Starbucks

[SafeSearchOff]

Okay, so I'm making a short film for my social justice class. We had to choose a corporation with unjust business practices, and report on it in a visually engaging way, so I chose to make a movie.

i need a little help with the research, you guys are really good at it so i thought i'd ask the favor.

pretty much i'm covering 4 topics:

1) rBGH
2) Fair Trade Coffee/Price Gouging
3) Environmental/Recycling
4) Monopolizing

okay so lemme summarize what I already know and information I cant find.


1) I know that Starbucks used to use alot of genetically enhanced dairy products from cows that had been administered rBGH. They recently disbanded this practice on jan. 1 2008 rBGH has been around since the early 90's, I cant seem to find when starbucks started using it. If anyone could find that it would be incredible.

2) I can only find hte numbers on the amt. of Fair Trade coffee purchased for 2006 and below. Does anyone know if hte 07 numbers have been announced? Anyone here an avid starbucks drinker? Whats the price for a regular cup of coffee?

3) I'm pretty set on this.

4) Anyone know info about their shady business practices, such as buying out all the local cafes? I can't find any info on this other than the fact that they do it.



i luuvvv you.


oh and please and thank you >.< i need this all by monday =D

[Ralleac]

Okay, so I'm making a short film for my social justice class. We had to choose a corporation with unjust business practices, and report on it in a visually engaging way, so I chose to make a movie.

i need a little help with the research, you guys are really good at it so i thought i'd ask the favor.

pretty much i'm covering 4 topics:

1) rBGH
2) Fair Trade Coffee/Price Gouging
3) Environmental/Recycling
4) Monopolizing

okay so lemme summarize what I already know and information I cant find.


1) I know that Starbucks used to use alot of genetically enhanced dairy products from cows that had been administered rBGH. They recently disbanded this practice on jan. 1 2008 rBGH has been around since the early 90's, I cant seem to find when starbucks started using it. If anyone could find that it would be incredible.

2) I can only find hte numbers on the amt. of Fair Trade coffee purchased for 2006 and below. Does anyone know if hte 07 numbers have been announced? Anyone here an avid starbucks drinker? Whats the price for a regular cup of coffee?

3) I'm pretty set on this.

4) Anyone know info about their shady business practices, such as buying out all the local cafes? I can't find any info on this other than the fact that they do it.



i luuvvv you.


oh and please and thank you >.< i need this all by monday =D

1. The dairy used depends on what is available locally. We use mostly Lucerne at the store I work at. They carry organic and soymilk, although it costs more.

2. A cup of coffee costs 1.40 for 8oz, 1.55 for 12oz, 1.75 for 16oz, and 1.85 for 20oz. This can fluctuate a bit across the country due to taxes, but those are the tax free prices.

3. Most of the espresso and coffee grounds are saved for gardeners, and a number of paper products used are made from recycled materials. All cardboard is recycled. They have to follow certain standards and regulations regarding food and waste disposal.

4. Up here in the Northwest they've taken over Seattle's Best and Coffee People, and there aren't really any serious competitors. There's Dutch Bros., Tully's, and a few small local chains, but nothing huge. Edited March 16, 2008 by Ralleac

[Voski]

I like coffee bean better, their shots taste better and seem to be stronger.

[SafeSearchOff]

ralleac - thanks for all the help!


only one more question i can think of.... how many grounds (in lbs. or ounces) does it take to make one large "vat" of coffee?

[SafeSearchOff]

hey ralleac you also have any info on unions/unionizing?

in New York for awhile starbucks was heavily fighting unions with bribes, lay-offs, etc.

also, if your allowed, can you talk about Health Care, and hours?


i have heard that all starbucks employees are "mandatory part time workers" - less than 40 hours a week, and more htan 40 is a disciplinary offense. i also heard that you can only qualify for the companies health care if you average like 25 hours a quarter or something like that?

[MechAnt]

Why target Starbucks? They are one of the most fair businesses around. A few years ago they were Forbe's Magazine's best company to work for. They are pretty clean especially when compared to some other companies... Just look at Countrywide, they had some shady shit going down.

[SafeSearchOff]

dude. the thing is, the deeper I dig, the more I learn about how Starbucks ISNT good.

You can only qualify for Health benefits if you average 25 hours a quarter, and at that point, you have to pay large sums for it?

They have a very small starting salary and almost never raise it. No employee can work more than 40 hours a week? How do people pay their bills make 7.85 an hour for say, a 35 hour work week. Then the next week could be 15. They never know!

