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Starbucks, monetary superpower

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Re: Starbucks, monetary superpower

#131

Post by ukoki »

dave5104 wrote: post #53
pweezy wrote: post #50

I've always thought that the main reason for Starbucks to push their card and reward program is to save on per-transaction credit card fees. By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount. The article mentions the interchange fee (the 2-3%), but for small purchases the transaction fee is more significant. I assume the…

> By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount. That's correct, generally. But those can always be negotiated. And Starbucks probably has the volume to have some negotiating power. I'd be surprised if they didn't have a lower rate.

What are they negotiating against though? Wouldn't the BATNA be to not accept credit cards which be suicide for a retail company?

Re: Starbucks, monetary superpower

#132

Post by whatshisface »

dragonwriter wrote: post #117
modo_ wrote: post #37

Earlier quoted context omitted.

I'm curious if a rules engine [1] could be used instead of implementing the logic in code for something this complicated? Could fuzzy logic be used to build a case when the laws become contradictory? Maybe after the case is built it could be passed on to legal counsel for approval. [1]: https://en.wikipedia.org/wiki/Business_rules_engine

> I'm curious if a rules engine [1] could be used instead of implementing the logic in code for something this complicated? Rules engine rules are code; just code in a language that is usually very simple but also (because it's not used anywhere else) completely obscure. > Could fuzzy logic be used to build a case when the laws become contradictory? Didn't the Bayesians kill fuzzy logic?

Bayesian statistics quantifies fuzzy knowledge of absolute statements, fuzzy logic quantifies absolute knowledge of fuzzy statements.

Re: Starbucks, monetary superpower

#133

Post by seanmcdirmid »

lsc wrote: post #112
seanmcdirmid wrote: post #106

Earlier quoted context omitted.

No one goes to Starbucks for the high quality of their coffee. They go for convenience, maybe atmosphere (a safe comfortable place to hang for awhile), and such. But if you want great coffee, that is a trade off that doesn’t favor Starbucks (like a burger conesuire at McDonald’s).

>maybe atmosphere (a safe comfortable place to hang for awhile), So I mean, coffee shops in general, yes. But at least in urban areas? Starbucks seems to be really well-designed to maximize throughput and profit; they have fewer seats, usually per cup of coffee sold than the smaller coffee places, and generally seem to be set up for 'to go'. It's one of those things where if I look at it as an investor, I really like…

What urban areas? Seattle? No, downtown stores have seats, there are very few togo stores, heck the one near the library is pure plush seat forest (the one in Paris near the grand opera is like that also). You can’t operate togo stores at all in China, where your sales volume is strictly limited by the amount of seating you have (unlike the USA). Tokyo has the best seating I’ve ever seen in a Starbucks, maybe NYC?

It really depends on the market, I guess.

Re: Starbucks, monetary superpower

#134

Post by ghaff »

maurimo wrote: post #31

I keep wondering why people buy Amazon/Netflix Gift cards. Great, you converted 50$ into 50$ that can only be used on Amazon, and people may end up not using at all. This is also financing with negative interest rate.

There are some practical reasons given in this thread. An Amazon card is about as fungible as you get. For me at least, it's even better than a cash card; these days I'll just put that value into Amazon anyway.

Amazon cards are pretty popular when companies have small dollar giveaways of various sort.

More generally, in a lot of circles in the US at least, giving cash as a gift is often seen as a bit crass. So, if you really don't know what to buy a person, a gift card is seen as an at least minimally thoughtful gift that lets the recipient choose what they want. Amazon admittedly tends to fail the minimally thoughtful test but that's the story with gift cards generally.

Re: Starbucks, monetary superpower

#135

Post by benbristow »

maurimo wrote: post #31

I keep wondering why people buy Amazon/Netflix Gift cards. Great, you converted 50$ into 50$ that can only be used on Amazon, and people may end up not using at all. This is also financing with negative interest rate.

As far as gift cards go Amazon are the most useful. I usually buy them from my friends for slightly less than their credit value. Win for them as they get cash, win for me as I'll definitely use it and I save some money.

