Starbucks Visits Declined 6.8% After Switch to Open Bathroom Policy

Utilizing SafeGraph foot-traffic data and led by senior finance academics from the University of Texas at Dallas and Boston College Carroll School of Management, study reveals the perils of private companies providing public goods

Academics from the University of Texas at Dallas Jindal School of Management and Boston College Carroll School of Management released a comprehensive research study that revealed Starbucks visits declined 6.8%, relative to nearby restaurants and cafes, after the company changed to an open bathroom policy.

This results of this research, released yesterday, has already gotten the attention of top news publications including Forbes and Yahoo Finance.

This Starbucks policy began in May 2018, following public outcry when a Philadelphia Starbucks manager called the police in April 2018 about two black men who asked to use the bathroom without purchasing anything and refused to leave the store. Under the new bathroom policy, anybody is allowed to sit in Starbucks stores and use the bathroom without making an in-store purchase.

The findings, which use SafeGraph foot-traffic data, highlight the difficulties for companies attempting to provide public goods, as potential customers are crowded out by non-paying members of the public. The complete study is now available at here: http://www.umitgurun.com/wp-content/uploads/2019/11/PublicProvision.pdf

“The results in our study highlight the difficulty companies can have when trying to engage in different forms of socially responsible behavior,” said David Solomon, Associate Professor, Boston College, and Umit Gurun, Professor, University of Texas at Dallas. “Our team was very interested in what the economic consequences would be of an open bathroom policy as an example of providing a public good. While the hope is always that providing public goods will be rewarded by the market with increased sales and new potential customers, this isn’t necessarily the case. In this instance, even taking into account new people brought in by the policy, the total number of visits was significantly lower, consistent with crowding of tables and bathrooms deterring customers. SafeGraph data allowed us to answer this question by comparing visits at Starbucks locations with similar visit counts for nearby cafes, providing a comparison group that’s very hard to obtain otherwise.”

The analysis is based on aggregated and anonymized location data joined to 10,752 Starbucks stores from the period January 2017 to October 2018. At SafeGraph, we use algorithms that consider a number of features (including the proximity of the pings to the establishment’s building footprint, number of pings, duration between pings) to determine whether a device visited an establishment. We then aggregate the visits to public places like Starbucks over the course of the month and provides these anonymized aggregated numbers to academics, retailers, real estate companies, and more.

Key Findings from the study:

• The decline was 84% larger for stores near homeless shelters
• The policy also led to fewer citations for public urination nearby store locations, but had no effect on other similar public order crimes
• Individuals visiting a Starbucks reduced the amount of time they spent in the store by 4.2%
• More affluent customers reduced their visits more, but black and white customers were equally deterred

The study indicates the potential loss in sales when a store goes from providing for customers only, to credible potential customers, to those with no prospect of being customers. More importantly, allocating these resources to non-paying members of the public can have outsized effects on sales by deterring paying customers. The cost is actually lost sales, not just the possible additional staffing costs to keep the bathrooms clean.

“This research is an incredible application of our data sets and gives a nuanced, data-driven view into the effects of corporate social responsibility, and tells the story of how companies driving social change may negatively be impacting their bottom line,” said Auren Hoffman, CEO of SafeGraph. “Our Points-of-interest and foot-traffic data helps organizations understand the physical world, and this study exemplifies how increasing access to geospatial data enables problem-solvers to answer some of society’s toughest questions.”

SafeGraph’s vision is to democratize the world’s information to help get valuable data into the hands of innovators. Want to start using SafeGraph data today? Use coupon code Starbucks at checkout to receive $100 of free data.

If you’re an academic researcher, you can also find out more about our Academic Partnership Program to learn how you can use SafeGraph’s point-of-interest data and geospatial data for free in your research.