The company is still capable of designing and opening a
store in 16 weeks or less and recouping the initial investment
in three years. The stores may be oases of tranquility, but
management’s expansion tactics are something else. Take what
critics call its “predatory real estate” strategy—paying more than
market-rate rents to keep competitors out of a location. David C.
Schomer, owner of Espresso Vivace in Seattle’s hip Capitol
Hill neighborhood, says Starbucks approached his landlord and
offered to pay nearly double the rate to put a coffee shop in the
same building. The landlord stuck with Schomer, who says:
“It’s a little disconcerting to know that someone is willing to
pay twice the going rate.” Another time, Starbucks and Tully’s
Coffee Corp., a Seattle-based coffee chain, were competing
for a space in the city. Starbucks got the lease but vacated the
premises before the term was up. Still, rather than let Tully’s
get the space, Starbucks decided to pay the rent on the empty
store so its competitor could not move in. Schultz makes no
apologies for the hardball tactics. “The real estate business in
America is a very, very tough game,” he says. “It’s not for the
faint of heart.”