General Question

hoosier_banana's avatar

How is this possible?

Asked by hoosier_banana (824points) September 18th, 2008

• Starbucks economic footprint in local communities: A study commissioned by Starbucks found that Starbucks stores contribute to local economic growth, create new jobs and add to local tax revenues. For every dollar spent at a Starbucks store, on average, $2.23 is put back into the local economy through employee wages and benefits, taxes, and payments to local vendors that provide some of its goods and services. sbux csr page

Tips maybe? Counting each time money is spent before it leaves the community?

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11 Answers

Nimis's avatar

Do you mean how do they afford to do this when they are not doing well themselves?

jrpowell's avatar

Spending multiplier is probably how they are getting their numbers.

hoosier_banana's avatar

I guess if their numbers held water they would compare them to locally owned coffee shop’s. So sad.

PredatorGanazX's avatar

It is more towards the jobs creation not just limited to the barristas but the whole other jobs as well such as the contractor that build the shop.

Furnitures and the whole shop itself creates the jobs which in turn spur the economic growth. Makes sense ?

bodyhead's avatar

Every job that anyone has anywhere spurs economic growth through the payment of wages to their employees. This is a silly statement. It’s just really not that impressive.

If Starbucks spent $2 for every dollar they get, they would go bankrupt. I bet it’s some shady math where it’s technically true in some roundabout not so obvious way.

cwilbur's avatar

So someone buys a cup of coffee at Starbucks, and spends a few dollars.

One of those dollars becomes earmarked for employee pay. The employee gets it, and that counts as adding $1 to the local economy. Then he pays taxes on it, and spends the remaining 70 cents as part of a gallon of milk on the way home. The grocer sends 35 of those cents off to the local dairy, and uses the other 35 cents to pay the rent on the convenience store. So that counts as $2.40 added to the local economy – $1 + .70 + .70.

A good economy is one in which the money moves around quickly and for a while before it stops. A slow economy is one in which people hang on to their money for a while.

marinelife's avatar

It does not seem surprising for new small businesses operating locally. Why are you questioning it?

hoosier_banana's avatar

I am researching the coffee market, and a red flag went up when I read it. The statement reads very positively for Starbucks, but without comparison it means nothing to me. Thanks for your help everyone, I agree that they are probably accounting for the trickle down effect.

Nimis's avatar

It’s not just the trickle down effect though.
They actually do put a lot back into the community.

Though I can’t say how purely altruistic their motivations are.
Those investments help create an image that is critical to their business.

hoosier_banana's avatar

I agree that Starbucks has made some real improvements in the way they do business recently, I just felt misled.

Nimis's avatar

Hoos: You should.
You’ve been PR’d.

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