Starbucks Store Clustering Strategy: Explaining Locations on Opposite Sides of a Street

Some Starbucks locations come in pairs: one store on each side of the same road, close enough that a customer at one can see the other. Explain why Starbucks would choose to run both stores instead of a single one at that spot. Cover what the second store gains, what it may take from the first, and the conditions under which running the pair makes business sense. ```hint Follow one customer's commute Picture a driver who wants coffee on the way to work and spots a store on the far side of the road. What does reaching it cost them, and where does their purchase go if Starbucks is only on one side? ``` ### Clarifying Questions - Is this a busy multi-lane road where crossing or turning across traffic is slow, or a walkable street that is easy to cross? - Are the two stores the same format, or is one a drive-thru and the other a café or a counter inside another business? - Are both stores company-operated, or could one be licensed to another operator with different economics? - Should I only explain the rationale, or also judge whether it is a good strategy and how to verify it? ### What a Strong Answer Covers - How a coffee store's revenue depends on passing traffic, the share who stop, order value and peak-hour capacity - Customer-side reasons the second store wins sales: direction of travel, the cost of crossing, waits at peak - Business-side reasons: denying the site to competitors, brand visibility and shared operating costs - Cannibalization: how to tell whether the pair adds net sales or only splits existing ones - The conditions under which twin stores are a mistake ### Follow-up Questions - How would you measure how much of the new store's sales came out of the original store? - What evidence would lead you to close one of the two stores? - How do mobile ordering and delivery change the case for placing stores on both sides of a road?