Starbucks' Store Location Approach Examined

10News Viewers Ask Why So Many Starbucks Stores Are Built Near Each Other

10News set out to answer a question that many viewers have been asking: Why are many Starbucks stores built so close together?

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On YouTube, there are videos that show a Starbucks store across from another Starbucks store. There is also a doctored photo making the rounds that shows stairs connecting one Starbucks store to another to another and so on.

In Scripps Ranch, you'll find a perfect example of this. There is a Starbucks store in a shopping center just three doors down from another one inside a Vons grocery store.

"Yeah, that's really weird for me, I never understood that," said San Diego State University student Matthew Acevedo.

"I think it's kind of dumb, but I mean, they make a lot of money," added Kristin Lahaszow of Seattle, which is home of the Starbucks company.

In 2011, Starbucks amassed a record-setting $11.7 billion in global revenue.

SDSU marketing professor George Belch said there's a method to the company's madness. He said Starbucks CEO Howard Schultz gave an answer to this question of why they seem to have a store on every corner.

"He said the answer is very, very simple: to reduce the lines and the waiting time for the customer," said Belch.

In a statement, Starbucks said: "Starbucks takes a thoughtful and strategic approach when choosing our 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."

But to some, that still does not make sense.

"Usually in business you can't put two places that close together, it just takes away from each other," said consumer Mike Trent.

That's where Starbucks seems to have an advantage. Unlike many chains, including McDonald's, Starbucks does not franchise its stores to local owners. The company owns most of its stores.

"Because their stores aren't franchised, they don't have to worry about necessarily alienating the franchisee," added Belch.

Starbucks does put stores in other stores, including Vons, Target and Barnes and Noble, but those are licensing agreements which Belch said give Starbucks more control than a franchise would.

Belch said Starbucks studies an area before putting a store there and based on things like demand, traffic and parking, they may conclude multiple stores will serve customers better.

"They call it the third place: home, work and Starbucks, but it has just become a very successful operation," said Belch.

The company hit an all-time high stock price of $58.47 on Thursday.

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