In The Atlantic, Cambridge professor Antara Haldar tells the story of Oregon’s Stumptown Coffee, and how being bought by Peet’s last October could, “corrode the very core of what has, so far, sustained Stumptown: loyalty.”:

Even as Peet’s plans to treble Stumptown’s presence and make it more widely available at grocery stores, it threatens to make the Stumptown experience increasingly impersonal. But making Stumptown indistinguishable from Starbucks will jeopardize its core constituency, and may even hurt Peet’s bottom line.

Smaller institutions have much to offer—not just sentimentally, but also in terms of pure economics. The idea goes back to the 20th-century British economist E.F. Schumacher’s declaration that “Small is beautiful,” a notion fashionable again in the era of institutions “too big to fail.” Since the logic of scale is more attuned to quantity than quality, workers (whose wages are usually driven down), consumers (who enjoy lower prices, but usually get a worse product) and the landscape of the economy (which shows signs of marked decreases in diversity) all suffer from growth that is too rapid.

Worthwhile thoughts, but based on this feature in the Willamette Week from 2011, some Oregonians thought the selling-out happened back then, when the company was sold to a San Francisco-based investment firm. Todd Carmichael, a coffee blogger for Esquire, wrote, “Duane Sorenson, the founder of Stumptown, the Che Guevara of the rock-star barista movement, sold his life’s work to the highest bidder.”

Stumptown and Peet’s won’t be selling each other’s coffee. Which is a bummer, since there’s a Peet’s by my office, recently converted from a Caribou Coffee. Though I thought it sad at first that it, along with 87 others, were lost to the colorful sharia-compliantly financed Minnesota company, to the Bay Area-based Peet’s — a company with more than a decade of unsuccessful unionization efforts, some more serious than others — the majority of both is owned by the same holding company anyway.

More from The Atlantic:

The arithmetic of the “bigger is better” paradigm, or what economists call “economies of scale,” is simple enough. The larger the bushel of coffee beans, the lower the cost per bean. The larger the machine, the more lattes it can spew out. Most of all, scale translates into standardization: the conversion of an unpredictable creative process into a precise and highly economical algorithm of production. All of this means more profits.

But, based on studies of human behavior in places ranging from blood banks to daycare centers, academics now recognize that the calculus is more complex: People act more responsibly in the context of personal relationships that are meaningful to them than in strictly commercial transactions. In fact, loyalty sometimes even trumps economic rationality: going that extra mile to get the perfect cup of coffee, or paying a loan back when the opportunity exists to default. This is what the shift from boutique to mass-manufactured cuts out.

2 COMMENTS

  1. Years ago, when I first moved to North Carolina, there was a little deli in Chapel Hill called Tripodi’s. They had fantastic knishes. I loved that place, and when it closed — the owner got tired of running a restaurant and moved into catering full time — I mourned it. Heck, I still mourn it. Every time I get a craving for corned beef, I miss that place.

    There was also a small chain of grocery stores called Wellspring Grocery that, about the same time Tripodi’s closed, was bought out by Whole Foods. I still have a canvas shopping bag with the old logo (they don’t make ’em like they used to, etc.). The founder/owner of Wellspring took a job with the new parent company that was, I assume, far less stressful than running a chain of groceries. I liked the old stores; I haven’t liked any of the changes that have happened to those stores since the buyout, and I wasn’t alone. Many of those changes had to do with loss of local relationships (as the Atlantic piece discussed), though not all.

    So, two local businesses, both beloved, two owners who got sick of the workload and moved into something easier. Only the second one was thought of as having “sold out.” My own inclination is to think that way: Instinctively I sympathize with the first owner, but I have to think about it a minute to remember to sympathize with the second. Why? I suppose the first business was like a friend who died. It’s sad, but you can mourn, get on with your life, and remember it fondly as it was. The second became sort of undead — looking like its former self, masquerading as its former self, but increasingly hollow, and so a constant reminder of what’s gone. You can’t move on.

    So maybe part of the problem is that we expect businesses, companies, brands to be permanent in some way? Not that we want to keep making businesses bigger (though we do), but that we abstract the brand or clientele from the relationships that built it? I suspect that, whether they realize it or not, fans of Stumptown might actually be happier if the brand just disappeared, and if that isn’t an economist-rational response, I do think it’s quite human. (So I say, anyway, justifying my own similar response!)

  2. Interesting you mention blood banks. I quit giving blood about 18 months after the local blood bank sold out to the state-wide blood cabal in Iowa. Knowing something about the blood industry, I know that the blood is being sold for exorbitant prices to blood poor regions of the country (because Iowa is blood rich). I could overlook that as long as I knew everyone, etc. Now that the phone calls come from a centralized phone bank in the depths of the cabal headquarters, I figure that since they’re making money from my blood, they can do without until they start paying me. Charitable? Absolutely not. But you hit the nail on the head to explain my attitude change.

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