Tag Archives: #Economics

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The poor economics of Starbucks

While I would expend the effort to drive for a Wawa coffee, it’s pretty foolish to spend $4.50 or more for a Starbucks coffee that I can make at home for 50¢!

Sadly, the days of the wife sending her husband off to work in the morning with a lunchbox in his hand and breakfast already in his stomach are gone. Many, many businesses have grown up around that societal and economic change, with all sorts of chain and local stores selling coffee and a bagel — sesame bagel, dark toasted, with butter for me, thank you very much! — but I have to ask: has the market become oversaturated with some of these businesses?

Starbucks kind of broke the mold, with its waitresses now becoming ‘baristas,’ and its fancy shops and eight million different flavors and brews. The average prices that can be found on the internet vary wildly, but $4.50 seems to be about a midpoint.

Now, the company is having problems:

Why Starbucks is closing these six Philly locations

Starbucks has seen sales decline over six consecutive quarters.

by Erica Palan | Monday, September 29, 2025 | 12:44 PM EDT

Starbucks, the Seattle-based coffee powerhouse, announced last week that it would immediately shut down hundreds of underperforming stores and eliminate 900 corporate positions.

The cuts come as Starbucks has seen sales decline at stores open for at least a year for six consecutive quarters. The company’s shares have fallen about 12% in the past year.

The chain is grappling with rising labor costs, in addition to rising coffee prices.

We have twice previously reported on Starbucks and other coffeehouse workers efforts at unionization, and how OCF coffeehouse owner Ori Feibush simply closed his three Philadelphia coffee shops when the workers decided to unionize. The coffee shops were not profitable anyway, and were only a small part of the owner’s businesses, so he could afford to do it.

Checking Amazon, the Keurig which looks closest to ours, as pictured above, lists for $109. If a person is spending $4.50 every working morning, for coffee that costs me roughly 50¢ at home, he will have paid for that Keurig, and the coffee pods it uses, over the course of 27 workdays. That ignores having to physically stop at the local Starbucks, and whatever fuel he spent if it was out of the way on his way to work.

We also have a toaster, so I could toast a bagel at the same time! 🙂

Starbucks workers have been whining that the closures are the result of management fighting unionization:

Employees impacted by the store closures were notified Friday.

On Sunday, about 35 Starbucks union members gathered in front of the location at 16th and Walnut Streets in protest. They say they’re prepared to strike if the company doesn’t return to the bargaining table to negotiate higher wages, staffing levels, and healthcare benefits.

Over the last few years, Starbucks baristas in Philadelphia and beyond have taken efforts to improve worker protections. Some have been successful in establishing unions, while others have not. According to Starbucks Workers United, there are more than 12,000 unionized Starbucks baristas at more than 650 stores.

So, out of 18,734 Starbucks stores, only about 3.47% have been unionized. Management doubtlessly considers that a serious problem, but does it account for sales dropping for six consecutive quarters? Probably not, but it does point out the rather obvious problem of workers trying to unionize a shrinking company. It’s less expensive to shutter an economically underperforming store.

Three of the closed stores in Philadelphia — 1801 Spruce St., 1709 Chestnut St., and 1500 Market St. — are not unionized. Three others — 1900 Market St., 1128 Walnut St., and 490 N. Broad St — are unionized.

This is a matter of economic competition. If people are spending $4.50 every workday morning just for a cup of coffee they could Keurig themselves, that’s $1,080 in a 240-workday year. After four years of Bidenflation, there just might be a few families that decide that Starbucks every morning just isn’t that good an idea.

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How does it work, going on strike in a job for which a replacement can be trained in half a day?

This site reported, back in June, how the ‘baristas’ at the OCF Coffee Shops in foul, fetid, fuming, foggy, filthy Philadelphia moved to unionize, and then owner Ori Feibush simply closed all of the shops he owned.

Now the Starbucks Workers United union has announced, on Bluesky, that they ain’t going to take anymore, that they’re going out on strike!

In the heyday of unionization, unions were representing workers who actually had some skills, workers who could not easily be replaced, because their skills were needed to do their jobs, and it took a long time to develop those skills. Perhaps, just perhaps, pulling a cup of coffee isn’t that difficult a skill to learn?

