Revitalization

Starbucks Confirmed for Locke Street

By Ryan McGreal
Published January 11, 2008

An article in today's Spectator confirms that Starbucks will be opening a new store in the former Robert David store at 158 Locke St. S.

This will generate predictable howls of outrage from some quarters about how the big corporate store drive out independent businesses. My natural inclination is to concur (and I'm not a fan of Starbucks' coffee anyway) - except that the evidence decidedly runs against this assumption.

In an energetic article for Slate that turns this conventional wisdom on its head, Taylor Clark argues from evidence that Starbucks actually benefits the "mom and pop stores" in its vicinity by providing free advertising for the cafe experience and boosting baseline demand.

Strange as it sounds, the best way to boost sales at your independently owned coffeehouse may just be to have Starbucks move in next-door.

That's certainly how it worked out for [Herb] Hyman. Soon after declining Starbucks's buyout offer, Hyman received the expected news that the company was opening up next to one of his stores.

But instead of panicking, he decided to call his friend Jim Stewart, founder of the Seattle's Best Coffee chain, to find out what really happens when a Starbucks opens nearby. "You're going to love it," Stewart reported. "They'll do all of your marketing for you, and your sales will soar."

The prediction came true: Each new Starbucks store created a local buzz, drawing new converts to the latte-drinking fold. When the lines at Starbucks grew beyond the point of reason, these converts started venturing out—and, Look! There was another coffeehouse right next-door!

Articles like this can be long on anecdotes and short on hard evidence, but Clark makes a pretty compelling case that Starbucks is beneficial in the aggregate as well:

Here's a statistic that might be surprising, given the omnipresence of the Starbucks empire: According to recent figures from the Specialty Coffee Association of America, 57 percent of the nation's coffeehouses are still mom and pops.

Just over the five-year period from 2000 to 2005—long after Starbucks supposedly obliterated indie cafes—the number of mom and pops grew 40 percent, from 9,800 to nearly 14,000 coffeehouses. (Starbucks, I might add, tripled in size over that same time period. Good times all around.) So much for the sharp decline in locally owned coffee shops.

Clark notes that this is certainly not Starbucks' intention.

Starbucks is actually trying to be ruthless in its store placements; it wants those independents out of the way, and it frequently succeeds at displacing them through other means, such as buying a mom and pop's lease or intimidating them into selling out. [emphasis added]

The reason for this "reverse jinx effect", Clark argues, is simple: Starbucks doesn't compete with local shops through economies of scale and predatory pricing - quite the opposite, as the chain is known for upscale pricing as well as a monolithic product line.

As a result, mom-and-pops can compete on both price and selection, offering complementary products and services that leverage the Starbucks buzz but do not compete directly. Between the stores, they can create a "coffee nexus" that grows the base market enough to support both businesses - especially with the strength of Starbucks' marketing muscle.

Last week, I bet an acquaintance that a new Starbucks on Locke will not drive the Bad Dog Cafe out of business by the end of 2008. I'm pretty confident that I will collect on that bet.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

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By jason (registered) | Posted January 11, 2008 at 10:44:46

good post. You're right....folks who come to Locke for the Starbucks might end up checking out the Bad Dog. And once they do, they'll never go back. Regardless, another cafe is opening across the street from the Bad Dog. More local food (a farmer family in Flamborough is opening it) and organic coffee. Mind you, I don't know too many people who like Starbucks in my hood, so I guess we'll see where they draw customers from. More people on the street is a good thing.

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By OLDCOOTE (registered) | Posted January 11, 2008 at 11:11:30

Marquee street-front businesses foreshadow others. This is a great thing for the Locke Street strip.

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By brodiec (registered) | Posted January 11, 2008 at 14:16:36

I think when local businesses take on the challenge, rather than just stamping their feet, the result is a lot better. There is real competition and a reason for small businesses people to drive. The flat characterization of small business people as totally altruistic and 'just trying to earn a buck' in a neighbourhood like Locke is kinda false. They're sitting on or renting expensive property in a desirable neighbourhood with lots of dollars. As somebody who likes coffee and walking around I look forward to see how this challenge works out. Are Hamiltonian business people up to the challenge or are they going to roll over and call "NO FAIR!" when the big league of coffee comes to town?

