloat--even despite the 157 Starbucks stores, carts and drive-thrus the company has landed within 20 miles of downtown Portland, according to the company's website. If you love your local coffeehouse, industry savants say, thank Starbucks.

"Every morning, I bow down to the great green god for making all of this possible," says Ward Barbee, publisher of the Portland-based coffee trade magazine Fresh Cup.

Like many others, Barbee says the notion of gourmet coffee barely existed before Starbucks mainstreamed it, opening the way for thousands of independent retailers.

"To their credit, they've raised the standards in the industry," claims Duane Sorensen, owner of the Portland-based Stumptown Coffee Roasters. "People who had been drinking canned coffee for years now drink specialty coffee."

According to the Portland Yellow Pages, before Starbucks came to Portland in 1989, there were 28 coffee shops in the city. Today, there are 91 non-Starbucks coffeehouses in Portland proper, compared with the chain's 48 stores within city limits.

In fact, coffee-industry types claim that nothing could be better for enhancing business at your locally owned coffeehouse than seeing a Starbucks plop down right next door.

"In most cases, Starbucks really helps the market," says Bruce Milletto, president of Bellissimo Coffee Infogroup, a company that consults for independent coffee shops. "They give people a safe place to have their first specialty-coffee experience, and once they have that, they find it easier to venture out."

Thus, Starbucks primes the pump and everybody wins. Unlike big-box stores like Wal-Mart and Home Depot--both of which strangle local retailers--the prevailing wisdom is that coffee shops have an amplifying effect on one another, just as densely packed gas stations, restaurants or fast-food joints tend to bolster each other's business. The coffeehouse owners and industry spectators interviewed for this article could only remember one shop, in Lake Oswego, that they thought was driven out of business because of a Starbucks.

"Anyone who complains about having a Starbucks put in next to you is crazy," says Barbee. "You want to welcome the manager, give them flowers. It should be the best news that any local coffeehouse ever had."

Alex McIntosh, part-owner of Vivace at Northwest 23rd Avenue and Pettygrove Street, can attest to that. In 2001, a year after his cafe opened, a Starbucks moved in one block away--bringing the total number of coffeehouses at that nexus to three (including one Tully's, a chain that actually made a policy of locating its stores right next to Starbucks). Since then, business has boomed, he says.

"If it wasn't for them, there wouldn't be this niche here," he says. "It keeps us in check, keeps us from getting sloppy. Overall it was a good thing."

CHARGE #2: STARBUCKS PAYS ITS FARMERS SLAVE WAGES.

VERDICT: NOT (ALL THAT) GUILTY.

With coffee prices at historic lows and Central American farmers suffering the brunt of the crisis, many hold Starbucks accountable for their plight. "The majority of their coffee is grown using underpaid third-world labor," says the unnamed creator of ihatestarbucks.com, for example.

In truth, specialty coffee--which only makes up 7 percent of the global coffee market, according to the Specialty Coffee Association of America--doesn't deserve singling out here. The biggest cause of suffering for the world's 25 million struggling farmers is this: 40 percent of all coffee is bought by four companies--Nestlé, Procter & Gamble, Kraft and Sara Lee--who pay a paltry 50 cents a pound for their beans. This often doesn't even cover the farmers' costs of production.

In comparison, Starbucks paid an average of $1.20 per pound for higher-grade beans last year. This is only a few cents shy of the per-pound price for coffee that is certified Fair Trade--a designation that comes from a cooperative dedicated to ensuring that farmers earn a fair wage. Of course, the company's not a charity project; Starbucks' profit margins are gigantic, and it's in the chain's own self-interest to pay a high price so it can control access to the beans it wants.

Aside from better prices, another way Starbucks avoids gross Third World exploitation is by doing business directly with growers, cutting out the middlemen who skim off a hefty cut from the farmers' share. Oxfam, the British anti-poverty charity, is even willing to give the company credit for buying 30 percent of its coffee direct from farmers, which leads all major coffee buyers.

"In countries of origin, Starbucks is very strong about finding coffee from locals and not using brokers," says Barbee of Fresh Cup. "They pay very well so that they can control the bean from seed to cup."

Still, the best places for ensuring the fairest wages for farmers are coffeehouses like Stumptown and World Cup Coffee, which pay upwards of $2 per pound for coffees that also minimize impact on the environment. But even they acknowledge that Starbucks is far from the worst at exploiting farmers.

