Starbucks and McDonald's (8 Jan 2008)

Starbucks was prominent in the news yesterday. Founder Howard Schultz has been called back into action in an effort to reverse the coffee chain's slide into mediocrity.

[Schultz] said moves to automate coffee making in the interests of efficiency had damaged the “romance and theatre” of a visit to the stores. Starbucks shares have fallen 48 per cent over the past 12 months. They rebounded 8 per cent in after-hours trading on Monday.
Mr Schultz said his agenda would include slowing the pace of new store openings in the US and closing under-performing locations, and redeploying capital originally assigned to the US to increasing the profitability of its overseas operations.

Ah, yes. I'm sure you fondly remember as I do how romantic it was to stand around in the Starbucks theater waiting for someone to hand you your coffee. What high drama there was in a cranky espresso puller getting burned by hot milk.

It seems that Starbucks' ubiquity has bred indifference to the brand, and its own success has undermined the mystique it once had as purveyor of some rare, special elixir known as a "latte." Now just about everyone knows what a latte is, and you'll even be able to get them at McDonald's, as this entertaining WSJ story details. Though Starbucks may have originally conceived of itself as the opposite of McDonald's, it always seemed natural that they would either mimic each other's identity or actually combine, like the women in Persona slowly shading into one another. I used to argue that instead of "selling hot, brown liquid masquerading as coffee" (as a ex-Starbucks exec called McDonald's coffee), McDonald's should be licensing Starbucks coffee and selling it to people who have come to want the serious gourmet shit. (But then I typically make the mistake of thinking that Starbucks primarily sells coffee as opposed to "upscale coffee drinks" -- I don't drink anything but black coffee, and I forget that most people associate Starbucks with the elaborate froufrou drinks and don't really care one way or the other about good coffee as long as there is lots of sugar and steamed milk.) Both companies are also primarily brands that communicate a certain uniformity of standards. It's not ideal but you know what you are getting when you roll into McDonald's after pulling off I-80 somewhere in Nebraska.

It seemed as though the companies could reinforce each other's brand equity; in a sense they already do. By giving the language of brands such powerful and universal symbols, it validates the whole phenomenon. But I hadn't expected them to become direct competitors, for, as the article points out, they want to supply different things to achieve the goal of vending high-margin beverages: McDonald's uses cheap, high-calorie food; Starbucks, ersatz ambiance and "theater." But ultimately, Starbucks abandoned that method and sought more and more store traffic. Schultz's return promises a reversal of that trend.

But the WSJ article offered other surprises. For one, McDonald's may also seek to provide a music downloading service at some of its locations. What more evidence does one need that music has been thoroughly commodified, that you'd buy some songs alongside a Big Mac? But who wants to stand in a McDonald's browsing for music? It's not like Starbucks, which seeks to sell its (now faded) ambiance as an enhancement to the music sold. If there's any justice, the first song McDonald's will sell will be the Gang of Four's immortal "Cheeseburger."



I also found this interesting:

Mr. Schultz has said that new competition actually helps Starbucks by expanding the specialty-coffee category. "Those consumers over time are going to trade up," he told investors in November. "They're going to trade up because they are not going to be satisfied with the commoditized experience or the flavor." He has emphasized that Starbucks's baristas, who are instructed to memorize customers' drink orders and make genuine conversation with patrons, will continue to set the chain apart.

Not only is it ripe for Schultz to argue that the Starbucks experience is not commoditized, but he goes on to offer the fact that workers are ordered to make "genuine" conversation as evidence. This may be stupid of me to ask, but when you force people to talk, can the resulting conversation really be considered genuine?

Small business sentimentality (30 Dec 2007)

Yesterday, as I walked to the other side of the neighborhood to get my hair cut, I noticed that a little independent coffee shop that had opened only a few months ago was already closed. This didn't surprise me at all; it was more of a whimsical notion than a coherent business. They sold hip, old-timey nostalgic things like campy paperbacks and candy in 1950s era packaging, and they also sold homemade pies at exorbitant prices. It had two tables in the back and one in front, not sufficient room for anyone to loiter comfortably, but enough where you were made to feel that someone ought to be but wasn't. And the barristas, if you'd call them that, were generally on their cell phones or in the midst of conversation among themselves instead of dispensing service. And its location, sort of on the way to the subway for that side of the neighborhood, was adequate, but not prime. Maybe, if this article by Taylor Clark from Slate is to be taken as gospel, they needed to be even closer to the Starbucks that's on the corner a few blocks away.

