No, Starbucks isn’t the next big thing in co-working

Kenneth Cheung
Aug 24, 2017 · 2 min read

I read this and this article about Starbucks and how it missed a trick on the Co-working bandwagon, but with all due respect, i don’t really think its the case. Starbucks sells coffee, they are a coffee shop. When we look at WeWorks, theres already evidence that their revenue mainly comes from SMEs looking for service+space, this concept of a co-working space filled with free thinking freelancers really is a niche concept, not something that Starbuck would pivot solely to cater for. I’d even argue that the concept of cool/hip relaxed co-working spaces for freelancers (in reverse) DERIVED from Starbuck concept of the 3rd space, if anything Starbucks saw this in the 90’s era of Friends!

Lets examine some of the finances, at WeWorks its 220USD/month for a hot desk with 24/7 access. so, around 7USD a day, lets assume a hot-desker takes up about 2 SQ-FT so thats 3.50USD/day/SQ-FT in revenue. lets say that (like gyms)we can double up, or even triple up the occupancy, so now we’re looking at 10.50/day/SQ-FT. (we’ll ignore costs) — as you can see, for a 1000SQ-FT . thats around 10,500 UDS rev/day.

A tall fresh brew from starbucks cost about USD 1.85, lets image how many cups of coffee are ordered per hour as being around 10 cups (adjusting, back of a napkin for other drinks, time of day etc) thats 18.50 / HOUR!!!!!

with this kind of math, its clear why starbucks didn’t do a WeWorks. will they? maybe, is it worth it, perhaps, but if i can make USD 18.50 an hour with 10SQ-FT (148USD/day on a 8 hour day) of space as a concession, vs USD 52.50 (WeWorks style) — why wouldn’t I?

I was in a debate about the atmosphere of Starbucks and how that affects the brand and i think theres value to that debate, but again, the numbers make it clear, adding the facilities to allow Starbucks to be more co-working FRIENDLY, make more sense than a full-on pivot.

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Kenneth Cheung

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