I’ve mentioned it before: rather than driving to a coffee shop, and paying $3.50 or $4.25 or whatever for a ‘barista’ to pull a cup of coffee for me, I can make it at home, in less than a minute, in my Keurig, for roughly 50¢. I’m saving money on the coffee, saving the environment a paper cup to be recycled or thrown in the trash, saving however much gasoline I would burn to get to such a coffee shop, and saving however many miles of additional wear-and-tear on my truck to get me there and back.

I am wryly amused.

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Oh the poor little lambs who don’t want to return to the office!

During the COVID-19 panicdemic — no, that’s not a typographical error, but is spelled exactly the way I see it — employees who could work from home were told to do so. As it happened, my younger daughter, an IT/communications professional, worked from our farm. Fortunately, I had already installed an outdoor electric receptacle on the screened-in porch, and she did a lot of her work there.

A cup of raktajino — Klingon coffee — in a mug celebrating my status as a descendant of white, Christian, settler colonialists to start the morning.

And she was quite honest about the whole thing: she was just not as productive working at our home. With cats and dogs and chickens, with fine Kentucky spring and summer weather, there were simply too many distractions.

And it’s good for the employees as well . . . as long as they are not Jeffrey Toobin. A cup of coffee in the morning costs me 50¢, not $4.50 at Starbucks.

Logically, if most employees were as productive working from home as they are at the office, employers would love that. Having employees working at home means that employers could maintain smaller offices, have smaller parking lots, reduced janitorial services, reduced office ‘perks’ expenses, just a whole host of things. It only makes sense to require people who could work from home to come into the office if productivity is a real issue.

From The Wall Street Journal:

Meet the People Who Refused to Go Back to the Office and Lost Their Jobs

These people are coming to terms with the fact that they might never work from home again

by Callum Borchers | Wednesday, December 11, 2024 | 9:00 PM EST

If you’re reading this from your home office, it’s time to consider whether you’re prepared to lose your job over a return-to-office mandate. Continue reading →

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Ivy League research associate wants clerks at Wawa to pay for her commute

Talia Borofsky, from her Twitter profile.

Cry me a river! Talia Borofsky is “a postdoctoral research associate in Princeton’s High Meadows Environmental institute, where she researches the evolution and ecology of cooperative hunting.” Dr Borofsky lives in foul, fetid, fuming, foggy, filthy Philadelphia but commutes to work at Princeton University, and she greatly saddened by the fact that cashiers at WalMart and hamburger flippers at McDonald’s won’t be paying as much for her daily commute!

Amtrak’s sudden fare increases bite the hand that feeds it

Amtrak recently raised multi-ride fares along the Northeast Corridor without adequate prior warning to its ridership. The drastic increase is a slap in the face to taxpayers, writes Talia Borofsky.

by Talia Borofsky | Thursday, August 15, 2024 | 12:00 PM EDT

In July Amtrak raised multi-ride fares along the Northeast Corridor by anywhere from 32% to 70% without directly notifying its ridership in advance.

Amtrak, a federally funded and federally majority-owned company, is meant to serve the public. The drastic fare increase is a slap in the face to taxpayers after the infrastructure bill dedicated a total of $22 billion in direct grants to the company.

You might think from Dr Borofsky’s first two paragraphs that her complaint is that she wasn’t notified far enough and directly enough in advance, but that’s not it. What upsets her is that she’s having to pay more for a direct service she receives.

Investopedia notes:

Amtrak receives considerable subsidies from both state and federal governments but it’s managed as a for-profit company. This isn’t unusual. No country in the world operates a passenger rail system without public support.

But Amtrak’s “for-profit” status is sadly ironic. The train company has never been profitable since its founding nearly fifty years ago. It’s only thanks to its subsidies that the company has survived.

In other words, Dr Borofsky’s daily commute has never been entirely paid for by her fares. It has always been subsidized by taxpayer dollars, many of which are taken from people who earn less money than she does. But hey, if you’re a daycare worker in Philly, or a laborer for a roofing company in Lexington, shouldn’t you be glad to know that some of the money you pay in taxes goes to pay for “a postdoctoral research associate” at an Ivy League university, who earned her doctorate at Stanford, the hoitiest and the toitiest of the colleges west of the Mississippi, to research “the evolution and ecology of cooperative hunting”?

