[RETHINK Retail]—Starbucks Corporation is branching out. The cafe chain confirmed that it intends to own and operate 100 more stores by 2025 in underrepresented neighborhoods countrywide. In a national partnership with United Way, the company reportedly distributed 1,000 neighborhood grants to local non-governmental organizations (NGOs) to expand their community impact. But judging from a Harvard Business School paper, the store openings may be met with mixed opinions from community members—if it’s not done correctly.
The downside of Starbucks openings in underserved communities
When new stores, restaurants, cafes and bars are built and/or opened in a community, this adds value to the neighborhood. Unfortunately, it may be at the expense of local residents. In the Harvard study (via CNBC), economists used the business directory service Yelp to track gentrification results from Starbucks openings. They found that each Starbucks store that opened in any ZIP code has been associated with a 0.5 percent increase in housing prices within a year.
While Starbucks openings cannot be confirmed as the direct cause for gentrification, the community reaction can be used as a determining factor for the future of the neighborhood.
“The presence of a Starbucks is far less important than whether the community has people who consume Starbucks,” Harvard economics professor Edward Glaeser wrote in the paper. “Consequently, we think that this variable is likely to be a proxy for gentrification itself.”
In the meantime, Starbucks appears to be trying to make themselves more welcome in the community, and that includes working with the community.
Trying to change the community relationship odds
According to Starbucks’ official site, the chain of stores will focus on local hires and creating dedicated community spaces for their new stores. They also plan to work with diverse contractors for store construction and remodeling. If all goes well, the 100-store expansion will be completed by 2025.
While expanding into economically distressed communities, or Opportunity Zones, Starbucks will look into improving areas with high youth unemployment, low median household incomes and population stability.
The community store initiative has already opened 14 stores since 2015, in the following locations:
- Birmingham, Alabama
- Phoenix, Arizona
- Long Beach, California
- Miami Gardens, Florida
- Jonesboro, Georgia
- Chicago, Illinois (Englewood neighborhood)
- New Orleans, Louisiana
- East Baltimore, Maryland
- Ferguson, Missouri
- Trenton, New Jersey
- Brooklyn, New York (Bedford-Stuyvesant neighborhood)
- Jamaica Queens, New York
- Dallas, Texas (Redbird neighborhood)
- Seattle, Washington (White Center neighborhood)
And this spring, the 15th Starbucks will open in Prince George’s County, Maryland.
Additionally, the chain plans to make the following neighborhood improvements to help these communities embrace recent store openings:
- Create more than 300 local jobs
- Generate more than $59.7 million in indirect economic development from store construction
- Hire more than 1,100 construction workers for indirect jobs
- Eliminate barriers that would often be used to prevent diverse-owned contractors from helping to build stores
- Provide 14 community spaces decorated with local artwork that reflects the community
And judging from Yelp reviews, Starbucks has kept its promises.
The community responds to the Starbucks expansion
While there are Yelp complaints about mediocre customer service, incorrect drink orders and occasional issues with parking—not uncommon for any Starbucks, cafes or restaurants overall—the new locations are noticeably missing gentrification-related complaints.
The trend of both happy and unhappy consumers is particularly important considering the recent studies related to how Starbucks changes the future of certain neighborhoods. And generally speaking, residents seem pleased with the openings and how they still represent their communities.
A Brooklyn resident pointed out how the Bedford-Stuyvesant location “kept the original floors from the [Fat Albert] I remember as a kid.”
A Birmingham resident mentioned that he wanted to give the new location six stars for having a “few homeless people in there with warm coffee” during the Thanksgiving holiday.
A Hialeah resident was impressed by the large conference room, calling it a “welcome addition to the area” of the Miami Gardens location, and a Tampa resident complimented the “unique” artwork with a photograph of his favorite piece.
A Chicago resident was also impressed by the local artwork and blues music playing in the background of the Englewood location. According to him, “I loved that it had African art hanging on the wall because it gives it a different vibe. It feels artsy and different with its built-in conference room inside, which no other locations have.”
While retail stores and local restaurants often rely on voluntary surveys to share consumers’ experience, store feedback on social media sites like this matter too. Yelp is one of many platforms that gives management the opportunity to keep their ears to the streets, especially when those streets have undergone considerable changes. And for companies like Starbucks that have long-term goals for the community, this helps them make sure that locals understand what their business goals are, too.