Starbucks is currently testing a $1, 8 oz coffee with free refills in Seattle (article). As I rework my syllabus for Principle of Economics, here are some reasons to believe the price of Starbucks may start to fall.
1.McDonalds and Dunkin’ Doughnuts now offer better substitutes than in the past: lower priced substitutes lowers prices of Starbucks.
2.With the economy in a recession or headed there, if Starbucks is a normal good, then as income shrinks coffee purchase will shrink.
However, Starbucks must also consider people like me. I tend to go to coffee shops with my laptop and order a small cup of coffee and stay a while. Prices will probably remain higher, since unlike McD’s or Dunkin’ Doughnuts, Starbucks also provides a nice place to hang out. This is probably why Starbucks charges for internet to keep people like me out from taking up tables.
This got me thinking about my laptop and coffee rules. This is where I turn from economist to non-economist. These are just some rules I think everyone should follow to help smaller coffee shops.
1.Always order something if you hang out at a coffee shop.
2.What you order should increase by a pastry or bagel if you plan to stay several hours and the place is a non-chain. Also tip the barista if you stay a while.
3.Do not take up a table too long if all the tables are full, unless I have to wait some place.
4.Never stay at a coffee shop more than 3-4 hours, and only then if it is almost empty.