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A few days ago I wrote about how the smallmarts of the world compete with much larger companies. Then a story appeared in the Kansas City Star that really hit home and I couldn’t pass up revisiting this idea.
There is a small coffeehouse in Kansas City’s Westport District called the Broadway Cafe. Broadway is in all ways local. Lots of character and characters, a very sweet, personable owner, homegrown from the tile to the ceiling. About 10 years ago a storm surrounded the store when Starbucks announced the location of their first store in the Kansas City area would be right next door, like, sharing an internal wall next door.
The locals petitioned and marched and met with City Council members over the injustice of this.
As it turns out, a funny thing happened. Broadway Cafe did not go out of business, in fact, some would say business grew. Now, how could that be? The fact of the matter is Broadway Cafe didn’t compete with Starbucks and never tried. It was amusing to drive by and see both stores busy with customers. A sociologist would have a heyday with the distinct make-up of each store’s demographics.
“I was nervous, I didn’t know how people would react,” said Sara Honan, co-owner of Broadway Cafe with Jon Cates. “But once (Starbucks) opened and people just didn’t flock next door I thought it was kind of funny that a Starbucks would be so close. We just did our own thing, making good coffee.”
Notice in the sentence above I said was - the article I referenced in the Kansas City paper was pointing out that the Starbucks location was closing this week, the first to do so in the area. Now, did Broadway Cafe bring Starbucks to its knees, no, not really, they just went about being authentic and didn’t panic when a large competitor came along - that’s the lesson.
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This entry was posted on Friday, December 14th, 2007 at Dec 14, 07 | 6:50 am and is filed under Small Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
that’s a great story!
i can’t imagine how nervous those guys must have felt at first.
and by the way: it’s “Goliath”, not “Golieth”.
I have seen this happen else where with Starbucks. In Eugene, Oregon, we have a couple coffee shops that pull this off.
Near the University of Oregon are Cafe Aroma and Starbucks, which is 2 stores down and on the corner. Both are successful. Cafe Aroma is known as the anti Starbucks and attracts a loyal customer base.
Full City Coffee is the other major rival. Located in downtown Eugene, there was quite a commotion when Starbucks came in. The local shop is still doing better though. Better in fact then they were doing before because more coffee drinkers flock to the area and realize the charm and uniqueness of the smaller chain.
It is similar in a way to the craft supply stores and botiques that will move in next door to a Wallmart… at first thought, one assumes that they won’t be able to compete. A second glance suggests that the big store creates added traffic which then translates to more traffic for all.
Don’t know if it quite applies in this case, but sometimes having siilar stores near each other helps business for all. It makes life easier for potential customers to know that if they want to look for antiques, or kitchens or whatever, then there’s a whole bunch of similar stores near to each other. It draws more customers in than would otherwise have happened so all the stores benefit - especially if there are similar, but different, things in each store. Doesn’t normally happen with coffee, but perhaps the stores were similar enough that if you want to go for a coffee, you had more choice by going to where they both were; but different enough that you didn’t end up with cut-throat price competition.
Ian
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As you pointed out, this is a wonderful opportunity for a sociological study. Let’s throw in marketing research. Starbucks fills a niche, offering convenient with mediocre coffee and service, high priced food, and wireless internet. Road warriors can have a quick meeting or get some work done in a familiar environment.
Broadway Coffee had an established customer base. In my opinion, Starbucks made a mistake opening next door and never had a chance.
Very interesting story. This is especially interesting to me as starbucks always tries to be more about the experience and community of coffee rather than “just” the coffee.
However they have gotten so big that people are beginning to think of them closer to McDonalds and the local coffee shops are the ones that have the unique experience and community.
I expect to see a decline of Starbucks in years to come, they seem to have hit their peak.
Tipper,
I don’t know that I agree and this certainly wasn’t meant to come out as me picking on Starbucks - I like Starbucks a lot - in fact that’s where I am right now typing this.
The point of the story to me is that small companies have a competitive advantage if they choose to use it.
That’s true whether the competitor is Starbucks or Bob’s All Night Cofee
Great article and nice blog. One of my favorite concepts that I talk to people about is just that - Authenticity. Most people do not realize the power of being authentic and true to who you are… especially if what you are doing is already working. Broadway Cafe had already tapped into the power and profitability (my assumption) of being who they were, then they dug in deep and stuck to what whey know. Good for them, very mature business ethic. Thanks for the article.
They also have the best espresso in the world! I have it everyday!
There was an interesting article on Slate about this phenomenon. link to article