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By jason (registered) | Posted January 11, 2008 at 14:38:58

"big league of coffee"?? have you ever tasted that crap?? Go to the farmers market or Bad Dog or My Dog Joe for the 'big leagues of coffee'. Hey, this is the Hammer...people drink Hortons. Starbucks'll do fine.

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By brodiec (registered) | Posted January 11, 2008 at 14:48:23

Jason, it's not about how the coffee tastes. I'm not particularly fond of their brew either but it's consistent and it sells. It brings people to neighbourhoods. This is business and Starbucks is up there with McDonalds. Like their fast food brethren Starbucks is a huge marketing machine that, much as the Slate article postulates, brings people to other businesses. Bad Dog and My Dog Joe can benefit from competition. I believe this IS one of the situations where the idea of the free market actually applies. When Corporate America is willing it invest in Locke St. it means that there's something to that neighbourhood. So if they're going to lend their name to the neighbourhood and attract those people it's up to the small businesses selling better coffee to convince Starbucks' customers that they're better. This is a fantastic opportunity and exciting time as it's the first time a neighbourhood in Hamilton has had this happen!

As for the debate as to how the coffee tastes, well, there are lots of blogs about coffee to discuss that one.

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By brodiec (registered) | Posted January 11, 2008 at 14:55:53

Ryan, nice! Now stick the text on there and make it look all Icelandic and awesome!

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By jason (registered) | Posted January 11, 2008 at 15:07:04

lol...great stuff!

yea, I was talking about the coffee, not their business model. Won't affect my life one bit that they're there. I'll keep passing by for the good stuff! lol

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By kevin (registered) | Posted January 11, 2008 at 17:28:41

I spend too much of my meager disposable income eating and drinking on Locke St. I'm interested to see who'll go there.

I don't think the locals have anything to fear. We may get a few bus trips into the area, now that it's been blessed, but they wouldn't have come to Hamilton anyway. I often heard our city described as "scary."

If this diamond in the rough scares you, please, stay away.

(brodiec, your website is to be commended.)

Bring it on.

Kevin

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By highwater (registered) | Posted January 11, 2008 at 18:09:17

Must be a Friday night. Ryan's letting his hair down.

I'm not a Starbucks fan either, but the fact that they're willing to invest in Locke can't be a bad thing.

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By rgelder (registered) - website | Posted January 11, 2008 at 21:24:32

I love Starbucks. I can't help it up. I'm a born and bred Hamiltonian, but spent much of my formative years (okay, Law School) on the left coast in the early nineties and got hooked. As such, I much prefer "Four-bucks" to Horton's.

I hope Ryan's right about it having a positive economic effect on busineses that surround it, including the the whole competing coffee house paradox.

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By noseyparker (anonymous) | Posted January 12, 2008 at 10:18:25

I too love Starbucks, and I'm thrilled they're opening on Locke St. I think it will only be positive for everyone. Bring on the competition I say! The bagel shop specializes in bagels and I've learned to like their coffee, plus they're often jammed packed on weekends. I think they will only benefit. I've tried the Bad Dog 4 times each with negative experiences. I find the women who run the place nasty and grumpy, after my 4th time I decided they are not getting my money. The number one rule in having a small business is you have to have a friendly personality if you're front line with customers - that's what really sells a place. They needed to take some life skills or anger mgmt. courses or (I think maybe they have?) sell the business. I don't care how good the product is, if I get treated poorly after checking it out a couple of times I will never return and I tell everyone I know!
Plus, I believe Starbucks pays more than minimum wage and offers a benefits package.
I also like Tim Horton's but I live right near Locke St. and I don't drive so my options are limited. I'm just happy with any movement on the street instead of boarded up buildings!

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By highwater (registered) | Posted January 12, 2008 at 11:47:43

Whew! I'm glad someone has finally said it. I too have experienced open rudeness at the hands of Bad Dog staff on a number of occasions. They certainly don't make it easy to support them. Let's hope the new management will be more welcoming.

