Coffee Shop Location Strategy Analysis: Cases of Starbucks and Cafe LaDra

Before we start work on developing a proposal, let's listen to some business people from some companies talk about what is important for them in deciding on a location. Starbucks have stores all over the world in many different locations. Listen to David Brewster from Starbucks talk about how the company chooses locations for their stores. As you listen, think about these questions. How is Starbucks sensitive to location? How does location affect hiring and the design of a store? What extra things or amenities in the store does he mention? And what other things does Starbucks think about when deciding a location? It has a lot to do with sensitivity to the neighborhood each store is in, or setting even if it's not a neighborhood, it's a college campus or a hospital or whatever. Being very attentive to the unique characteristics of whatever that setting is, hiring locally, so that after a couple of visits you become pals with the Brewster at 8 in the morning, and they know your name and they know your drink.

I think there's also a lot of attention paid from an architectural and design point of view to the location and its setting. So a lot of our stores take, I would say, guidance or hints from the surroundings. If it's a modern contemporary office building, if it's an older neighborhood that we try to fit ourselves in without seeming too corporate, whatever the setting is, there's definitely a sensitivity about how people in that environment are going to feel comfortable when they come into our stores. And that includes the music and the lighting and the furnishings and all of those things we think about as well. So that as you visit, you feel comfortable, it feels familiar, it feels safe, and then we have lots of amenities for you like free Wi-Fi and great music overhead and all kinds of everything. So that's all for the product and on top of the great customer service.

Now listen to Jack Kelly, the founder of Cafe LaDra, talk about how they decide on the location for any new coffee house. As you listen, think about the following questions. One, currently is the company actively searching for new locations? Two, what is special about the location of their next coffee house? Three, why does Jack mention density? By the way, density means the proportion of people living in an area. An area with high density has a lot of people living in a small area. Volume means the amount of something, for example, the amount of sales. Well, right now we really are not actively pursuing more retail. So I am not working with real estate agents currently. Where in times in the past I've been looking very aggressively. Our wholesale department and roasting department is the part of our company that is really growing and has the trajectory we want. So for me to look at new retail, it has to be something special for us. So people bring those things to us. They call us all the time. Obviously, lots of building going on in Seattle right now. So we get phone calls all the time.

This one in particular, I knew the company who was building this location. I knew the quality of work that they do. And it's in an area that is highly dense, very dense population of South Lake Union. So the location has about 450,000 square feet of office above. So we know that that's going to yield a certain amount of volume. And then the rest of the neighborhood around will be quite confident that there will be great foot traffic. So those are the things that we look for as density of population. So we can have a lot of volume for the cafe.