Re: Starbucks, monetary superpower

#136

Post by ikeboy »

>Keep in mind that each payment made through the Starbucks app is a payment that isn't made by credit card. Since each credit card payment will cost Starbucks 1-2% in interchange fees paid to the card networks and banks, the company saves a lot of money by guiding customers to its payments app

Most of those gift cards are purchased by credit card as well. This point is incorrect.

Re: Starbucks, monetary superpower

#137

Post by ghaff »

banana_giraffe wrote: post #80
airstrike wrote: post #77

Earlier quoted context omitted.

But you could always go with one those reloadable debit cards, no? Though those usually come with a fixed setup fee of, say, $5

It's actually fairly hard to get money onto those without paying a fee (if you don't have a bank account). Most of the obvious ways to get money onto them involve "Visa ReadyLink", and that comes with a service fee from $2 to $5. If I recall correctly, some even have monthly fees if they get below a certain level. Amazon gift cards can be purchased without a fee most of the time, and with less friction in the store t…

>some even have monthly fees if they get below a certain level

If I receive one for some reason, I've learned to go straight to my computer and load it into my Amazon account.

Re: Starbucks, monetary superpower

#138

Post by JetSpiegel »

ukoki wrote: post #131
dave5104 wrote: post #53

Earlier quoted context omitted.

> By my understanding, in the US, typical merchant fees to accept a card are a flat $0.20-$0.30 transaction fee, plus 2-3% of the total dollar amount. That's correct, generally. But those can always be negotiated. And Starbucks probably has the volume to have some negotiating power. I'd be surprised if they didn't have a lower rate.

What are they negotiating against though? Wouldn't the BATNA be to not accept credit cards which be suicide for a retail company?

Accepting some cards and not others? That could potentially move the market, at Starbucks' scale.

Re: Starbucks, monetary superpower

#139

Post by xeromal »

kvgr wrote: post #121
xeromal wrote: post #78

Earlier quoted context omitted.

I think that for all of their drinks but the coldbrew. They have solid cold brew and I've tried nearly every artisan coffee shop in DTLA and the valley

Yup, even Costa Coffee has decent cold brew. In my opinion it is very hard to make a bad cold brew, compared to espresso. You just take OK coffee and let it sit for 12 hours. Bingo. With espresso - in Starbucks the make the "american espresso" that quite sucks. It is large and burned. Also Starbucks french press is pretty decent and good value for money, but it is on "secret" menu and you need to ask for it.

Yeah, I think so too, but for some reason higher end shops try to make special coldbrew and messing it up. It's not complicated. Just takes some planning.

Re: Starbucks, monetary superpower

#140

Post by lsc »

seanmcdirmid wrote: post #133
lsc wrote: post #112

Earlier quoted context omitted.

>maybe atmosphere (a safe comfortable place to hang for awhile), So I mean, coffee shops in general, yes. But at least in urban areas? Starbucks seems to be really well-designed to maximize throughput and profit; they have fewer seats, usually per cup of coffee sold than the smaller coffee places, and generally seem to be set up for 'to go'. It's one of those things where if I look at it as an investor, I really like…

What urban areas? Seattle? No, downtown stores have seats, there are very few togo stores, heck the one near the library is pure plush seat forest (the one in Paris near the grand opera is like that also). You can’t operate togo stores at all in China, where your sales volume is strictly limited by the amount of seating you have (unlike the USA). Tokyo has the best seating I’ve ever seen in a Starbucks, maybe NYC? It…

mm. in santa clara, redwood city, san francisco and Los Angeles, Starbucks usually have few places to sit (compared to local coffee shops) - and are usually way busier (compared to local coffee shops) and usually don't offer mugs; they just have to-go cups (or bring your own mug) - while most of the nicer local places give you a mug by default if you say it's 'for here'

I mean, sure, they aren't 'to go only' - but they are impractical places to meet or hang out compared to most smaller coffee shops, just because they seem to have a much worse (or, I guess as an investor, better) ratio of customers to seats; a lot of time there are more people in line for coffee than there are tables.

I'm not saying they don't have seating at all, just that they seem to be optimized in a thoughtful way to sell as much coffee as possible, making them superior (if you are an investor) but inferior if you want a place to meet up with other people or hang out, when compared to the locally run and less-optimized coffee shops.

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