As a postdoc at Princeton University, I commute from Philly to Princeton using Amtrak. This commute used to make financial sense; rents in Philadelphia are almost half the price of those in Princeton, and Princeton provided a helpful although limited commute subsidy.

However, the commute became unaffordable for me and likely many others on July 1; the 10-trip (one-way) ticket package between Princeton and Philly shot up from $230 to $390, and the monthly pass increased from $576 to $975. These sudden increases have impacted many postdocs and graduate students at Princeton, whose budgets were already strained by the previous fares.

There’s such a whiff of elitism from Dr Borofsky’s OpEd. As a “postdoctoral research associate” at an Ivy League university, she is paid much more than most Philadelphians. According to Glass Door:

The estimated total pay range for a Postdoctoral Fellow at Princeton University is $57K–$67K per year, which includes base salary and additional pay. The average Postdoctoral Fellow base salary at Princeton University is $62K per year.

The minimum of $57,000 is slightly higher than the median household income of $56,517 for Philadelphians overall. But Dr Borofsky apparently believes that the baggers at Giant Food Mart or the clerk at Wawa brewing her large coffee for the train ride — yeah, I’m guessing about that last, but everyone in Philly should drink Wawa coffee! — should have to contribute a bit more to pay for her train ride.

Dr Borofsky continued to tell readers about Amtrak’s poor service, and that the suddenness of the fare increase was “exploitative.” I have no qualms with her point that the increase was sudden, nor that Amtrak’s service isn’t the greatest.

But it’s her concluding one-sentence paragraph that gets me:

Train travel should be viable for all, not just the wealthy.

No, train travel should be available to those who pay for the service. Why should I, a retiree, be required to pony up some of my tax dollars so that Dr Borofsky doesn’t have to pay for the service she receives? Why should the janitors at Princeton be required to help fund her commute?

The subtitle of her article states, “The drastic increase is a slap in the face to taxpayers,” but no; the drastic increase is a boon to the taxpayers, the ones who are already subsidizing her train ride. The good research associate should pay for the services she receives herself.

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I know how to save The Washington Post! Find a new billionaire owner who doesn't care if the paper is losing money!

I know how to save The Washington Post! Just have Jeff Bezos, net worth $196 billion as of June 4, 2024, owner of the newspaper, give it to MacKenzie Scott, net worth $33.3 billion as of June 4, 2024, Mr Bezos’ ex-wife and a noted philanthropist who has no problem in giving away her money. Just a straight-up reassignment! Mr Bezos stops losing $77 to $100 million a year on the Post, and Miss Scott, with five times as much money as Patrick Soon-Shiong, net worth $6.3 billion as of June 4, 2024, and who is finding the Los Angeles Times’ losses too much to bear, can easily handle losing money, because she doesn’t seem to care if she makes money or not. Continue reading →

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Lies, damned lies, and statistics Who are you going to believe, Joe Biden, or your lying eyes?

“The Party told you to reject the evidence of your eyes and ears. It was their final, most essential command.” — George Orwell, 1984

The official inflation rate has come down from its highs earlier in the Biden Administration, and the Democrats are arguing that inflation has been whipped, that wages are rising just as fast as prices, and even a little bit faster. But Erin McCarthy of The Philadelphia Inquirer wrote something that just doesn’t go along with the Democrats’ meme. Continue reading →

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The Golden Rule

Have you heard of the Golden Rule? “He who has the gold makes the rules!”

We have noted, many times, how deep-pockets donors have reacted very badly to the tolerance of anti-Semitism on campus. Several major corporate CEOs have said that they would not hire Harvard students who signed a stupid document blaming Israel for Hamas’ October 7th attack, and at least one CEO has said he will never again hire anyone from Harvard, MIT, or Penn following the three presidents’ debacle. Continue reading →

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But, but, but, it’s just so unfair! Caitlin Clark's new endorsement deals are all about the Benjamins

Caitlin Clark was the top NCAA women’s basketball player this past season, and was the number one draft pick by the Indiana Fever. She was the major reason that the Iowa Hawkeyes’ women’s team got more coverage this year, and that the women’s tournament drew a lot more viewers than the norm. And, as her rookie season begins, the advance television schedule shows that the Indiana Fever will get a lot more national television coverage. Continue reading →

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When a reporter has more of an agenda than an understanding of economics and business.