Clark argues that far from putting mom-and-pop coffee shops out of business, Starbucks teaches local customers to elevate their tastes and to find it reasonable to spend a lot on coffee.

Each new Starbucks store created a local buzz, drawing new converts to the latte-drinking fold. When the lines at Starbucks grew beyond the point of reason, these converts started venturing out—and, Look! There was another coffeehouse right next-door!

The reason Starbucks doesn't obliterate its competition the way Wal-Mart does, is that it has far fewer overhead advantages, and the ones it implements (cheap, automatic espresso machines) degrades its product. Often, a chief aspect of the service it sells -- convenience -- is spoiled by its own popularity. And we all know how sentimental latte liberals can be about "anti-corporate" businesses -- independent retailers and the like. The presence of Starbucks right next door allows such people to express their political views with much more salience when they actively reject Starbucks for the small-time coffee shop, assuming all the time how clever they are and how much better the service will be from the local people who truly appreciate it.

I admit that such thinking drove me from my local Starbucks to the now defunct independent competitor. I had received a few lukewarm cups from Starbucks (and didn't have the time on the way to work to go back to the store, wait in line, and ask for a new one) and I remain fed up with Starbucks' employees inability to properly prepare an Iced Americano, so that it doesn't turn into a piss-warm puddle of watered-down espresso. I figured the new local place would do a better job out of pride. As Clark notes, you don't beat Starbucks on ambiance but by providing a better product. But the local shop ultimately failed in this, serving their own lukewarm brew and sometimes making me wait as the counter person carried out their private conversations leisurely rather than waiting on me. Maybe I'm sensitive (i.e. paranoid), but I hate when clerks are laughing with their friends as I approach. I hate disrupting a good time, especially when all I want is what the establishment is presumed to exist to provide. So I stopped going there and made another effort to get up earlier to have coffee at home in the morning. (Clark cites this shocking statistic: only 10 percent of coffee shops fail. That confirms that my neighborhood java entrepreneurs were unusually misguided.)

So, though little public failures always tend to depress me, I wasn't exactly sad to see this locally owned coffee shop fold. Instead, it was a reminder that I shouldn't make the mistake of being sentimental about mom-and-pop stores. It's the same temptation as being sentimental about small-town life, while forgetting the stultifying conformity and the routine invasions of one's privacy. One benefit of, say, going to Starbucks is that you preserve your anonymity, which is tantamount to remaining basically equal in the eyes of the clerks (though the tall guy with the glasses at the Starbucks on my corner remembers me and gets my small coffee ready without my having to ask -- this is more than the local place would do). Mom-and-pop places are much more prone to the petty graft that comes from familiarity and small-scale aspirations -- extorting tips, using variable, spontaneous pricing to take advantage of neophytes, and so on. Local places will play favorites with customers, decide who belongs and who doesn't, and work in various subtle and unsubtle ways to exclude those deemed undesirable. Some people will get "the nice guy discount" (if they have the gumption to ask for it) and others will get stonewalled mysteriously as they wait to be helped.

Ultimately, it depends on the disposition of particular employees how one will be treated in a shop, but national chains are more likely to insist on uniform service apart from local considerations. Sentimentality leads us to believe that those considerations are to our favor, are the sorts of things that knit us into a community. We forget that they can work the other way, and remind us of our arbitrary exclusion.

Modern life in Maricopa County (30 November 2006)

Whenever I come back from my annual Arizona vacation I feel a bit like a cliche from a David Brooks column, ready to patronizingly lampoon philistine provincial life and point out obvious atrocities like the local news broadcast (this just in: snow is cold; also: car chase in Dallas ends in collision), the ubiquity of paycheck loan kiosks (some retrofitted into Mexican restaurants that were themselves retrofitted into moribund fast-food chains), the relentless sprawl (it's practically filled the valley past the Maricopa County line to the south and well into Carefree to the north), and so on. I tend to be seduced by the idea that New York City is the capital of the free world and as its media center originates the cultural ideas that trickle out to places like Phoenix and Tucson. And sometimes this is true; one can see the hangover of trends that have already exhausted themselves back East.