You love Starbucks but you've only "learned to like" LSB's coffee? I have some bad news for you. They are one and the same. Seattle's Best was bought out by Starbucks a few years back.

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By jason (registered) | Posted January 12, 2008 at 12:11:21

yes, the new management at Bad Dog is great...folks have been excited about the change for months now. Seattle's Best was bought by Starbucks, but the coffee hasn't changed. They would have lost the SB clientele had they messed with the coffee.

I'm guessing that customers experience rudeness at Hortons, Starbucks, Second Cup, LSB etc....everyday of the week. The product is certainly the top reason for going somewhere. If not, then none of us would go anywhere with human beings behind the counter. lol.

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By statius (registered) | Posted January 12, 2008 at 20:32:41

I had the distinct displeasure of patronizing the Bad Dog myself not too long ago. I found the service cold and the coffee not nearly so good as all the posturing here would seem to suggest. Though I am certainly apt to give it a second chance, such amateurish and apathetic business practices are all too common amongst small enterprises in Hamilton. I would not wish ill luck on anyone, but the place, like all poorly run businesses, probably deserves to fail (although I haven't seen what the new management is like, so maybe things really have turned around). I don't think any establishment should be patronized simply because it is independent. There is such a prejudice amongst a certain class of consumer against any sort of corporatized product, it really defies common sense. Rarely is the product in question ever so bad as "indie elitists" (to quote a recent Times article) claim it to be (rarely is it ever so good as its mass consumption suggests either, mind you). But it doesn't make sense economically to disregard utility in favour of image and some distorted notion of conscience (such practice is often ultimately wasteful). Sometimes moral consideration legitimately does enter into a consumer's decision between one product and the next, and occassionaly economic considerations even weigh against the immediately cheapest, most convenient purchase option (as with shopping at Walmart). But this is relatively rare. And besides, default judgment against the corporate option is by some measures immoral in itself.

That being said, I too am pleased that Starbucks has finally made the move to the lower city. The presence of its stores is often taken to be categorical proof of an area's successful rejuvenation. In Toronto, for instance, some yuppies won't buy into an "up and coming" (read formerly working class, now gentried) area until Starbucks opens a shop. Kudos to Locke.

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By adrian (registered) | Posted January 12, 2008 at 23:09:43

Band: Back Walkover Album: What is worth reading Cover: http://www.flickr.com/photos/speleomante...

I don't like the cover. The rest is pretty sweet.

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By highwater (registered) | Posted January 13, 2008 at 00:33:43

"The product is certainly the top reason for going somewhere." I agree. That's why I went back inspite of the abuse.

"I'm guessing that customers experience rudeness at Hortons..." There's garden variety rudeness, and then there's Soup Nazi rudeness. Bad Dog was definitely tredding in Soup Nazi territory. ;)

Must be a Saturday night. Adrian's letting his hair down.

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By noseyparker (anonymous) | Posted January 13, 2008 at 14:54:08

Well I'm relieved to see I'm not the only one who was treated poorly at the Bad Dog. A friend of mine defended them wholeheartedly and I thought "It must just be me!". Not true! I'm not at all offended when I receive bad service from Tim Horton's, etc. I just think "this person is probably working for crap money and who can blame them". However, when its your own business ie. Bad Dog thats a whole other thing. Beyond the product your selling, your selling atomsphere and personality. Case in point was the ice-cream guy that opened 2 years ago on Locke. Sure his product was a no-brainer (most of us like ice-cream) but he also gave out free samples, a big hello and smile with his perma-white teeth, and pretended to remember you even if he didn't. His business was a smashing success. And his staff was always friendly no matter how swamped they were.
I went to a Kirendall meeting a couple of years back when the whole Westown thing was very hot and I could have sworn I heard McHattie say "We've all agreed that we don't want a chain on Locke St." I'm kinda curious how Starbucks snuck in?
Also, I didn't know LSB and Starbucks were the same coffee. I'll confess I only drink their Americanos which do the trick for a night shift. A friend of my moved here recently and wanted to know where she could go for a coffee after 6pm. I could only suggest Main St. desserts (if you don't mind sitting on a highway) or the Westown which is a bar. Not the most comfortable atompshere for a woman alone. Now she can go to Starbucks.
Now when is the gun shop gonna take a hike? I hate that picture of Adolph Hitler they have in the window! My child always comments about it - its embarrassing. I'm not sure what the comment underneath it means.
Anyways, if the Bad Dog has new owners I'll give it another try.