And for years, knowingly, they were giving us dairy products that were proved to be cancer causing, and weakening our immune system. not to mention to continue giving us those genetic dairy products endorsed the unfair and painful treatment of cows. oh, and puss in your milk. PUSS

what else. Fair Trade coffee. they offer Fair Trade coffee, what, once a month? 18 million lbs out of 300 million lbs were purchased as Fair Trade, meaning, that 6% of the farmers they purchased from were guarenteed to have Fair Wages and a proper living environment.


it may be a good company to work for (in some peoples eyes) but its not just working for them, its how they conduct business.


edit: not to mention incredible price gouging!

they spend, on average, $1.40/lb for their coffee. They sell a cup of coffee at what, 1.50 or something like that? An employee told me it takes 1.7 ounces (im not sure if thats correct, she was kind of dumb) of coffee grounds to make a VAT of coffee.

Lets be fair, and say a Vat of coffee contains say, 5 cups of coffee. I'm sure its much more.
1.7 is about 1.1% of a lb if you round up. Starbucks pays 1.40/lb to refresh your memory. 1.1% of 1.40 is 14 and 8 tenths of a cent. the amount of coffee grounds needed to make a VAT of starbucks coffee is then valued at 14.8 cents. divide by 5. your coffee is worth 3 cents.


some one correct me if my math is wrong? 500% price markup right there.


edit: sorry, i forgot to say that paper cups are like 10 cents. Edited March 16, 2008 by SafeSearchOff

[MechAnt]

Of course, that's part of capitalism! Lets do some math. If you buy starbucks once a day every day for a year(a grande "fancy" coffee), the total amounts to a little over $1100 as opposed to spending about $400 a year if you make your own coffee. Basically not spending money on Starbucks for a year, you are able to buy a vacation to Mammoth Mountain for a family of four for 4 days, 4 nights including lift tickets(which cost over $80 a day each). Consumers will continue to spend money on Starbucks cause it's "good" coffee and are willing to pay a lot of money for the convenience and cafe like experience. Starbucks is able to have prices increased like that and still sell incredible amounts of coffee because the demand elasticity for coffee is extremely low. Caffeine is the most used drug in America and most all of us depend on it to even operate throughout the day. I admit I need my coffee to work. Because of this inelasticity, consumers are relatively insensitive to price change. Before even mentioning "price gouging", take a quick crash course in Microeconomics because that would be the strongest and easiest argument against that. If you educate yourself in it, you cover your ass against that argument and make yourself all the most stronger because of it! Best of luck with the project.

BTW, use the Mammoth Mountain example. Especially if you're in california. Everyone knows mammoth . With that, you can strengthen your argument that Starbucks is EXPENSIVE. Edited March 16, 2008 by MechAnt

[SafeSearchOff]

i got lost like halfway through.


but i mean seriously. buying 1 cup of coffee could buy you a pound of coffee...

xbox actually loses money on its game systems
nintendo makes something like $80 bux on the wii
most companies make between 40-110% profit.

500%?



oh also, when they knew that they were giving people cancer, they started offering soy and organic milk. for 50 cents extra.

lets say you drink 2 cups a day. im in high school and I drink at least 2. my brother in college is on at least 4 cups a day, most of my friends are on 2 cups as well, so i think 2 is a fair number.

2 cups a day with the organic milk add on - $1.00
7 days a week - $7.00
52 weeks a year - $364

paying $364 a year NOT to get cancer? and its not even like its a cancer cure, its paying to NOT get cancer.




and i'll agree. yes, its capitalism, but its also straight bullshit.

[MechAnt]

Profits from game systems are from the games themselves, almost never from the system themselves. They offer that organic bullshit because people get the sense that they want to be "healthier" and with a low elasticity, why not make a little extra money. As for anti-union sentiments, since the capital of coffee making is very cheap (the coffee itself, the machines, etc.), most of Starbucks' spending is on labor and rent (because they get some awesome locations). There are three stipulations that give labor unions a lot of negotiating power. (1) Inelastic Demand, which Starbucks has very low elasticity. (2) Substitutability of labor with machines, which coffee making right now can't be automated. (3) "The Importance of Being Unimportant", which means wages must be a small percentage of cost which labor at Starbucks is a HUGE part of their cost.

As you can see, Starbucks employees satisfy two of these. However, in order for unions to effectively exist, the one they really need to have is number 3, which employees don't. Starbucks fights unions tooth and nail because if a union comes into place, they are forced to raise the wages even more when labor is already a huge part of their cost. It's simple really . As for their "500% profit", that is only based on what they spend on the coffee itself. In reality, they "profit" is actually revenue which doesn't factor in their fixed and variable costs.

[mdl]

Starbucks is a frim and firms have a solid goal of maximizing profits. If you want to maximize profits you must set the markup as high as you can to where consumers are still willing to buy the good. This also means increasing your market share which results in buying other competing firms. Consumers are still able to purchase coffee elsewhere and at much cheaper prices so I honestly don't believe that saying Starbucks is a Monopoly will hold. No one needs coffee as a "basic neccessity" of life as they do water, or electricity.