But this time I've returned enamored of a different cliche about the postmodernity of edge cities: that in fact Phoenix is an ongoing project in manufacturing the cutting edge suburban lifestyle, in pursuing and distributing the state of the art in middle-class amenities -- retail plazas with organic-food markets and parking lots with giant spaces -- and New York City is an antiquated version of modern life, one that's terminally threatened and holds on merely through the tenacity of tradition. Out in Arizona we rented a crossover SUV (the poetically named Chevy HHK) and drove the brand-new freeway loops and did a bunch of shopping and dining in new commercial developments on what used to be the outskirts of town. I felt like a character in a car commercial or something.

While everyday life in New York is a thicket of nuisances, dealing with crowds and lines and the ceaseless imperative to rush and put yourself first lest you never get what you're trying to do done, the ease and convenience of the quotidian in Arizona is palpable, which to me seems a product of the redundancy of shopping centers. Also the expanse of open desert space (while it lasts) allows one to take scorched earth policy toward communities -- when it ceases to be convenient, when it starts to feel encrusted with idiosyncratic necessities or complications, one can simply strike out for the latest development on the fringe and partake of the hottest enticements -- four-car garages, cathedral ceilings, etc. The driving forces of contemporary consumer capitalism -- novelty, convenience, the desire to feel independent from the impact of other's decisions -- seem to culminate in the dynamic system on display in Maricopa County.

For me this plays out as a kind of vacation listlessness, some of which must be blamed on my lack of imagination. But since so much of the region seems devoted to convenient transportation and shopping, I feel like there is nothing to do but drive around and shop. Sure, I could leave the valley altogether and go hiking or something but it seems easier to pivot from cable TV to shopping to dining to sleeping. Imagination itself is reconfigured as a nuisance; best to glide along without the trouble of it, finding fulfillment in the safe and predictable, in the pseudo-novelty of new franchises of chain stores and restaurants.

Update: Via The Economist's new blog comes this defense of chain stores by Virginia Postrel: "Chains make a large range of choices available in more places. They increase local variety, even as they reduce the differences from place to place. People who mostly stay put get to have experiences once available only to frequent travelers, and this loss of exclusivity is one reason why frequent travelers are the ones who complain." The idea behind this is that each chain represents some local brainstorm made national or global. (That ingenious idea to have all you can eat breadsticks is now available at the Olive Garden in your town.) Postrel argues that "the contempt for chains represents a brand-obsessed view of place, as if store names were all that mattered to a city’s character." A fair point, but it still seems to me that the ubiquity and density of chain stores evokes the criticism; the individual chains don't matter so much as the blanket they spread over a locale, rendering it familiar to travelers and encouraging the idea that interaction with any locale is primarily a matter of shopping. The contempt for chains stems from the fact that it blots out a city's individual character, which is not merely a matter of driving local companies out of business or obscuring what the local industries consist of.

Postrel and The Economist blogger (Megan McArdle) seem to want to emphasize the vanity of urban planners (and activist consumers) who reject chains as inauthentic and the sound sense of "ordinary Americans" who appreciate their virtues. Perhaps they are right; the development of cities such as Phoenix certainly seems to bear out their assumptions about what Americans prefer; Phoenix suggests what all American cities would be like if they could instantaneously rebuild according to current consumer preferences. And perhaps the accessibility of the various successful retail strategies of so many different chains at once accounts for my feeling of being intoxicated (if not incapacitated) by convenience. The corporate interests behind the chains are able to induce us to accept values amenable to the corporations' thriving because they offer us the least resistance and we as individuals are ultimately more flexible than corporations (which aren't as flexible as market theory typically proposes). What we lose is any interest in local idiosyncrasy, or the kind of complication that arises from tradition and history. Phoenix (appropriately named in this regard) allows us to believe that the community in which we live was invented to suit us personally -- it flatters our own vanity; the world, for me -- because it so compellingly convinces us to reduce ourselves to the consumer desires it is optimized to service.