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By brodiec (registered) | Posted January 13, 2008 at 15:51:58

Why is it embarrassing to explain Hitler to your kids? The Third Reich supposedly introduced gun control to prevent a Jewish resistance from taking up arms and protecting themselves. That's not historically accurate and really it's more like the usual libertarian propaganda one might see in the window of a gun shop. So why not next time explain to your kids that people who own gun shops are afraid they'll lose business if we try and protect people from accidental death and illegal sale of fire arms? And that these gun shop owners use pictures of scary people to shock people into believing that?

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By brodiec (registered) | Posted January 13, 2008 at 15:52:36

From Starbucks to Hitler. Sorry for diverting the discussion :)

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By statius (registered) | Posted January 13, 2008 at 16:37:58

Well said, though.

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By Mar (anonymous) | Posted January 13, 2008 at 17:54:10

Live near Locke and Charlton. Love locke; and welcome Starbucks. It means we have arrived. Sorry but the independents are fine but they have all the requisite problems identified above. Starbucks is a 'chain' but the ownership is local...so what's the diff? other than to the ideologically pure like Brian McH. Now if we can only attract a Chapters. Maybe we'll have to wait for the small big box at the Innovation park.

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By highwater (registered) | Posted January 13, 2008 at 18:27:22

Jeez. I hope it wasn't me who brought the conversation around to Hitler. I was of course referring to:

youtube.com/watch?v=VFIVNwiq8ls&feature=related

"A friend of my moved here recently and wanted to know where she could go for a coffee after 6pm. I could only suggest Main St. desserts (if you don't mind sitting on a highway) or the Westown which is a bar. Not the most comfortable atompshere for a woman alone. Now she can go to Starbucks." My Dog Joe in Westdale is open late and has way better coffee and yummy homemade baked goods. (Second Cup Westdale is open late too and has great atmosphere.) I'm not ideologically opposed to Starbucks, I just don't happen to like their coffee, or their cello-wrapped 'food'. Bleah.

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By Nasty Cat (anonymous) | Posted January 13, 2008 at 20:42:36

i've been back to the bad dog since it came under new management and i have to say, that it's much, MUCH better now. the coffee is still excellent (sorry statius but your taste is in your mouth) and the new owners are really friendly and don't make you feel like they're doing you a favor by selling you a latte at 330 in the afternoon. it also looks like they fixed the place up over christmas because it's got a new paint job and doesn't feel nearly as cramped.

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By jason (registered) | Posted January 13, 2008 at 20:45:11

geez, people who like starbucks are an antsy bunch. someone says they like the bad dog and get accused of 'posturing'. must be that crappy coffee you're drinking.

for late night coffee downtown try:

Ola Bakery Acclamation Bar and Grill Three16 Lounge My Dog Joe Main Desserts Infusions Williams Coffee Pub Bread and Roses Cafe

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By Screen Name (anonymous) | Posted January 14, 2008 at 08:34:27

Wow statius you must be great fun at parties. :P

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By OLDCOOTE (registered) | Posted January 14, 2008 at 10:07:59

I like the vibe of My Dog Joe, but the last coffee I had there was horrible. The bottom quarter was full of coffee grounds. The staff need to be a little more motivated.

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By highwater (registered) | Posted January 14, 2008 at 12:54:09

They ARE doing you a favour serving you a latte after 12pm. That's like wearing white after Labour Day! ;)

Oldcoote, I'd say that last coffee was a fluke, but I tend to agree with your assessment of the staff. They could take a few lessons from the gang at the Second Cup.

