The Starbucks Phenomenon and the U.S. Slowdown

I sat in Starbucks in Manhattan yesterday morning merrily pecking away at my keyboard and constantly struck by the long line that seems to meander outside into New York’s Fall rain. I watched as New Yorkers of all stripes queued up to fork over $3.40 - $6 for various shades of brown caffeine with foreign sounding names.

Sitting there and watching the endless ka-ching of 90% margins for colored water and and steamed milk made me think that this has got to be the greatest stock to buy on the planet.

Then I turned on my new Nike watch’s stopwatch to time how long each of these wet New Yorkers spent waiting on line for coffee. Average wait time = 10 minutes. 10 minutes!! That is from the time they enter the door, get to order their Grande Latte and then have their name and favorite coffee's name screamed out by a barista. Some waited as long as 12 minutes.

Given that I see many New Yorkers strolling around midday with Starbucks coffee cups, I realized that people probably drink 3-4 cups of Starbucks a day and spend 30-40 minutes a day on their coffee fix.

As I sat on the Starbucks/T-mobile WIFI network admiring the productivity increases technology affords us, I could not get over the wasted productivity on that line. Great for Starbucks, but no wonder the US economy is on the verge of a recession. Nobody is working. Everyone is wasting the productivity gains waiting on line for coffee!

Comments

[Mick Weinstein]

I was also struck by that there in NYC... the whole pace of life slows down when residents get in those lines.

But notice how many people are checking their Crackberries in line - and what about the caffeine fixes' impact on worktime productivity ;)

[Johnny_Vegas]

I would expect that in New York, so many people. Here in the Midwest I either have no line or perhaps a 5 min wait tops when its busy, although I have had to wait 10 mins before when they were brewing a new pot, but they gave me the coffee for free.

[kowalski]

During my times in investment banking, when I and my collegues earned megabucks, we would drink 3 - 4 SBUX coffees [always Venti] a day per person. It was bad, really bad. It almost ruined my teeth and I suffered from sweat attacks, but still we would keep on drinking the stuff on a daily basis. I haven't had a SBUX since 2002 - the day I left banking I stopped drinking coffee! I now prefer drinking tea --- in a SBUX cup! Insane? Yes, I know.

[Kunst]

Starbucks coffee is a luxury easily reduced or dispensed with. It is not a necessity. People are looking a lot closer at what they really need (housing, food, gas) and what they don't.