"They actually do a lot," says World Cup's Dan Welch. "But I still think they can do more."

CHARGE #3: STARBUCKS IS A BAD EMPLOYER.

VERDICT: NOT GUILTY.

Tracy Morgan says that when she worked for the company as a barista, many thought the conditions must have been terrible. It's a job that almost everyone is overqualified for, and the constant regimen of enforced cheeriness seems oppressive.

"I really didn't mind it, though," she says.

Starbucks creates a lot of jobs--1,750 in the Portland metro area alone--and from a benefits standpoint, it's probably the best employer in its sector. Though baristas start at $7.25 an hour, every Starbucks employee who works 20 hours a week or more receives health insurance (including dental and vision), a 401(k), a stock-options plan and--beginning in August--partial tuition reimbursement. Few people love pouring coffee all day, but these perks have made Starbucks' annual turnover rate just 60 percent, compared with an industry average of 200 percent.

This generosity springs as much from the bottom line as from the goodness of the company's heart. Starbucks Chairman Howard Schultz has made a name for himself in management circles by preaching that good benefits can make unions superfluous (Starbucks has staunchly resisted union drives). Plus, by giving employees more reasons to stay, the company is able to curb recruitment and training costs.

Starbucks employees generally seem pleased with the job for what it is, though none wished to be quoted for fear of breaking the company's policy of referring all media questions to its nearly robotic press-relations corps. (Starbucks is so skittish about its publicity that it declined to make any employees available for interview for this article.) Those that did talk off the record, however, said it's a good place to work and the company even offers other benefits, such as paid adoption fees and closing costs on homes.

At the worker-owned Red and Black Cafe just up the street from the new Starbucks on Division, employees start at $8 an hour and are eligible to become part-owners after six months of employment. But since the cafe only recently turned a profit for the first time in its three-year history, employees see none of the health, retirement and stock benefits enjoyed by their green-aproned comrades down the street.

CHARGE #4: STARBUCKS SUCKS CASH OUT OF LOCAL ECONOMIES AND RUINS NEIGHBORHOODS.

VERDICT: GUILTY AND NOT GUILTY.

When Starbucks revealed its plans to open a store on Division, few were as frustrated as Charles Kingsley. He had worked for years with city planners to implement the "Division Vision" plan, which stresses locally owned businesses and mass transit, only to see the cooperative spirit behind the blueprint quashed by developer Peter Perrin. When Starbucks was willing to pay a reported $22.50 per square foot in rent--three times what some in the area are paying--it was tough to get Perrin to say no.

"I don't want to be an elitist and say there's not room for everyone," Kingsley says. "I know we can't be exclusively local. But I also know that with local businesses, money circulates a lot longer in the local economy, which makes a big difference."

Kingsley and others are concerned that the chain's profits will all be diverted to the company's headquarters in Seattle, resulting in a net loss to the neighborhood. Though this is a perpetual neighborhood fear, very little research exists on how much a local economy suffers when a chain comes in.

Stacy Mitchell, a research associate at the Institute for Local Self-Reliance, says that the only numbers about this effect are based on two small-scale studies in coastal Maine and Austin, Texas. Researchers found in both cases that for every $100 spent at a chain store, only $13 recirculated in the local economy. Independent stores, on the other hand, respent $45 locally, on things like local accountants and print shops.

But there are those, like Portland State University urban-studies adjunct professor Will Macht, who think the negatives are more than balanced out by the benefits a cash cow like Starbucks can bring into a neighborhood.

"Starbucks is ideal from an urban-planning standpoint," Macht says. "They act as attractors, have small parking demands, and are pedestrian-oriented businesses. It gives the stamp of approval that an area is worth investing in."

Macht points to two Starbucks locations in Vancouver, Wash., at Heritage Place and Uptown Village, where the chain's new stores attracted several now-thriving local businesses. Plus, Starbucks stores--which are put in place after the company does extensive demographic research--make it easier for local entrepreneurs who open stores nearby to get small-business loans, Macht says.

Bob Cook, who manages business loans at Wells Fargo in Portland, says this might be an overstatement, but there's still something to it.

"We look primarily at an applicant's credit and business experience," Cook says, "but a Starbucks nearby is a good sign."

