Revealed: Starbucks Secret to Store Placement

Starbucks (NASDAQ:SBUX) CEO Howard Schultz has finally given the answer to a question that has confused many for years. Why is there such an abundance of Starbucks stores placed right next to each other?

“He said the answer is very, very simple: to reduce the lines and the waiting time for the customer,” said SDSU marketing professor George Belch.

Starbucks said in a statement that it “takes a thoughtful and strategic approach when choosing store locations, carefully considering many factors including community demand. We are always looking for great locations to both better meet the needs of our current customers and to reach new ones.”

Although it goes against traditional thinking in business to place to stores near each other, Starbucks has an advantage: it does not franchise its stores to local owners. “Because their stores aren’t franchised, they don’t have to worry about necessarily alienating the franchise,” Belch said.

He added that Starbucks studies an area before placing a store and bases its decision on demand, traffic, and parking, and these factors might lead to the belief that the more stores, the better.

“They call it the third place: home, work, and Starbucks, but it has just become a very successful operation,” Belch said. The coffee company hit an all-time high stock price of $58.47 Thursday.

To contact the reporter on this story: Patricia Lee at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com