Starbucks isnít really in the coffee business. Weíve known that for over a decade. McDonaldís coffee is better and cheaper than Starbucks, but that hasnít done any harm to the coffee shopís bottom line. Thatís because what people are paying for when they hang out at a Starbucks, isnít the coffee. Instead, itís the "third space" ó that place, neither home nor office, where you can sit down, meet people, work, rest a minute, recharge. And it turns out to be much easier to give that space away "for free" with expensive coffee than it would be to try to charge for that space and time directly.
In order for Starbucksí business model to work, then, it needs to rely strongly on shared social norms. The company can absolutely cope with some people just coming in to wait for a friend or go to the bathroom, even if they donít buy anything; it doesnít need rules to prevent that. It just needs that behavior to not be too common.
Thatís where social cues come in ó the same cues that make it difficult to enter an austere high-end art gallery or keep posh hotel lobbies surprisingly empty, even in very crowded districts. We humans want to feel that itís okay for us walk in somewhere and make ourselves comfortable, to sit down, hang out, wait, do nothing in particular. And Starbucksí entire business model is predicated on getting those cues exactly right: to make people feel welcome, but also to make the same people feel social pressure to buy something.
Those cues are subtle and, perforce, vary enormously by location. Iíve spent a bunch of time working in various branches of the New York Public Library, observing how relatively small differences in architecture, demographics, and staff behavior can have an enormous effect on the perceived acceptability of things like talking to other people, or taking a phone call, or just sitting in a chair and not reading anything.
The job of a Starbucks manager, then, is to constantly be aware of social interactions in the store, and to try to keep it as welcoming as possible to as many people as possible, while at the same time not being too welcoming to people who arenít going to spend any money.
The manager will inevitably, sometimes, become the de facto enforcer of social norms. If everybody else in the store is angry and resentful at the person who has taken up a huge table for hours, without ordering anything, talking loudly on the phone the whole time, then ultimately itís up to the manager to talk to that person and resolve the situation to general satisfaction. Thatís not an easy job, and the wide range of discretion that the manager has in such situations is exactly the kind of place where racism can fester.
In Philadelphia, the store managerís actions created a bad situation that made her customers furious, to the point that they took out their phones and vocally objected to what was going on. If any manager feels empowered to act in such a manner, thatís reason alone for a CEO to call an all-hands and try to right the ship.
But for Starbucks, the crisis is even more urgent than that. Once you become a multibillion-dollar household name, norms change: While people instinctively know the polite way to behave in a locally owned coffee shop, there are fewer social norms for how to deal with multibillion-dollar corporations. The men arrested in Philadelphia were keeping up their side of the social contract, behaving politely and respectfully.
But once we see the police being called, thereís an understandable tendency to move away from a mindset of being polite, and to move instead toward a more aggressive mindset of demanding certain rights. Few people are going to feel guilty when the only harmed party is a faceless corporation with vast power and wealth.
Thatís why the coming racial-bias training day is so important for Starbucks. The companyís entire business model is contingent on managers retaining a large amount of store-level discretion, dealing with situations on a case-by-case basis as and when they arise. Social mores canít be written down in a rulebook, canít be codified in a simple yes-or-no response to questions about whether people are allowed to sit down without ordering a coffee, or use the restroom while waiting for a friend, especially when your whole model relies on remaining a "third space." Everything depends on context ó but as weíve seen, itís all too easy for racist attitudes to infect that decisionmaking process and engender entirely justified anger aimed at the Starbucks brand nationwide.
The training, then, is not just a piece of standard corporate contrition in the wake of an unpleasant news cycle. In the context of Starbucks in particular, itís a recognition that its profits come not from selling coffee, but rather from showing millions of Americans an open and welcome attitude thatís friendly and inclusive.
For Starbucks, racism isnít just bad PR: Itís an existential threat to the entire business model. Fighting its scourge is an ongoing project, not something that can be tackled in an afternoon. And the company is aware of that. Besides, the act alone of shutting 8,000 stores, forgoing millions of dollars in revenues, sends a clear message to employees. Itís absolutely necessary for the company to take a significant step forward, given the magnitude of the backward step that the country witnessed in Philadelphia.
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