As for the starting salary; Starbucks is not the only firm in town for people to work for. If the amount of people who want to work for Starbucks is high then Starbucks is able to pick and choose their employees' salaries since the supply of labor is large. As before, no one has to work for them if they don't want to.

[SafeSearchOff]

im sorry, should have specified 500% profit - on coffee >.< so lets have another theoretical situation.

say we have.... 5 people on shift - 3 baristas, 2 cashiers. in one hour, they need to serve 7 coffees/person for starbucks to break even. that means they need to server 35 coffees an hour. which is 2 coffees for just under 2 minutes.

i'm not sure if you've seen the lines at starbucks - but im sure they serve at least 3-5 coffees a minute.


you can see the profit here, no?






also, it seems your very hung up on this capitalism issue.

however, my project touches on just a brief part of that. it's main foucs is how starbucks for years used rBGH dairy products, how it fails to use Fair Trade coffee, and poor environmental conduct.

[MechAnt]

Here's a graph. Equilibrium here is at P1, Q1 (Price 1 and Quantity Supplied 1). This is the point at which the supply and demand curves intersect. Lets look at D1 (Demand curve 1). As you can see, it has a steep slope. What this implies is that as price increases from P1 to P2, there is very little drop (Q1 to Q2) in quantity supplied. This means that the demand curve D1 is inelastic (technically, very low elasticty, nothing is perfectly inelastic). Inelastic means that there is insensitivity to price change. Now, lets look at D2. The curve has a flatter slope meaning, as price rises from P1 to P2, there is a huge DROP in quantity from Q1 to Q3. Keep in mind that price and price changes between the two curves is the same. D2 is an elastic demand curve meaning a high sensitivity in price change.

Starbucks' demand curve is D1. As you can see, as price changes, quantity supplied doesn't fall all that much.

Oh yea, Paint FTW Edited March 17, 2008 by MechAnt

[mdl]

also, it seems your very hung up on this capitalism issue.

however, my project touches on just a brief part of that. it's main foucs is how starbucks for years used rBGH dairy products, how it fails to use Fair Trade coffee, and poor environmental conduct.

That was all I could comment on as I don't have information on the other aspects of your project.
I suggest staying with the the trade and environmental aspects to keep things in focus. I think it weakens your overall goal if you try to pick on parts of the company that the majority of firms are trying to accomplish. There is nothing legally wrong with trying to extract as much money from consumers as you can where as there is if they are practicing poor environmental conduct. Edited March 17, 2008 by mdl

[MechAnt]

If that's the issue, then concentrate on that rather than trying to argue their "profits" and what not. That actually makes your whole project lose a bit of credibility when there is no solid economic backing but rather some ignorant logic. I'll look into their rBGH stuff too. I want to help out. I really do

[SafeSearchOff]

=D

thanks for proving me wrong >.<


well they pulled rBGH products beginning this year, but i think its till fucked up they used them for so long, no?


as for my "ignorant logic" i dont have all dems college smarts, seeing as im in high school. and i'll probably never take an econ course since i plan on going into engineering...




however, i can adress one part of it.
"There is nothing legally wrong with trying to extract as much money from consumers as you can"
I'd say that about sums up both your arguments to this point, right?

Like I said I'm doing this for my Social Justice class. while corporations ARE in it to make money, straight up robbing people is NOT socially just. so while nothing about it is illegal, like I said before its fucked up. all companies do that, and in that, are socially injust. i'm just applying it to my particular topic, starbucks.


Personally im no righteous do-gooder social justice maniac, i just want to get a good grade. i mean hell, I love Nike, Coke, etc, but my teacher pretty much despises capitalism and such, so i'm going to spin my project as such.

[gaia.plateau]

Have never stepped foot in a Starbucks, and proud of it

I do have several friends who have worked for them, however, and I've been consistently informed that they use fair trade coffee with absolute minimum frequency to be able to say that they do, which is like one day out of every 50, or something like that.

Also, in my own personal experience talking to the owners of coffee plantations in Central America, fair trade has many drawbacks. Basically it's good because it eliminates "middle men" and tries to get better prices for farmers, but it's probably more accurate to say that it replaces the middle man, and it actually makes it worse for farmers because it only gives them a slightly higher cut (like 0.005% instead of 0.001%), while creating the impression amongst us Westerners that someone is doing something about it.

Also, Fair Trade buys all coffee at a set price by region, and in Central America the only way for coffee farmers to make any profit at all is to specialize and cultivate "premium" beans, which are worth more and cost more to produce than the average bean. So in these cases, they still have to sell to traditional coffee middle men while their competition is being subsidized. Edited March 17, 2008 by gaia.plateau

[SafeSearchOff]

good point, gaia.


but also, Fair Trade guarentees money. Its like having a set salary. Would you rather be guarenteed 500 dollars a month, or take your chances and risk anywhere between 200 and 700 dollars a month?

