I do not drink coffee and I have never set foot in a Starbucks. At the same time, I don’t ridicule those who do. As we all do, at times I spend my own money in ways that others would find frivolous.
I don’t think their coffee is overpriced either. People who consume coffee in Starbucks are buying more than a cup of coffee—they are buying the Starbucks experience. Since I don’t consume Starbucks, I won’t attempt to define what the experience is; but needless to say, it is real enough to have become a cultural phenomenon.
While I won’t ridicule those who consume Starbucks, I will ridicule Starbucks. Monday’s Wall Street Journal had an opinion piece by David Boaz of the Cato Institute which details the experience of David and his friend in trying to have printed on their Starbucks gift card the words “Laissez-Faire.” (Starbucks encourages gift cards to be personalized.) David’s friend “was informed that the company couldn’t issue such a card because the wording violated company policy.” David writes:
And so, at my suggestion, my friend went back to the Web site and asked that his card be issued with the phrase “People Not Profits.” Bingo! Starbucks had no problem with that phrase, and the card arrived in a few days.
I wondered just what the company’s standards were. If “laissez-faire” is unacceptably political, how could the socialist slogan “people not profits” be acceptable?
My assistant and I tried to get the company to explain its policy. We started by trying to purchase a card with the phrase “Laissez Faire,” and were rejected as my friend had been. We then asked a company spokesperson why. He suggested that it might be because “laissez-faire” is a foreign phrase. That seemed possible and a reasonable precaution.
So we tried another foreign phrase – “Si Se Puede,” or “Yes we can.” It’s the United Farm Workers slogan, now adopted by Barack Obama’s presidential campaign. That sailed right through. The senator’s political campaign slogan was acceptable.
Since Starbucks finds laissez faire to be offensive, we may speculate a bit about how they might fare in a more regulated environment. First, is it not wasteful that in some major cities, Starbucks are located very close to each other—a few blocks down the street or even across the street? Some might propose strict regulations on how many Starbucks may open in any given area. The free-market protects Starbucks from that interference.
As most of you already know, a specialty coffee costs considerably more than the basic brew at Starbucks. How much more does it cost Starbuck’s to serve a specialty coffee compare to a basic brew? Almost nothing! Of course, customers pay much more for the larger sized servings too. Yet the cost to Starbucks is almost the same regardless of serving size.
So why is the fancy or large drink price so much higher? Starbucks is simply trying to find those consumers who are less price sensitive. If you are a Starbucks’s fan and buy only a basic coffee, be glad the fancy coffee drinkers exist. They help make Starbucks profitable, they help the chain grow, and they help to hold down the price of a basic cup of coffee.
But is this not unfair? Why should consumers buying a grande latte with a shot of amaretto for $4.50 be subsidizing those who drink a plain cup of coffee for $1.50? Why should those who need a bigger size of coffee subsidize those who need less caffeine? If Starbucks finds laissez faire so offensive, perhaps they would agree to have municipal governments setting fair prices for a cup of coffee. If a flavored grande latte contains only 15 cents more of ingredients than a basic cup of coffee—in name of “people not profits”—charge the customer only 15 cents more.
Of course, I am not for any such regulation; and of course, Starbucks isn’t either—which makes their gift card stance more than a bit ridiculous. Talk about biting the hand that feeds you!