What's to love about Starbucks

By Justin Rohrlich, Minyanville

Hate Starbucks (SBUX, news, msgs)? Have you asked yourself why?

Maybe it's because you find the coffee stores bland and generic. Perhaps you don't like that they seem to be everywhere you look.

Or it could be that you simply prefer your local, independent mom-and-pop coffee shop and show your loyalty by hating Starbucks.

But guess what. Mom-and-pop coffee shops don't hate Starbucks at all. In fact, most of them love it when Starbucks opens a location nearby.

• What's to hate about Starbucks

"Paradoxically," Taylor Clark writes in his book "Starbucked," "the surest way to boost sales at your mom-and-pop cafe may be to have a Starbucks move in next door."

It may sound like something you'd read in The Onion, but it's absolutely true. Mitchell Wool, whose parents founded the Bean Bag coffee shop in Washington, D.C., said that Starbucks is the best thing that ever happened to the family business.

"Starbucks single-handedly created a national industry," he told The Washington Post. "It created greater demand for coffee. We rode it."

Before two schoolteachers and a writer cobbled together $8,000 in 1971 to open the first Starbucks adjacent to a farmers market in Seattle, making coffee was something a busboy did when he wasn't clearing tables. Now it's big business.

The Specialty Coffee Association of America estimated that in 1989 there were just 585 coffee retailers in the United States. Less than a decade later, there were nearly 24,000 -- 60% of which were independently owned.

The fact is, indie shops aren't Starbucks, and most don't want to be. But in the not-too-distant past, if you asked someone what a cafe macchiato was, you'd likely be met with a blank stare. Now, thanks in large part to Starbucks, consumers can choose from a seemingly limitless variety of specialty coffees, not just what happens to be in the pot at the diner.

It's the magic of the free market at its best.

Of course, critics find plenty to gripe about when it comes to Starbucks. There's the popular refrain that Starbucks pays market prices for their coffee beans, which some say don't ensure farmers a livable wage.

What's this about? Now people are finding fault with companies for paying market prices?

Last I checked, Procter & Gamble (PG, news, msgs) paid market prices for its raw materials. I have no choice but to assume Microsoft (MSFT, news, msgs) pays its developers market wages. (Microsoft is the operator of MSN Money.) And I know I pay market price for my subway ride to work every day.

The truth is that Starbucks actually does buy quite a bit of coffee above prices set by the market. Their self-imposed "CAFE Practices" (Coffee and Farmer Equity Practices), a set of socially responsible coffee-buying guidelines, see to that. In fiscal 2008, Starbucks says it purchased 385 million pounds of coffee and paid an average price of $1.49 per pound, compared with the market price of $1.36.

Video: Starbucks' profits perk up

In fact, if you really want to blame someone for the low prices paid to coffee growers, blame Vietnam. The Vietnamese have flooded the market with tons upon tons of cheap, low-grade Robusta beans -- dragging down prices across the coffee spectrum, including the high-quality Arabica beans that top-end roasters prefer.

What's more, Starbucks actually treats its employees well.

"I worked with people whose lives were vastly improved because of Starbucks health care policy -- young, single mothers who didn't have time to work a full-time job but still needed health care," a former Starbucks "partner" (otherwise known as an "employee") told me. "Starbucks provided that opportunity."

Where else can you work 20 hours a week and get full health coverage for as little as $6.25 per week? And that's not all: Partners are also offered a 401k savings plan, stock options, a discounted employee stock purchase plan, adoption assistance, domestic partner benefits, emergency financial aid, tuition reimbursement and a free pound of coffee each week.

Can McDonald's (MCD, news, msgs) say that?

If you still really, really hate Starbucks and wouldn't be caught dead drinking its coffee, might I offer this suggestion: Vote with your wallet and buy your coffee somewhere else.

Once again, that's the magic of the free market at its best.