Starbucks open-bathroom policy driving customers away –study

Woke as ever, Starbucks touted its rising profit from same-store sales as an indicator that its policies and plans, presumably its open-bathroom policy, was working.

That was the policy put into place to allow all comers, whether the homeless, the drug-addicted, or the general bums to use the store bathrooms without buying a thing.  It happened in response to a racial incident with some non-paying customers who wanted to use the facilities, including the table space and the bathrooms, or else "racism."  Starbucks was all apologies and bent over backwards to accommodate everyone involved.

Not so fast.

A Texas study finds that actually, there might be a problem, according to this report from Yahoo! Finance:

Starbucks' (SBUX) changes to its bathroom policy appear to be impacting foot traffic for the coffee giant, despite sales that have outpaced expectations, according to recent data.

Since opening its bathroom doors to the public in the wake of a controversial incident in Philadelphia, the coffee giant has seen a 6.8% drop in store attendance per month relative to other coffee shops nearby, according to the findings of a joint study from the University of Texas at Dallas and Boston College.

"When you throw open the policy to let people come in and just use the bathrooms and the tables, maybe people come in and find the bathrooms are dirty, and the tables are crowded," David Solomon, Assistant Professor at Boston College Carroll School of Management, told YFi PM. "And so they don't buy the coffee as well."

Starbucks was quick to decry the report as nonsense, citing its fine overall store numbers.

"Customers are visiting Starbucks at record numbers," a spokesperson told Yahoo Finance. "Rather than tracking cell phone data without user knowledge, we see real customers in our stores and the connections they make with our partners (employees) every day across more than 31,000 stores."

And, if you look at its most recent fourth quarter and full year 2019 report, yes, same-store sales are up, and more stores have opened. 

But there are some caveats. 

Starbucks says it has more than 31,000 stores.  The open-bathroom policy may be in place everywhere, but it's likely that only the blue cities that encourage homelessness are the ones seeing the greatest drops in traffic.  The Texas study looked at only some of Starbucks's stores, some 10,000 of tem, which were in areas where other rival coffee shops were present.  That sounds like blue city dynamics to me.

It's natural to think that letting the homeless in would be a traffic deterrent.  Assuming there was table space, who would want to share a space with someone who might be doing drugs or using the space to panhandle or plan robberies?  It's a no-brainer to other stores, which are posting even higher profits, but Starbucks keeps sticking to its policy.  Here are some same-store sales figures from what analysts call Starbucks's nearest rival, Dunkin' Donuts.

Stock investors always look for the group leader among similar industried stocks.  If the Dunkin' Donuts figure is anything like what it was last year, it might just be customer flight, as the study suspected.

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