[erufiku]

SafeSearchOFF & Mechant: face it, you guys won't be able to come to an agreement because one of you is seeing the world through the romantic black/white lens, while the other one is clearly discerning many shades of gray in between the two extremes.

There is a bakery chain in Montreal called Premiere Maison where a slice of cheesecake costs around $5. Robbery? Wait till you see the queues of people.
Another example - Caff'e Artigiano in Vancouver, where coffee costs around 3-5$. You're lucky to find a sitting spot usually.
Other examples could be cited, but I guess we all get the general drift.

If people are willing to pay for something, it's not robbery. You can always vote with your wallet, and if a corporation succeeds in convincing the herd that a premium price is to be paid for the product, it's all fair game. It's up to the individual to decide if (s)he is fine with .50$ coffee from a diner or needs the 10$ cup of Starbucks.

Examples of the contrary: public transportation costs in Vancouver (up to $4.25 single-way) and London, high drug (as in medicinal) costs, etc. Here you are paying a high price because you really have no choice.

[gaia.plateau]

True enough, but I've found that in the majority of cases (in the Central American context) both options are usually unfeasible. Finca turnover is very high, and I've heard stories from many different farmers wherein they had to let entire crops rot on the plants because the owners couldn't afford to hire hands to pick the beans (both farmers that do and do not sell via fair trade).

So for many, the options are to either take a chance to keep their farm by using traditional middle men, or definitely lose it by selling fair trade. There are definitely benefits and detriments, but the main detriment is the illusion that farmers are actually getting a just deal with fair trade, and this can be remedied simply by spreading awareness.

[erufiku]

As to fairtrade, there was an article in The Economist that shed some light on the issue. While it was a step in the right direction originally, it quickly became a media buzzword and proved to actually put the producers on the disadvantaged side.
Think: organic.

[gaia.plateau]

Erufiku: but do you think that people pay an extra $5 for a cup of Starbucks coffee because it tastes better, or because that little mermaid is a status symbol?

Look at Oakley's Sunglasses... people don't pay an extra $400 for superior quality, they pay it for that fucking little O.

Look at the stigmatic white iPod earphones.

Constructing social mores for financial gain is still robbery Edited March 17, 2008 by gaia.plateau

[SafeSearchOff]

okay

i understand the concept of capitalism >.<
but if a company can make profit off a piece of cheescake and have hte price less than $5, it is a socially just imperative for them to do so.

so i guess you can say capitalism is socially injust.

[MechAnt]

Like gaia said, people are willing to spend a lot of money because they want to have the brand name. A good example, especially among younger crowd, is Abercrombie and Fitch. They use shitty materials and charge ridiculous prices for a pair of jeans with half the fabric of others. They are paying for the retarded moose on the shirts and stuff. I'm not anti-brands because I believe that if you invest money in one good pair of clothes, you can wear it for years and it'll still look good and be in fashion. That's why I tend to spend a little bit more on clothes but I wear them for a long time. I haven't bought clothes in almost a year yet people still comment that my fashion sense is good and I dress well. Banana Republic ftw . You can argue that I'm paying for the name but consider this: they use good materials and I haven't bought a single thing at retail price, they hold awesome sales. Coffee, that's just a whole other thing. I just don't get it. Folgers in 8239857385023oz. cans for $12. Tastes just as good.

Charging what is considered "socially acceptable" is selling at equilibrium price. Refer back to my chart. If demand is very high and supply isn't that high, they will crank up prices so that where the demand meets the supply. This is so that demand is quelled enough so that the firm can supply what exactly is demanded. All this deals with the short run which is moot. We'll have to get into long run equilibrium which is a completely different chart. I'll fire up Paint and I'll see you guys in 10 mins Edited March 17, 2008 by MechAnt

[erufiku]

Gaia: (sigh) you're right, there is always the herd's stupidity and strive for status to be considered. I guess I am living in a fairytale world where the individual has the power to make his/her own informed decisions.

To address the Oakley example, it's common of all brand-name sunglasses. Cheap, plastic frames with Cavalli written on the side go for $400... But at the same time, it's called brand name for a reason. While I agree with you on the sunglasses, I am still bent on buying designer clothes for a simple reason: they fit and look good. Again, this is coming back to the individual preferences. Sure, $20 Walmart jeans achieve the same goal as the $400 Gucci pants: they cover your ass. But some people are superficial and self-conscious, and will pay the $380 premium. Still not robbery in my eyes. It's hard to distinguish the between the individuals who walk around with their Starbucks cup because they've consciously made a choice that it does pay better vs. the ones that do it because it's cool. In either case, they made the choice to part with their cash. Same goes for designer clothes, electronic gadgets, hell, even books. You know how many people have Hawking in their library just to seem "smart"?