COURSE: Urban Informatics | GSAPP Fall 2018 | Columbia University
TEAM: Yue Dong & Nengjing Deng
SOFTWARES: Python & ArcGIS
DESCRIPTION:
Starbucks is one of the most well-known coffee chains worldwide, along with Dunkin’ Donuts, Costa, and McCafe. In New York City, Starbucks and Dunkin Donuts are no doubt the two strongest competitors, targeting at different consumers. For a long time, Starbucks is believed to be a “warning sign” of imminent gentrification while its counterpart Dunkin’ Donuts is considered to be more friendly to poor neighborhoods. The purpose of this research is to test whether this “Starbucks effect” is substantial in five boroughs and whether the difference between brands is substantial.
The analysis consists of two parts: First, the hypothesis would be tested with 340 Starbucks and 538 Dunkin’ Donuts by linking the profile of each store with demographic data in the corresponding census block. Then the spatial analysis would be conducted, in order to identify and examine spatial factors that have an impact on the location of a franchise store.
INTRODUCTION
After the recession period, both Starbucks and Dunkin’ Donuts started to extend their footprint in New York City. In 2014, Dunkin Donuts had a net increase of 21 new stores (a 4 percent gain) and was the top national retailer of the year. Starbucks has a strong presence in Manhattan. As its franchise stores in Manhattan saturated around 2015, it begins to increase the number of new stores and further extend its footprint to the outer boroughs.
ANALYSIS
- Is the “Starbucks effect” substantial in New York City?
“Starbucks effect” depicts the phenomenon of how a Starbucks store opening increases property values. A new Starbucks gives a sense to developers that the neighborhood is on the rise, which may lead to gentrification.
In the following research, we use the income change as a proxy for observing displacement. We collected and compared the census block’ median household income for each franchise store in the year before and the year after it opened. (Since intricate factors would cause the change of neighborhood’s median income, we narrow down the time frame to two years and define income change as the delta between the median household income of the corresponding census block in the year following and its median income in the year before.)
As shown in this map, the stores marked in red depict there is an income increase in the surrounding block and others marked in blue indicate a negative income change. Indeed an increasing median income is witnessed in Williamsburg and Elmhurst, however, there is also negative income change in Park Slope and Harlem. This inconsistency demonstrates that Starbucks does not significantly lead to gentrification in these neighborhoods.
Furthermore, Starbucks does not lead to significantly higher income change than Dunkin’ Donuts does. Income changes related to the opening of Starbucks is symmetrical distribution centered on 0 and the values are relatively small. Only a few outliers, located in Midtown and Upper East, have a high percentage change in median household income, which are also not necessarily associated with displacement and gentrification.
Based on the analysis above, we find it hard to come to the conclusion that the entry of Starbucks is the start of dramatic neighborhood change. The income change before and after a franchise opens is mixed.
2. What are the factors that affect the location of Starbucks?
While the relationship between a coming Starbucks and neighborhood change is not significant in New York City, the other way round, does population density, income or purchasing power affect the location of Starbucks? And are there any spatial factor, such as adjacency to public transportation, influencing the location of a new store?
2.1 Population and income threshold
Based on the total population in the surrounding block of each coffee shop in its opening year, the minimum population density to support a Starbucks is 254 per sq mile while Dunkin Donuts require a higher population threshold of 475, which is almost doubled.
In addition, most Dunkin’ Donuts stores are located in areas with a population density of 50,000 per sq mile, 30% higher than the average population density in Brooklyn. With a high variance of the population density around Starbucks, it seems that population density is not the premium factor to influence Starbucks’s decisions.
By comparing the two coffee brands, Dunkin’ Donuts focuses on a lower-income group than Starbucks. The threshold value of the median household income for Starbucks is 40% higher than Dunkin Donuts. A similar gap is seen in the average.
It seems that Starbucks, as a premium coffee brand, is likely to chase after the rich or gentrified neighborhoods, rather than lead gentrification in New York City.
2.2 Adjacency to public transit
Close enough to the subway stations is another critical factor for the location of Starbucks. Except for Staten Island where there are no subway lines, starting from each Starbucks, one can walk averagely 390 meters (5 minutes’ walking distance) and achieve a subway station. The same number of Dunkin Donut is 782 meter (10 minutes’ walking distance).
Moreover, the location of Starbucks is strongly related to subway stations, and the company also makes most of its investment within a walkable quarter mile. Among the total 340 Starbucks in New York City. 80% are within a ¼ mile from a subway station and 23–19% are even closer, within 100 meters straight-line distance from a station.
2.3 Distance to another store of the same brand
In order to avoid competing with each other, a new franchise store would be strategically kept in a distance from an existing branch. In the midtown area, high population density, the volume of tourists and high mobility drive high demand for coffee shops, Starbucks and its counterpart dunkin’ donuts are both highly concentrated. Especially Starbucks has a strong presence in this area. If one is near the Empire State Building, he/she would find Starbucks across the street from each other. Meanwhile, Dunkin’ Donuts avoids the direct competition around Times Square but also well serves the midtown area. As shown in the following, centered on each Dunkin Donuts store, a ¼ mile buffer zone almost covers the whole core midtown since 2015.
CONCLUSION
Based on our analysis of two coffee chains in the city, the “Starbucks effect” is not significant since the direction of neighborhood change after a Starbucks is not fixed. However, compared to Dunkin’ Donuts, Starbucks has a higher income threshold, and it is more likely to chase after the rich or gentrified neighborhoods, rather than to lead gentrification. Expect the fact that Starbucks locates at more affluent neighborhoods, most Starbucks shops are within a walkable distance to subway stations. The adjacency to public transit is another important factor determining the location of a franchise store.