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By statius (registered) | Posted January 15, 2008 at 14:17:33

Actually, Starbucks ownership is not local. The shops are, with some exceptions, 100% corporately owned company stores, not franchises. Thus unfortunately the only local wealth creation the Locke Street store creates will be either direct but minimal (to the staff) or indirect and nonquantifiable (e.g. to the surrounding area businesses, as discussed above). On the balance, I still think it's going to be a plus.

For the record, I never said that the Bad Dog brew was bad, but rather "not nearly so good as all the posturing here would seem to suggest". I didn't gag or anything. But for that matter, I don't really mind an americano from Starbucks either ...

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By oates (anonymous) | Posted January 21, 2008 at 13:36:10

Three months a go I wrote a letter to the city stating that when Starbucks moved in, we would know that the city of Hamilton was moving forward.

Starbucks is a destination. Locke Street is becoming a destination - a place that people will go out of their way to get to. Hamilton lacks destinations - places that draw people on a regular basis. The life we have seen in Locke Street and James Street North over the pasyt year is a testament to Hamilton building destinations.

Places such as the Lister Block, the Farmer's market, and other pending projects need to be created as destinations - places that are so great - that they draw people.

When the people come - then the city will move forward.

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By jason (registered) | Posted January 21, 2008 at 15:09:16

Oates...I agree with your sentiment wholeheartedly. Hamilton has a great opportunity to create a destination atmosphere downtown with Lister/Market/Gore etc.... I fail to see the connection with Starbucks though. There are thousands of them everywhere and they're all identical. Will someone from Oakville come to Hamilton now because Starbucks is here?? There's probably a couple dozen locations closer for them. Having said that, you are right - we need to great great places that will cause people to WANT to come and visit them. Start with the Gore/Lister/James St/Market/West Harbour and I think we'd have a great corridor to build on.

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By johnpiercy (registered) | Posted February 10, 2008 at 19:56:48

Im a big fan of LSB , they get all my business . Always friendly , always fresh goods , no attitudes . Smiling Girls get me back ,, Never been into the Bad Dog .

Starbucks will be good for business on Locke St. Competition keeps business's sharp and on there toes. Will we see a storefront Hortons soon on Locke ?

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By Slacker (anonymous) | Posted July 19, 2008 at 22:37:21

I don't live in Hamilton anymore but I grew up near Locke St. and don't see "Starbucks" being successful at that location.

Did they actually open a store there? Whoever thought of the idea to open one there must be nuts.

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By Slacker (anonymous) | Posted July 22, 2008 at 17:29:55

Personally, I'd think a locally owned business would have been better off at this location.

Starbucks will have no hesitation to pack it in and shut down if sales don't meet expectations or even if it slightly making a profit. If its not profitable enough they'll shut it down. Since there is no local ownership, they don't care of the impact it would cause other businesses in the area. They are already closing 600+ stores in the USA and expect things to get worse in the coming months.

Starbucks is no longer considered the "trendy" place it once was. People don't want to spend money on 4 dollar coffee, especially as gas prices rise and everything else is going up people are cutting back on these types of luxuries.

If Tim Horton's can't keep a store open at Dundurn and Aberdeen, how do you expect Starbucks to?

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By Virgo (anonymous) | Posted July 29, 2008 at 14:40:34

"I've heard that the Bad Dog Cafe will soon be re-opening after some difficulties with the old property owner."

Yes but who wants Cosco brand coffee (which of course was what they were serving before they closed down), cold sandwhiches and loud arguments between staff interupting your meal.

Let sleeping dogs ly.

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By seancb (registered) - website | Posted July 29, 2008 at 15:11:32

The Tim Hortons did not close because of lack of business. It closed because the location was too small to be converted to the "new style". It was on their list for needing a makeover, and since the location couldn't physically accept the makeover, they closed it. Makes no sense to me, but I guess that's the corporate world... play by the formula or don't play at all.

My guess is that they figured it would be better to put a brand new store in the MIP than renovate an old store (only to need a new store at the MIP in 2 years anyway). I don't think we've seen the last of Tim in that area...

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By pasticheese (anonymous) | Posted August 10, 2008 at 13:59:23

"The Third Reich supposedly introduced gun control to prevent a Jewish resistance from taking up arms and protecting themselves."

