Alex Schroeder
Starbucks is one of the most ubiquitous brands on the planet: Since its founding in 1971, the upscale coffee chain has expanded rapidly to more than 20,000 stores worldwide. Many American urbanites have probably grown accustomed to passing one regularly, if not frequently dropping in themselves. The company has arguably saturated the U.S. market, making its weak presence in Kansas City proper a curious anomaly. This prompted me to delve deeper into potential reasons for Starbucks’ tepid growth in Missouri’s largest city.

A book co-authored by Arthur Rubinfeld, known as the “architect behind Starbucks’ expansion,” outlines the logic underlying the company’s growth strategy. With a target market comprised of “urban professionals, high-income individuals from the age of 18 to 45,” Starbucks sought to conquer the country’s major metropolitan areas. Demographic considerations, the intensity of competition, city-specific macroeconomic conditions, and a number of other factors, determined the pattern of expansion.

The areas surrounding Kansas City are home to a multitude of Starbucks coffee shops, which form something of a ring around the city itself. This same distribution is not evident in other Midwestern cities such as Saint Louis, Oklahoma City, Omaha, and Indianapolis. We can learn a lot about certain areas from the behavior of private enterprise.

My colleague Patrick Ishmael and I intend to explore this phenomenon in greater detail. We wish to better understand why Starbucks has chosen to focus disproportionately on Kansas City’s peripheral markets. As Rubinfeld’s volume makes clear, a substantial amount of research goes into determining how capital can be most profitably distributed. Accordingly, there is almost certainly a strong rationale under-girding Starbucks’ behavior in Kansas City. Perhaps further investigation can teach us some important lessons about the business climate in the City of Fountains.

[caption id="attachment_42962" align="aligncenter" width="540" caption="Note: The green circles with white numbers simply represent areas with such a high density of Starbucks stores that individual emblems cannot be displayed. A circle with a number, n, corresponds to an area with a concentration of n stores. "]Note: The green circles with white numbers simply represent areas with such a high density of Starbucks stores that individual emblems cannot be displayed. A circle with a number, n, corresponds to an area with a concentration of n stores. [/caption]

About the Author

Alex Schroeder