When Starbucks Moves In, Neighborhoods Change Like This for 7 Years, According to a Massive New Study

A new study by Columbia University professors suggests that when Starbucks arrives in a neighborhood without a similar coffee shop, the rate of entrepreneurship increases. The study suggests that a new Starbucks leads to a seven-year neighborhood entrepreneurship boom, resulting in between 1.1 and 3.5 new businesses per year that wouldn’t have been created otherwise. This increase typically lasts about seven years.

Researchers have long debated the “Starbucks Effect,” which suggests that new Starbucks locations are correlated with rising home prices. The new research suggests that it’s the Starbucks model, which Starbucks has long proclaimed as one of its reasons for being, that might make the difference. Choi, Guzman, and Small suggest that the idea of offering a “third place” for people to meet (besides at home or at work) might have been responsible.

The study found an intriguing control group: neighborhoods where Starbucks wanted to open new stores but was stymied due to city planning, zoning, community organization, or other issues. They also took a special look at the partnership between Starbucks and legendary basketball player-turned-entrepreneur Earvin “Magic” Johnson, which led to a 29.7% increase in the number of expected startups in neighborhoods where Johnson was involved.

To increase the number of neighborhoods examined, the researchers looked at both census tracks where Starbucks entered neighborhoods and compared them to “all census tracts that did not previously have a coffee shop.” The entrepreneurship effect of a new Starbucks lasts seven years.

While Starbucks has changed significantly over the years, the study highlights the importance of the third place, as giving people a place to get together and meet can lead to unexpected growth.

Read More @ Inc.

Suggested Reading