We have twice reported on the decisions of Wawa to close down some stores in foul, fetid, fuming, foggy, filthy Philadelphia. The late Josh Kruger complained bitterly about such.

This crime is not new, and The Philadelphia Inquirer reported that the Headhouse Square Wawa “will become the sixth Center City Wawa to shutter since 2020.”

So, you would think that an article in the newspaper on food ‘deserts’ in some Philly neighborhoods would at least mention crime. But, if you did think that, you would be wrong.

About 40 million people in the United States don’t have access to a full-service grocery store

The 2023 update of the Limited Supermarket Access Study examines the lack convenient access to health food options across the nation — and in Philadelphia.

by Lynette Hazleton | Thursday, March 21, 2024 | 5:00 AM EST

What food is available has everything to do with the food stores that are available.

When the food store is a full-service supermarket, like the ShopRite in Parkside, it usually means you will have the access to a wider variety, higher-quality and lower-cost food, explained Michelle Schmitt, a senior policy analyst at The Reinvestment Fund (TRF) as she walked around the bustling 15-year-old supermarket.

As you can see, the article wasn’t produced by the regular Inquirer staff, but the Leftist Lenfest Institute for Journalism, the non-profit which owns the newspaper. I have previously noted that, as a subscriber, I sometimes receive begging for donations letters from the Leftist Lenfest Institute.

When you don’t have the same access to high quality food as you do to chips, fast food and soda, it can contribute to an unhealthy eating pattern that can ultimately lead to chronic disease.

How is it that Lynette Hazelton, the Philly native who reported this story, couldn’t bring herself to note that the densely-populated rowhouse neighborhoods which make up a significant part of the city’s neighborhoods don’t really have room for a huge Giant Food Mart? Yes, there are corner bodegas in most of the neighborhoods, where you can get those chips, fast foods, soda, beer, lottery tickets, and the occasional bullet in your chest. But the kinds of supermarkets that Miss Hazelton envisions take up around ten acres when parking lots are included.

Schmitt is the main author of the 2023 update to the Limited Supermarket Access (LSA) study which determines who is and is not well served by their grocery store. The official definition for limited supermarket access is 500 people in a low income tract where urban members are more than a mile and rural shoppers are more than 10 miles to a full service store. It is the fourth update since 2010 and the first to include Alaska and Hawaii.

The big take away: about 40 million Americans live without easy access to healthy food options.

Take Parkside, Belmont and Mantua neighborhoods of West Philadelphia. Together they are home to roughly 48,755 residents. Virtually all the blocks are very densely populated, 66% Black and almost half the people had an annual income of $25,000 in 2021, the latest data available.

This was some sloppy writing. Did Miss Hazeltom mean that $25,000 was the median income?

While this is the neighborhood many traditional stores would overlook, it is the type of neighborhood that the LSA study showed was in desperate need of a supermarket.

OK, why would “many traditional stores” overlook those neighborhoods? The author noted that “Virtually all the blocks are very densely populated,” which means less available area to put in a ten-acre supermarket. The neighborhoods are mostly poor, and grocery stores “operate on razor-thin profit margins. The industry average is between one and three percent, far below other retail sectors. With such lean margins, grocery stores rely on high sales volume and inventory turnover to thrive.” Then you throw in Philly’s crime rate, and the obvious question is easy to determine: how could a supermarket make a profit there?

Supermarkets were once associated with suburbs, and by the 1970s seven out of every ten food dollars were spent there. But also supermarkets did not place their businesses in low-income communities which lead to real consequences.

This paragraph alone tells you just how poor Miss Hazelton’s article was. The source she hyperlinked told her that grocery stores in Philly were mostly the ‘corner grocery store’ type, operating in the rowhouse neighborhoods, yet somehow, she couldn’t figure out that those neighborhood structures dictated the kinds of grocery stores that were there. In more rural areas, we had “general stores” before supermarkets were developed, and many lament that so few of those old general stores exist. Alas! The old general store that was near where I now live went out of business, became someone’s auto repair shop for a while, and is now a small volunteer fire station. Kroger and Giant and Aldi forced those old country general stores out of business, but in the suburbs and rural areas, there was the physical room for supermarkets.

Perhaps it’s as simple as the reporter having more of an agenda than an understanding of economics and business.