One local business owner who grudgingly gives Starbucks credit for helping spark a neighborhood renaissance is Leather Storrs of the restaurant Noble Rot, located on Southeast Ankeny Street near 28th Avenue. The area, now packed with successful, trendy local businesses, was home to a Starbucks long before any of them arrived.

"You have to pin some credit on them for the neighborhood development here," says Storrs. "It's an iconic marker and a validation for some of the older set. When they see a Starbucks, they say, 'We can investigate this neighborhood now.'"

Others, in more rural communities, have a less equivocal reaction. In the long-struggling suburb of Cornelius, residents reacted to the arrival of Starbucks the way some in Third World nations react to getting indoor
plumbing.

"We're absolutely thrilled," says Carol Hilsenkopf of the Cornelius Chamber of Commerce. "People look at that and say, 'This is a place to be.' Since Starbucks came, we've had four or five new businesses locate nearby."

CHARGE #5: STARBUCKS IS HOMOGENIZING AMERICA.

VERDICT: GUILTY AS CHARGED.

It seems clear that it's incorrect to dislike Starbucks for the same reasons one might dislike a company like Wal-Mart. It's not strangling the competition and neighborhoods, nor is it treating employees poorly.

But if variety is the spice of life, then chains are turning our neighborhoods into packs of saltines--and Starbucks may be the worst of them all. Within 10 years, the company hopes to nearly quadruple its store count--from 7,500 to 25,000. Who, other than the store's management circle, really wants to see that happen?

"People are beginning to see Starbucks as the new McDonald's," says University of Oregon marketing professor Lynn Kahle. "They're becoming the prototypic American brand."

Political scientist Benjamin Barber contends that this mega-expansion does more than just make communities aesthetically bland. Barber claims that what he calls "McWorld" is creating a "homogenous global theme park" that is slowly undermining democracy by using the free market to expand against society's best interests.

"Where is the 'we' in McWorld?" Barber writes in his 1996 book, Jihad vs. McWorld: How Globalism and Tribalism Are Reshaping the World. "[McWorld] acknowledges welters of me's operating impulsively in an anonymous market, but it provides not a single clue to common identity or to the place of community in the market."

Of course, Starbucks' homogeneity is the secret to its success; whereas local coffee shops can be inconsistent with their products, automation and training ensure that at Starbucks, you'll get the exact same latte every time, anywhere in the world. But homogenization is, by definition, a signal of the loss of diversity, uniqueness and charm, the long-range effects of which could be quite damaging.

"Starbucks is an intriguing challenge because it's absolutely clear that they're doing some things very well," says Kingsley, the neighborhood activist. "But I think one of the biggest challenges we're going to face in neighborhoods is how we're going to preserve their character. How are we going to preserve what makes Portland attractive?"

Half a mile away from the Starbucks on Division, Tracy Morgan works at her new job in a Southeast Portland salon.

Now that she has some distance from the company, she thinks that many perceive her old employer to be more evil than it actually is, though its alarming expansion has made her realize that "the value of consumer choice is that much more important."

But she still goes to a Starbucks for coffee in the morning. After all, she has little choice; there's one just a block away from the salon.

"It's weird," she says. "For the hairstylists I work with, the most consistent thing in their life is their double tall latte."


Starbucks' first Portland store opened in Pioneer Courthouse Square in 1989.

If you had bought Starbucks stock at its 1992 initial public offering, you would have received a 3,028 percent return on your money today.

In 2002, Starbucks sued Samantha Buck of Astoria for trademark infringement over the name of her small coffeehouse: Sambuck's. They are still battling in court.

"Specialty" or "gourmet" coffee refers to the high-grade, exactingly prepared beans we've become accustomed to paying up to $3 a cup for.

Starbucks has almost 30 times as many outlets as its closest competitor, Minnesota-based Caribou Coffee.

Of Starbucks' 157 outlets in the Portland metro area, only two have closed: A store on Southeast Grand Avenue and a counter in the Multnomah County Central Library.

Nationally, independent coffeehouses and chains of fewer than 10 stores make up 57.5 percent of the specialty coffee market.

In 2003, Starbucks acquired the Seattle Coffee Company and its brands, including Torrefazione Italia and Seattle's Best.

In 2002, 30 percent of voters in the city of Berkeley, Calif., voted in favor of a measure to ban all non-Fair Trade coffee. The punishment for breaking this law would have been six months in jail.

 
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