Actually, they did introduce precisely such gun control, with the German Weapons Act in 1938 and a further addendum the same year, Regulations Against Jews' Possession of Weapons, the intent of which is not difficult to figure out.

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By al Fresco (anonymous) | Posted August 11, 2008 at 08:05:28

"The Third Reich..."

I hereby invoke Godwin's Law.

/thread

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By highwater (registered) | Posted August 11, 2008 at 10:44:00

Man am I sorry I ever brought up the Soup Nazi.

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By Slacker (anonymous) | Posted January 28, 2009 at 23:20:46

That may be the official corporate reason why they shut that timmys down but the real reason is low traffic in that area (there are 2 timmys on dundurn&king and dundurn & main and also 1 a few blocks east on king.) 7-11 had the same fate on that corner.
Is Starbucks still open on Locke St?



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By highwater (registered) | Posted January 29, 2009 at 09:40:15

And on a lighter note:

www.marketwatch.com/News/Story/Story.aspx?guid={D8DE922A-87E5-455D-AAE8-9A0E1BA379CB}

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By seancb (registered) - website | Posted January 29, 2009 at 09:53:14

low traffic? are you kidding? 7-11 closed because big bear across the street had way better selection for the same or lower prices - the only thing 7-11 had going for it was a cibc bank machine. that tim's was rammed most of the time it was open. the biggest thing it had against it was a small, awkward parking lot that probably drove some commuters away. that intersection suffers from everything BUT "low traffic" anyway, it's not like we don't have enough tim's as it is.

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By Slacker (anonymous) | Posted January 29, 2009 at 12:00:30

that tim's was renovated at least 2 times that I can remember, I do remember they were selling donuts & coffee out of a trailer in the parking lot for months during renovations. That parking lot was the same parking lot they had since they opened the store. The whole idea of the "store is too small" story by tim's is an excuse. That location wasn't making enough money compared to other stores so they shut it down. If it was making huge profits, they would have kept it open.

I only mention 7-11 to make a point of that corner can't handle 2 convenience stores. When 7-11 opened in the 80s, it killed off "Mac's Milk" on Dundurn just up the street. Big Bear did the same to 7-11.

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By Keven (anonymous) | Posted February 09, 2009 at 23:39:48

More and more people are thinking of the ways on how they are going to cope up with the present recession they are facing. The recession that we are facing today has affected everyone including Starbucks. It is also the reason why Starbucks is creating a value menu. Since the recession has hit, more people are turning towards restaurants that have value menus, where they can get food for less. In response to their falling revenue, Starbucks – the place you'd normally need payday loans for coffee and a bagel – will offer a drink and food item combo that will go for about $4. Many sectors of consumer spending have been hit with losses, especially high end, so it's about time a company did something different than ask for government payday loans to keep them afloat.

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By jack Sparrah (anonymous) | Posted April 03, 2009 at 14:06:23

Hey Ryan, you ever collect on that bet? Bad Dog is still open...

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By oopsie (anonymous) | Posted July 18, 2010 at 15:40:16

Is it all about class war?

Is it that anti-Starbucks people oppose the middle class buying a cup of $3 coffee at Starbucks from a middle-class kid with a BA in Critical Theory making $14 an hour, but support the pro-pollution anti-gay unionized industrial labour workforce buying $1 Tim's coffee from a 55-year-old woman making minimum wage who has to slave away on her feet for 9 hours a day serving crappy tippers and abusive steelworkers while being yelled at by a grade-12 dropout manager?

Tim's is just as good at pressuring independents as Starbucks... in fact, more so, because they have an underpaid shabbily-treated workforce to produce goods for far cheaper.

Independents can can compete easily by being original, different, slower-paced and less "trendy". Serve to the people who don't want to be hustled in and out, who don't want to sit at uncomfortable plastic tables, and who don't need to hold a cup with a logo on it to compensate for a lack of identity, and you can do quite well.

As for anyone who hates Starbucks... try deflecting just a little of your attention towards Tim Horton's. It's one horrible company to work for, and it's one of Hamilton's worst litter producers.

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